Category: Mckinsey chemicals

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mckinsey chemicals

McKinsey Global Institute Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. McKinsey Quarterly Our flagship business publication has been defining and informing the senior-management agenda since Featured Change that Matters Learn what it means for you, and meet the people who create it.

Our Insights. Press enter to select and open the results on a new page. Back to Our Insights. Article The nimble prosper: Dynamic resource allocation in chemicals November — Crafting a strategic road map and responding rapidly to external shocks are critical for superior value creation in chemicals.

Article Chemicals and capital markets: Still going strong July — The chemical industry continues to ride high in capital markets. Our latest capital-markets update suggests that a number of the Subscribe to our newsletter Receive updates on recent reports and articles from McKinsey Brazil in Portuguese. Sign up.

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By using this Site or clicking on "OK", you consent to the use of cookies. Never miss an insight. We'll email you when new articles are published on this topic. See other popular subscriptions. Our Insights Webinar. Featured Transformation Improving your odds of success for large scale change programs Digital Helping you embed technology where it unlocks the most value for your organization Accelerate Enabling your people to accelerate and sustain the change.

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Press enter to select and open the results on a new page. Email Subscriptions Sign In. Article Is chemicals innovation still worth the investment?

June — Long considered a cornerstone of chemical industry growth, innovation's contribution has been questioned as parts of the industry have become commoditized. We show that chemicals innovation continues to deliver attractive returns, and describe three approaches to further improve innovation returns.

Article McKinsey on Chemicals: New perspectives on supplier management June — Successful supplier collaboration and streamlining the supplier qualification process can provide new opportunities for chemical companies, both in their roles as suppliers to OEMs and other major consumers and in their relationships with their own suppliers.

June — To drive further profitable growth in the increasingly competitive China market, international chemical companies should focus on five areas. To continue to grow at home and remain competitive, big changes will be required. Article Meeting the need for a new supply chain in chemicals April — Chemical companies' supply chains are increasingly under strain. Strengthening supply-chain capabilities can improve results and provide a competitive advantage.Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy.

Our flagship business publication has been defining and informing the senior-management agenda since It will look familiar, maybe reassuringly so. As this interactive graphic shows, what the plant does may not change much. While some parts of the world will be building new assets, many of the ones currently in place will keep operating, especially in mature markets.

But how those existing plants work will be transformed. Data management will be substantially more advanced. Asset optimization will enable new breakthroughs in efficiency. And, most importantly, what people in the plant do will be dramatically different. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy.

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Press enter to select and open the results on a new page. Email Subscriptions Sign In. Create a profile.Periscope Performance Vision gave clarity to this large-scale chemicals company by identifying opportunities equivalent to 40x project investment, leading to a doubling of pocket margins. How can you achieve transparency in a truly mega-scale organization? This was the question posed by the chemicals business unit at one of the world's leading oil players.

A squeeze between the market and production kept margins thin. And a lack of transparency in this huge, complex organization inevitably led to management issues that weakened margins as well. Periscope Performance Vision offered the company a way forward, because it held out the possibility of a thorough, dynamic analysis of all the factors impacting the cost effectiveness of marketing and production enterprises at the chemicals unit.

A comprehensive performance management platform built to capture the best of McKinsey's commercial analytics, the Solution could deliver precisely the kind of business intelligence the chemicals business was looking for in their drive to improve margins. And it showed a clear route to the transparency that the business needed. It also suited the CEO's preference for a structured, quantitative approach.

So this was how we approached the challenge - following up an intensive pilot test-drive with a six-month rollout plan. From implementation start, we began to uncover significant potential.

During the pilot alone, we identified opportunities equivalent to 40x project investment. The waterfall we designed to reflect the business' true underlying economics revealed a number of surprises around hidden costs. And our work to decompose and accurately allocate costs for complex transportation systems showed the way to almost double pocket margin. It has also made for more accurate sales incentives: these can now be based on actual profit, rather than the artificial gross margin numbers used in the past.

Periscope Performance Vision is all about sustained impact. So during implementation, we designed commercial and operational processes to embed the Solution in the business unit's daily workflows.

We built the company's capability, training users and 40 master users. Moreover, the arrival of Periscope Performance Vision created an opportunity for cultural change, introducing lean into both sales and marketing operations. Today, the chemicals business has a system at the scale they need. Periscope Performance Vision covers 70 cost categories, 60 business dimensions, and 50 data sheets and uploads data on actions, margins, revenues, costs, and profits.

The software is a fully translated local language version - which is particularly important for transparency - and includes new functionality and customized analyses. Periscope Performance Vision provides the critical transparency that will help the company consistently find new opportunities to manage margins in their daily operations.

