Key Challenges Faced by Chemical Supplier & Manufacturer

1. The chemical industry bears an immense significance in our regular operations and  day-to-day lives. The Indian chemical industry is a booming domain, manufacturing  more than 70,000 chemicals that are indispensably linked to our lives like  Thermoplastics, PVCs, synthetic apparel and textiles, fertilizers, drugs, and other highly  sophisticated pharmaceutical products cleaning agents and numerous others.  The chemical industry is keeping pace with the rest of the manufacturing and  production industry in India. India currently occupies the sixth position in the list of  largest chemical producers across the whole world and the third position in the list of  largest chemical producers across all of Asia. Though there is an immense opportunity  and scope for further growth and expansion by the chemical industry, it is also facing a  lot of challenges and critical roadblocks that it has to overcome to achieve its ulterior  objective.  Recent most developments in the chemical industry  The global chemical industry is experiencing a windfall. Though the market is  continuously expanding at a tremendous rate, the profitability is skyrocketing. On the  other hand, the resulting market competition has ensued, affecting the efficiency,  productivity, and overall performance of the chemical companies.  The highly prosperous chemical market means that it will continue to attract more  players, particularly the big ones, thus enhancing the competitiveness and the  associated pressure in the industry. Therefore chemical companies are invariably prone  to facing critical challenges and should constantly strategize as well as perform  accordingly to overcome them.   

2. Unique challenges faced by chemical companies in the recent past  Chemical manufacturers and suppliers, in general, are witnessing several unique  challenges. The key challenges faced by chemical suppliers can be summarized below:  1. Metamorphosis of business portfolios:  Product diversification is on the rise in the chemical industrial sector. Acquisition and  mergers are also happening at an exponential rate in the chemical industry, especially in  the specialty chemicals sector. Big companies are continuously acquiring minor ones.  Therefore, it is evident that the business portfolios of chemical companies are highly  dynamic as the manufacturers are continuously integrating newer divisions in their  scheme of things. They are also getting rid of some other ones which do not fit their  provisions at the moment. Chemical producers are always engaging in new market  entries and also taking a position in strategic as well as operational mergers.  Globalization is another crucial reason that has enhanced the complexity of business  portfolios of chemical companies.  2. Ever-changing demand patterns:  There is minimal scope to ascertain the demands for the chemical products and predict  the amount of customer insistence. Uncertainty and unpredictability of the nature of  claims are now commonplace in the chemical industry. The chemical companies have  extremely restricted amounts of visibility into the orders that their customers will be  placing or requesting in the future. The customer portfolios are even varying while they  are expanding, and they cover several types of end-user markets. Thus, visibility in the  variations of demand represents significant challenges for chemical manufacturers and  suppliers.  3. Expanding portfolio of the products:  Integration of newer technologies is leading to an increasing amount of innovation and  research on the products that the industry is presenting to the world. The continuous  change is a result of increasing differentiation, selecting newer points of market entry,  and effectively planning them as well as the scope of maximizing customer loyalty. The  increase in the introduction of more new products, frequent adjustments, and  adaptation of the existing products has resulted in a significant number of products in  the market. This scenario has led to increments in the operational complexity of the  chemical companies.  4. Regulations and compliance related issues:  Chemical manufacturers are facing growing problems in the documentation of product  quality and the compliance of various procedures. These issues are generally contributed  by multi-level regulations imposed by the Governments, requirements posed by the  end-user market, as well as specific needs and necessities of the customers.   

3. 5. Highly increasing intimacy of the customers:  One of the most crucial trends which are driving companies in the chemical sector is  bridging the gap between the industry and its pool of customers. The reasons are the  introduction of customer-specific service arrangements and tailor-made products in the  market. This case has led to an increase in the complexity of business operations of  chemical companies while creating enormous product differentiation too.  Few of the Traditional Challenges and Problems Specific to the Chemical Manufacturing  Industry.  Challenges Confronted by Chemical Manufacturers  1. Inadequacy and shortage of raw materials:  The raw materials which are required in the organic and inorganic chemical industry,  which even spans the specialty chemical industry, are often inaccessible and not  available in the market in the required quantities. In addition to raw materials, also  treated water is an essential requirement for chemical industries. The shortage of water  treatment plants makes the scenario increasingly tricky.  The primary raw materials like naphtha and natural gas are very high-priced in the  Indian market compared to the Middle Eastern states, China, and other South-East Asian  countries. This case renders the Indian chemical industry uncompetitive in the global  market.  2. Ease of the affordable import of materials:  One of the most significant challenges that Indian chemical manufacturers and  suppliers face in general is the shortage of expertise in the import of cheap chemicals.  The Indian Government has made multiple efforts to waive off the taxes and other  regulatory barriers that prevent the entry of numerous chemicals through import. This  scenario has resulted in an improvement in the import of several chemical substances at  inexpensive rates that are available in the global market.  Absence of the necessary audits that regulate the qualities due to blockades in  transparency result in the increased number of product recalls from the market and  thus poses a considerable problem.  3. The remote location of the industries and inadequate infrastructural facilities:  A vast expanse of the chemical industry in India is located along the Westernmost coast  of India, i.e., along the stretch of Gujarat. The market statistics indicate the fact that the  biggest consumers of chemical products are located along with the Eastern and  Southern Indian territories.    This case causes a massive augmentation of the price in logistics and transport, thus  affecting the cost of the chemical products. Infrastructural complications like the  absence of adequate facilities of ports, poor connectivity of pipelines, insufficient power  supply, an abnormal condition of the railway system, and erratic nature of the transport 

4. system make it challenging for the chemical manufacturers to obtain raw materials  from vendors across the country.  4. Problems in regulations and compliance and high rates of tax:  It is often found that the duties imposed on a lot of raw materials surpass the tax that is  imposed on ready-made chemical products and supplies. This scenario causes a massive  disruption to the manufacturing sector of the Indian chemical industry.  This case prevents the import of an array of raw materials due to the high amount of  taxes inflicted upon them. It only facilitates the import of similar chemicals and raw  materials that have leaner tax regulations. This situation also leads to higher  discrepancies in prices.    Key Takeaways  These can be unarguably denoted as the most significant challenges faced by the  chemical suppliers, particularly in India.  Shanti Inorgochem ​is one of the foremost and leading chemical suppliers in India,  which is battling the challenges mentioned above and consistently striving for better  performance.