INDUSTRY SURVEY SHOWS CHEMICAL SUPPLIERS REALISE SIGNIFICANT BUSINESS GROWTH BY REDUCING CHEMICAL USE AND COSTS FOR THEIR CUSTOMERS

Posted: Monday 23rd November 2009

Proving that less really can be more, Chemical Management Services (CMS) providers saw more than 30 per cent revenue growth per year from 2006-2008 by helping their customers significantly reduce their chemical use, waste, and emissions.

According to the CMSIndustry Report 2009, the third in a series released on October 21st, 2009, the CMS industry not only reported revenue growth, but projections indicate the global market will more than triple in the next five to 10 years. The estimated current market globally is approximately $1.3 to $1.6 billion.

“We see this as a tremendous opportunity to provide sustained value for industry in the UK,” said Ralph Gerrard, Business Development Manager, Yorkshire Chemical Focus. “Under the CMS concept, chemical suppliers are developing their business models to focus on providing high value services rather than more volume. CMS providers partner with customers to manage their entire chemical lifecycle and create savings by leveraging purchases, improving inventory management, reducing chemical use and waste, and enhancing IT infrastructure.”

Yorkshire Chemical Focus Limited (YCF) received backing in 2008 by from Yorkshire Forward, the regional development agency for Yorkshire & Humberside, to actively promote awareness of the CMS concept; YCF is currently exploring various industry sectors with an eye towards funding a pilot CMS implementation. “The business model which underpins chemical management services and chemical leasing, [a related concept], makes sense,” commented Chris Hughes, Chairman of the UK Chemicals Stakeholder Forum. “It is good to be reminded of its successes as we seek to give it a stronger foothold in the UK chemicals supply chain.”

One “key aspect of a CMS provider’s successful value proposition and longevity is devoting strategic leadership and focusing resources to drive cost out of the customer’s chemical supply chain, evolving from moving transactions to moving markets through the power of aggregated leverage,” said Scott Little, Global Commodity Manager for United Technologies Corporation, who has led the roll-out of CMS programmes at the company’s Claverham subsidiary.

According to the report survey data, customers have realised hard savings as high as 40-50 per cent in the first year of their CMS programme, and continue to see savings five to 10 years into their programme. The customers surveyed for the report represent diverse industries and companies, including: Intel Corporation, Lockheed Martin Corporation, Chrysler Group, Delta Air Lines, Ford Motor Company, United Technologies Corporation, Pacific Gas and Electric Company, Seagate Technology, and a US Department of Energy research lab, among others.

The European Union’s chemicals directive, REACH (Registration, Evaluation, and Authorisation of Chemicals), and similar emerging regulations internationally require users to have more detailed chemical information about their operations, products, and chemical supply chain. CMS providers’ IT capabilities are proving critical for their customers to meet these needs and to make informed business decisions. In the last five years, customer adoption of the CMS model has expanded from five to nine global regions, with the greatest international activity occurring in Western Europe.

Support is growing among government agencies internationally as an innovative strategy for green growth. The United Nations Industrial Development Organisation is also leading an effort to promote Chemical Leasing, a complimentary concept to CMS where a supplier works directly with its customer to optimise an individual process. Patrice Mongelard, Department for Environment, Food and Rural Affairs Chemicals Policy Team Leader, remarked, “This is a very timely report indeed – it will make a major contribution to the evidence we are putting together as part of the Chemical Leasing Action Plan which Defra and other stakeholders are currently developing.”

The 2009 Chemical Management Services Industry Report and press kit is available: http://www.chemicalstrategies.org/IR09press.htm.




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