Organic chemical buyers need to be vigilant on quality
SOCMA chief sees outlook as optimistic
By Tom Stundza -- Purchasing, 9/18/2008 11:31:00 AM
The current outlook for the organic chemical market remains positive--although “somewhat prayerful”--with a large number reporting improved sales this year, says Joseph Acker, president of Synthetic Organic Chemical Manufacturers Association SOCMA in Washington.
But, Acker says the continuing high price of energy, as well as recent higher costs in emerging markets, means that buyers can expect even more pressure from continuing price increases. “Product and service reliability and product quality will remain greater concerns than in the past, so buyers will have to get information as far down the supply chain as they can--to their suppliers’ suppliers’ suppliers, especially when buying from offshore,” he tells The Chemical Purchasing Summit organized by ICIS and Purchasing magazine.
With the world credit crisis in full contagion and corporate profit margins under extreme pressure, buyers need to ensure that product and service reliability, quality and cost transparency become cornerstones of corporate strategies--no matter where the suppliers are located.
He says that product quality issues and concerns inside the organic chemicals supply chain won’t go away, making it important for buyers to safeguard the quality of what they buy. “Purchasing people may need to abandon sole sourcing programs, to become more flexible in decision making, and develop contingency supply programs that may have as many as four or five alternative suppliers,” Acker says.
Despite these concerns, Acker says a survey of SOCMA members found that four out of five organic chemical suppliers expect outsourcing by their customers to expand through 2010, mostly because of currency fluctuations and energy costs that make still products more economical when bought from overseas suppliers.
He adds that buyers should expect organic chemical suppliers to spend corporate dollars to introduce new product introductions, make process improvements and install new process technologies, make product improvements and abandon non-core technology and products.
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