We see three major trends that will have significant impact on the chemical industry within the next five years:
- We expect M&A transactions as well as the alignment of key portfolios – products and customers – to lead to higher overall profitability of business lines and units.
- Continued focus on cost management to provide for investments in growth areas and innovation: identification and realization of additional cost improvement potentials will be crucial for success in the chemical industry.
- Continued digitalization of business processes and tools in two directions: horizontally along the value chain from suppliers and towards customers, and vertically with continued effort to link ERP with manufacturing execution layer (Industry 4.0).
Strategic portfolio alignment based on Business Lifecycle Management
Our proven approach to address challenges in the chemical industry is the methodology of BearingPoint´s Business Lifecycle Management (BLCM).
A typical BLCM project is structured in two key phases:
I. Business assessment
Based on interviews and transactional data, positive and negative factors on profitability of the organizational unit in scope are identified and evaluated.
Analyses and what-if scenarios provide for additional, new perspectives on the data and thus help generate new improvement ideas and measures. Quantitative analyses are based on the customer´s ERP data, with two main benefits:
- Management decisions are made on a solid and accepted foundation
- Decisions can be communicated more easily to stakeholders
Depending on scope, ERP data is collected from functions such as sales (customer data, customer segments, sales channels, price/volume, revenues, rebates), products (ID, name/family, volume, SKU), Manufacturing (sites, COGS), transportation (distribution costs), billing (invoice data on line item) and organization.
Results of the evaluation are used to generate a profitability model to assess the effects of potential improvement measures, e.g., the alignment of customer and product portfolios in the context of simultaneous price increases and cost reductions.
As a result, an improvement catalogue, a plan is a laid out that includes all agreed improvement measures and their quantitative and qualitative benefits (business case and implementation roadmap).
Typically, an assessment is performed in two to three months, depending on complexity.
II. Implementation of the business case
The focus is on the establishment of improvement measures to rapidly implement the defined actions to improve profitability.
Tracking of key performance indicators such as cost savings (actuals versus plan) per single measure, increase of ROCE/EBIT and price changes provide for measurable progress of the implementation. Finally, progress becomes manifested in the P&L.
Typically, an implementation phase of a project covers 12 to 18 months, depending on the scope.
Our people, many of whom had a career in chemical industry before joining BearingPoint, are the difference.
- We develop pragmatic concepts for consolidation or strategic realignment of business units or business lines according to corporate or divisional targets and principles.
- We implement strategies in product and customer portfolio optimization, performance improvement (operational excellence, growth) and business process management.
- We manage firm-wide programs to integrate an acquired business and business partners related to harmonized processes and information technology.
- We apply innovative tools to gather and analyze customer data.
- Many of our projects are built on a financial business case that quantifies benefits over effort and provides for a measurable ROI proposition.
- Our digital expertise was awarded the “Digitalization” prize by German business magazine WirtschaftsWoche in 2016.