Photo by Jihan Colletta
This year has been one of the toughest ever for our industry. The economic uncertainty brought on by the pandemic has presented new challenges and unexpected roadblocks. While it’s impossible to plan for every problem the pandemic may bring, we can be sure about this: the stronger your operation, the more prepared you are to meet the future.
In its 2020 Chemical Industry Outlook midyear update, Deloitte analysts wrote, “it makes sense for chemical companies to find new growth opportunities and extract more out of their existing assets and resources.” The authors suggest that companies invest not only in new products or technology development, “but also in new business models.”
The Deloitte report echoed an article published by the American Institute of Chemical Engineers in February (which seems like a decade ago). The AIChE article noted that sometimes, satisfying customers means delivering new products, but oftentimes a business just needs to modify their existing products offerings and operational efficiency. When done correctly, providing new purchasing and delivery options can spur the same excitement in customers as introducing a brand new product.
We’ve seen many customers modifying their existing offerings or pivoting their current products for new purposes. After all, when the going gets tough, the tough get growing!
Here are some of the ways you can protect your margins and your business—and even get stronger—by working with a contract manufacturer.
1. Consider expanding geographically
It may seem counterintuitive to expand coverage during an economic downturn, but if you were already considering expansion before the pandemic arrived, there’s no reason to put those plans on hold. While it can be difficult to secure long-haul hazmat shipping services, many customers find that fulfilling orders from a toll blender with multiple locations means they can easily reach new markets, and quickly – simply because they’re moving their products over shorter distances.
Another reason now may be a good time to expand is that retailers, wholesalers and end-users have all experienced shortages recently, and in the process, they’ve grown accustomed to different chemical packaging, sizing and formulations . Some see a corresponding opportunity: the market may be more accepting of “new” or “different” products – including yours.
As you’re developing new customer relationships, a toll blender can help you fill trial orders quickly, and then ramp up to full production as orders come in.
2. Reduce shipping and overhead costs.
More than ever, companies are looking at every option to reduce overhead costs. When you’re shipping over shorter distances, obviously, you’ll see significant savings on freight.
Because contract manufacturers can get lower material costs (by pooling orders for ingredients that are common to many products), customers may see some savings, as well. More importantly, by using a toll blender, most chemical customers realize savings across multiple departments, from production and maintenance to warehousing and fulfillment.
In addition to the bottom-line savings, some of our customers find that their business operations get stronger because they’re able to focus on the core aspects of their business, such as building relationships with their customers.
3. Optimize business opportunities with on-call production
If your business has struggled to meet sales orders, whether due to seasonal demand or new product introductions, a toll blender can provide the extra capacity you need. Having an experienced, versatile production partner gives you the ability to fulfill orders as they come in, so you can capitalize on all business opportunities.
Because toll blenders specialize in managing the manufacturing process, their business is built on expecting and can manage surges in demand. From the customer’s perspective, it really is like having a production line on-call. The arrangement is flexible, so you’re producing only what you need, when you need it.
4. WOW your customers with wider options and custom solutions
The pandemic hasn’t changed basic human nature. People want what they want! Offering a variety of product options and customization is a great way to get your customers’ attention. When your customer requests a different dilution, custom blend, or other specialty item, you need to be able to say, “yes, we can do that!” But if your main line production is tied up with ongoing orders, “no” might be the only responsible answer.
When you partner with a reliable toll blender, you can say “yes” to special requests. The flexibility and agility toll blenders provide mean you can have a specialty line up and running in days. Toll blenders allow you to quickly produce orders (including special orders) for your customers.
Say “yes” to growing your business
It may seem like uncertainty is everywhere, but growth opportunities are out there, too. Say “yes” to additional sales and improve your operational efficiency by partnering with a toll blender that offers the extra capacity, flexibility and services you need.
Royal Chemical has five locations nationwide, special warehousing and blending capabilities and the industry experience needed to navigate economic uncertainty. Schedule a consultation and let’s talk about growing your business.