Supplier consolidation

The specialty chemicals industry is estimated to have an annual turnover of 200 billion worldwide, with production scattered among a great variety of suppliers. Consolidation of that industry was to be expected owing to the pressure of shareholders and to management eager to rationalize their portfolio of products. Some corporations like Ciba Specialty Chemicals, Clariant, ICI, Rohm Haas, Crompton, and Great Lakes... 

The supply/demand balance is tightening for EDC/VCM due to capacity limitations caused by poor returns holding back investment. In addition to supplier consolidations, there have been customer based consolidations driving lower net prices. 

Supplier management Supplier consolidation, optimal direct-from-manufac-turer implementation, compliance with GPO agreements 0.5-2 %... 

Alliances Supplier consolidation Best partner Partial alliances Joint ventures... 

Structural changes in the group organization and adjustments of administrative functions were also made. For example, each division s software activities were bundled into a software center of competence that acts as an internal supplier to the divisions. This not only allows the company to be faster and more efficient in developing software, but it also provides tremendous benefits to customers as all MED products include software with a common look and feel. Shared service organizations that consolidated functions such as general accounting and payroll were formed as well. 

Selecting the most cost-efficient supplier, while consolidating the supplier portfolio ... 

When it announced the acquisition of Solutia s resins, additives, and adhesives business in December 2002, UCB surprised analysts as well as employees, who were all expecting an acquisition in pharmaceuticals rather than in chemicals. The acquisition, however, was not completely opportunistic. UCB Chemical s business development department was continuously on the lookout for value-creating opportunities to give the business more critical mass in an industry where suppliers and customers were rapidly consolidating, which made a concentration wave in the resins industry inevitable over time. In this context, the acquisition was a clear no-regret move the acquisition price was attractive and could easily be financed by UCB, and there were many complementarities as well as synergies. In addition - and as clearly stated at the time - the increased scale created more options for the future, including a possible spin-off or divestment. 

Italian company Novamont has since emerged as the leading supplier of starch-based polymers. Novamont started its research activities in 1989 as part of the Montedison group and its Mater-Bi polymers were commercialised in 1990 with the opening of a 4,000 tonnes per annum plant at Terni in Italy. Novamont further consolidated its leading position in starch-based polymers in 1997 with the acquisition of worldwide patents belonging to Warner-Lambert and has continued to grow the business very successfully since then. 

Consolidated chemical catalogs from various suppliers provides physical properties and safety data links to molfiles and MSDS Chemical directory, with links to several property databases... 

Thus, outsourcing represents an opportunity that should be considered in supply chain design and evaluation of existing supply chains. In addition, the role and utility of the distributor ace chemging. In some cases, consolidation of suppliers and customers has reduced the value and functionaUty of distributors. 

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