Consumer goods brand achieves category captain status with Periscope Assortment Advisor. Case Studies. Chemicals: Clear Formula for Success. Periscope Performance Vision for B2B paves the way for higher margins for large-scale chemical business unit. Details Clear route to transparency Periscope Performance Vision offered the company a way forward, because it held out the possibility of a thorough, dynamic analysis of all the factors impacting the cost effectiveness of marketing and production enterprises at the chemicals unit.

Double pocket margins From implementation start, we began to uncover significant potential. Embedded capabilities Periscope Performance Vision is all about sustained impact. Most importantly, it has become core to business intelligence at the chemicals BU. Learn more about Periscope. Other Case Studies.

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mckinsey chemicals

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McKinsey Global Institute Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. McKinsey Quarterly Our flagship business publication has been defining and informing the senior-management agenda since Featured Change that Matters Learn what it means for you, and meet the people who create it. Press enter to select and open the results on a new page.

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Chemicals manufacturing 2030+: More of the same…but different

Chirag Adatia Partner, Gurugram. Serves healthcare-service providers and medical-device players in our Gurugram office. Ankur Agrawal Partner, New York. Focuses on counseling healthcare systems and pharmaceutical and medical-device companies on strategy and corporate-finance issues. Rafiq Ajani Partner, Waltham. Heads the McKinsey Cancer Center and leads our work on cancer globally, working with biotech and pharmaceutical companies, health Jan Ascher Senior Partner, Zurich.

Helps leading pharmaceutical companies develop corporate and business-unit strategies maximizing the commercial potential of their Michael Balz Partner, New Jersey. Advises companies in the animal health, pharmaceutical, veterinary, and vision care sectors on strategy, organization, marketing, Supports healthcare companies to develop global strategies and operating models.Companies have tried hard to reduce operating costs to help offset this trend, but they have paid less attention to marketing and sales, where expenses have continued to rise.

However, this is not a matter that the marketing-and-sales department can fix. It is a strategic issue where company leadership needs to intervene, but taking steps in this direction is proving difficult for many enterprises.

Drawing on our experience in the industry, we offer this article as a thought starter to help chemical company leaders get moving. Increasingly harsh conditions have encroached on much of the global chemical industry over the past two decades. For the majority of players, however, product ranges have become more comprehensively commoditized, squeezing margins Exhibit 1. Companies have mobilized to offset this trend, cutting costs by improving operational performance.

But sales and marketing has been largely untouched, and our research shows commercial costs have instead increased. What has been happening? It appears that while their colleagues have been taking a lean approach to operations, the commercial departments have pushed on with traditional marketing and sales approaches and even added to their expenses. The commoditization trend and new opportunities afforded by digital technologies make this a good time for chemical companies to take the offensive and rethink their marketing and sales operating models.

Production technology for chemicals has become more broadly available, and there has been a rapid buildup of capacity, particularly in emerging markets. The number of chemical producers has also increased, despite consolidation in more mature Western markets.

Proliferation of producers has tended to encourage capacity additions that have got ahead of market growth, depressing prices and margins. A good example is provided by the evolution of polyethylene terephthalate PETwhich evolved from a specialty chemical to a commodity in less than 15 years Exhibit 2. Similar dynamics are evident in other products that have historically shown consistent profitability, including epoxy resins, polycarbonate, purified terephthalic acid PTAmethylene diphenyl diisocyanate MDItoluene diisocyanate TDIand titanium dioxide, as well as numerous specialty chemicals Exhibit 3.

They have succeeded at pushing for a commoditization of products to help them secure lower prices. Importantly, there is little sign of these trends abating. Based on their high-margin model of 20 or more years ago, the starting point for many chemical companies has been to make custom grades to lure customers and keep them.

This was a logical commercial approach when comfortable margins could support it—even if the quantities were uneconomical and these special grades then complicated inventory management for the producer.

Related to this, companies would offer free service support and generous commercial conditions such as free transportation or expedited shipping at no extra charge. But many chemical companies no longer have the margins to pay for this level of service.

In the area of service support, the reality is that many users have become familiar with the products they use and have little need for service support. Still, many chemical companies have some psychological hurdles to overcome before they can change course.

mckinsey chemicals

With their long traditions of innovation and technological sophistication, many companies find it hard to accept that their product lines are becoming commodities: we have observed that using the word is a taboo in some places, and this state of denial makes it hard to take appropriate action. Second, the commoditization trend that most chemical companies confront has usually occurred gradually. The process of commoditization is slow and steady, and while sellers can continue to hope for a return to the good times, the commoditization trend is unremitting, even in traditional specialty segments like pigments.Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy.

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