Manufacturing Today - November/December 2017 - 15

STEFAN GUERTZGEN | COLUMN BY

To be successful, chemical companies must move beyond selling products. Instead, to improve profitability, they must be willing to transform
their business models in a way that
allows them to sell business outcomes
and results. Top performers have already started bundling products with
value-adding services that differentiate their offerings, increase customer
loyalty and grab a larger share of the
customer wallet. mt
Dr. Stefan Guertzgen has worked for seven years as the
Chemicals Global Director for Industry Solution Marketing at SAP.
Prior to this assignment he spent 11 years in the chemical Industry
at Chemtura in various positions including R&D, global business
development, sales and business process management, and sales
& operations planning. In addition, he has extensive experience at
AspenTech, AT Kearney, and SAP Business Consulting with focus
on business operations. Join him in conversation @SGgaw29c or
on @SAPIndustries.

NOVEMBER/DECEMBER 2017 manufacturing-today.com

15

P R O F I TA B I L I T Y

A CCOUNTING

L AST PAGE

F U N D E M E N TA LS

I MPROVEMENT

M ARKETING

To define and implement the right
service strategies for each customer
segment, companies need the latest
technology. Here are a few examples:
> Leverage sensors and telemetry to
implement vendor/supplier managed inventory concepts and completely automate the replenishment process ("no" or "low touch"
order to delivery).
> Monitor your customers manufacturing process parameters in
real-time via sensor technology.
Leverage advanced algorithms
to correlate process parameters
with quality of (semi-) finished
products. Start selling first-pass
quality as business outcome, instead of selling products, which
provides an opportunity to offer
benchmark data as a service.
> Use advanced algorithms to better
understand buying behavior/patterns of customers, adjust product
and service portfolio correspondingly, and identify cross-selling opportunities to increase customer

loyalty and share of wallet. With
this information it is possible to
better understand and respond to
demand patterns without direct
point-of-sale information.
> Get visibility into customer/market sentiment via capturing and
processing unstructured data
from social media, respond with
appropriate marketing campaigns
and innovative service offerings.

D IALOGUE

The Role of Technology

M F G TOMORROW

C U LT U R E C H A N G E

N EWS

E CONOMY

customers and employees as to
the services provided as well as to
the processes used.

A LFAB INC.

I N T E R N AT I O N A L T R A D E

E MPLOYEES

B UY AMERICAN

er segmentation supported by a
thorough price waterfall analysis,
along with real-time insights into
prices and margins at customer
and product level.
> Product-Only Pricing - Some customers view chemical products as
pure commodities. To accommodate this mindset, chemical companies could unbundle services
from their products. With this
model, customers can purchase
products only online. Digital
technologies with artificial intelligence help determine the rules.
Dow Corning adopted this approach in 2002 when it launched
Xiameter, an online, low-cost
sales channel for its silicone products. Through this online channel, Dow can meet the low pricing
demands of customers willing to
buy in bulk that do not need support services. Seven years later,
Dow Corning reported the new
sales model resulted in five times
the number of products sold and
sales continue to grow (McKinsey
& Company, May 2011). This is
an ideal application for the IoT,
where chemicals may be ordered
machine-to-machine, and many
sales may proceed entirely without human intervention.
> Separate Business Units - Developing a separate business unit
often is an effective strategy to
compete in situations with intense competitive pricing pressure. In this way, companies can
be low-cost providers without
the risk of "cross-contamination"
with services they still provide to
customers who are paying high
prices for chemicals that retain
specialty status. Using a separate
business unit provides a clear cut
and eliminates confusion in both


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Table of Contents for the Digital Edition of Manufacturing Today - November/December 2017

Table of Contents
Manufacturing Today - November/December 2017 - Cover1
Manufacturing Today - November/December 2017 - Cover2
Manufacturing Today - November/December 2017 - 1
Manufacturing Today - November/December 2017 - Table of Contents
Manufacturing Today - November/December 2017 - 3
Manufacturing Today - November/December 2017 - 4
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Manufacturing Today - November/December 2017 - Cover3
Manufacturing Today - November/December 2017 - Cover4
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