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Industries & Key DriversSoap makers, even the largest ones, do not for the most part maintain their in-house chemical production capabilities. They should therefore source and purchase their raw materials from other suppliers. A recent trend among large soap and detergent companies is to reduce the number of suppliers used, as a move that help to reduce costs and improve benefits. Known as "supplier consolidation", this trend puts more business in the control of a group of fewer suppliers, thus providing them greater incentive and benefit to offer superior service to their soap making customers. In addition, it is apparently less costly and easier to deal with a small number of suppliers for a given input. A negative effect of supplier consolidation is that different suppliers have different strengths. While some may be excellent at ensuring timely deliveries of high quality inputs and reacting to direct requests of the buyers, others may be very good at anticipating the buyer's requirements or at offering providing auxiliary services, like inventory tracking. Therefore, to implement a successful supplier consolidation strategy, a buyer must carefully weigh the tradeoffs that may arise.
While soaps and detergents are generally not considered as high-technology products, the companies are always looking for a breakthrough product to increase sales, because to have new and high value products is the principal way to improve profitability. But as most of the biggest soap makers in the world, have divested much of their chemicals strengths and capabilities, they are turning to the suppliers of their raw materials to provide chemical expertise.
Beyond simply searching for efficient suppliers, soap manufacturers and their raw material suppliers are expected to formulate more technology alliances over the next few coming years than they have in the past. This requires the soap manufacturers to devise and formulate a new culture, in which they will share information with their suppliers.
Growth Drivers
The chemicals industry manufacture not only basic and specialty chemicals, but also agro chemicals, pharmaceuticals and consumer care products. Starting with raw materials such as oil, fats, alkalis, minerals, gas, air and water, the chemicals industry converts these materials into a wide range of substances for uses and applications by other chemical companies, other industries and consumers. Soaps and Detergents are one of the oldest and major segments of the chemistry business. These products are designed and formulated utilizing simple chemistry but have a high degree of differentiation along the branding lines. Research and development costs are increasing and rising and most of these products are becoming high-tech in nature. As consumer care products we mean products, such as soaps, detergents, laundry aids, bleaches, hair care products, skin care products, fragrances, and more.
Key market drivers of this industry include
- Product Innovation: Product innovation allow all companies,
large or small, to participate in a sector where the needs of consumers
are evolving and the opportunities are growing for both mass market as
well as niche solutions to satisfy diverse attitudes and lifestyles. It
helps to accomplish major developments, innovations and technological
breakthroughs, which can be at formulation level, at product form level,
or at packaging level.
- Sustainable Consumption: Sustainable consumption means
changing the habits of people so as to minimize the impact on
environment due to domestic use. This principle was put into application
with the advent of concentrated products. These products however, did
not have the intended economical and environmental effect, as because
some people just did not think that a lower dosage of concentrated
products was required. Because of this in the recent years, the industry
has introduced the concept of unit dosing in capsules to tablets to the
dishwashing laundry detergents market. Unit dosage provides convenience
as well as simplicity, anticipating the consumers' demand for easy to
use and safer products. Unit dosing has had various positive
environmental effects, because of less transport among others.
- New Product Development: The practice of developing and
introducing new products to market spans the complete product lifecycle,
which starts from primary identification of market opportunity,
conception, design and development and goes through production, product
launch, support, enhancement and retirement. The process is basically
concerned with the conversion of the product concept into a functional
reality. As such, the concept of new product development tends to have
more focus on engineering, dealing with the issues of new technology and
the development and testing of functional prototypes. As markets are
increasingly become mature, manufacturers are under high pressure to
have faster new product development cycles. The prime reason for new
product development is convenience.
- Regulations: The soaps and detergent industry is one of the most regulated of all and in addition to the regulation of its products, it is subject to several requirements that aim at reducing the release of chemical substances into the environment during the process of manufacturing. Such requirements generally include limitations (through regulations) on the quantity of a substance, which can be released to the environment.
