Cost Management of Chemical Companies
Over the past 10 years, Indian chemical companies have developed from simple undifferentiated chemical product production to advanced chemical enterprises developing concentrated chemical products. Indian chemical companies mainly start from the production of basic chemicals such as petrochemical and chemical fertilizers. These chemicals have low differentiation, large output, and high barriers.
Then, the next version of chemicals is to make chemicals by adding special things such as resins and adhesives. This chemical substance is completely different from the simple one. It has other properties and changes. These chemical enterprises now can manufacture knowledge chemicals, such as biotechnology and pharmaceutical products. These chemical enterprises also have excellent R & D capabilities and significantly differentiated chemicals.
Improve profit margin
To improve the profit margin of cost management in the chemical industry, such as the chemical industry, the industry can mainly focus on the strategic and operational aspects.
Cost management operations will involve reducing costs
Improvisation of the manufacturing process, direct material cost, improvement of procurement efficiency, etc.
Reduce the prices of tourism, facilities, information technology, etc.
Reduce the cost of the supply chain through transportation and network optimization.
Reduce repair and maintenance costs and cost conversion through effective energy management.
The following actions can help reduce addressable costs by 8%. This will also improve the competitiveness of enterprises for some time, but in the long run, improving competitiveness may not be stable.
Strategic cost management includes some conclusions that have a long-term impact on the competitiveness of the company, including the analysis of strategic cost and the determination of solutions. It also involves the impact on cost levels and structures.
Carbon footprint in the production phase
The main key factor of manufacturing location is the accessibility of raw materials. Due to this factor, several leading Indian chemical enterprises have established their manufacturing facilities internationally.
The next major factor is the convenience of manufacturing location and the allocation of costs. An obvious example is a consumption near the area where formaldehyde is formed, and 30% solution is generally sold. The process of manufacturing formaldehyde is not troublesome, so long-distance transportation becomes expensive.
Inflexible environmental regulations and their degree of compliance determine the future results of the company. Therefore, environmental flexibility is an important factor in the selection of manufacturing sites.
Scale operation
Compared with the global chemical industry, the operation scale of the Indian chemical industry is relatively low. For example, India's chemical industry can produce 40 kg / mt, while the output of international manufacturers is 8 to 15 times that of India's chemical industry. The reason is the lack of scale, which leads to the decline of industrial competitiveness and the production of natural chemicals.
Business scale is the strategic level that has a long-term impact on industrial competitiveness, including the conclusion of forwarding mergers and backward mergers of relevant enterprises.
Conclusion
With the progress of the times, India's chemical industry has developed rapidly. The demand of domestic manufacturing enterprises in various fields lags, and the operating profit is also under pressure. Therefore, most enterprises rely on exports to overcome the problem of demand. However, focusing on operating profit to manage costs can greatly improve the company's solvable cost base. In addition, one of the factors that India's chemical industry needs to pay attention to is strategic leverage, which has a great impact on the profits and productivity of the organization. The company may dynamically select the following options according to the business segments:
Evaluate their strategic and operational capabilities based on market value and competition.
Evaluate and adjust the manufacturing footprint and adopt global connectivity if necessary.
Improve the scope and reliability of operation, and determine and adopt appropriate strategies.
