Last year’s State of the Industry Report, produced in association with the National Association of Chemical Distributors (NACD), highlighted the impact of COVID-19 and the supply chain snarl-ups on the chemical distribution sector.
The study, carried out during a particularly disruptive period of uncertainly, lockdowns, and safety restrictions, asked over 500 industry professionals to share their experiences and expectations for the year ahead.
Reflecting on those findings today, it’s clear that NACD members were successful in providing their services throughout the pandemic and were largely able to mitigate the damage inflicted on their businesses. Certainly, it highlighted the agility and flexibility of our industry and its resoluteness during even the toughest of times.
The report had conveyed an overall sense of optimism among respondents – and that still appears to be the case. Recognized as essential critical infrastructure, they were able to continue operating their plants and facilities throughout the crisis.
With society now opening up again, many of our members have reported robust demand and a good year in terms of sales, regardless of the headwinds that were in front of them. In fact, we’ve heard that some have even been increasing investment and expanding their businesses.
A few months into 2022, it’s interesting to look back on how working practices have changed and adapted this past year. Indeed, many of the measures taken back then have since been engrained into everyone’s usual day-to-day operations.
Last year, when asked about their main priorities, 76% of the 192 respondents said finding operational efficiencies was at the top of their agenda. Yet for all their good intentions to streamline and improve productivity, the conditions made it fairly difficult to implement meaningful change.
“Some companies were able to become more efficient but the supply chain challenges actually strained operational efficiency in a way I don't think anybody could have anticipated when we wrote the report,” suggests NACD’s Chief Operating Officer, Lucinda Schofer. “They were living in crisis mode for maybe nine months so couldn't make all the changes they wanted.”
Dan McCusker, Vice President of Sales at Datacor, agrees: “To be more efficient you generally have to spend time implementing a new project or technology. Instead, with all the supply chain issues, everyone was on the phone all day trying to find out where their product and containers were – so the ability to introduce any new technology was difficult.”
The report also highlighted expanding product lines as another key area of focus. Again, this was tough but some distributors were able to achieve this by capitalizing on the high levels of demand for personal care and cleaning products. Whether this was a long term shift and forms part of their future strategy, however, remains to be seen.
Interestingly, despite being only placed third in last year’s findings, it is digitalization that has arguably gained the most traction.
Faced with remote working, social distancing, and the travel restrictions in place because of COVID-19, technology made it possible to stay in touch with customers while keeping employees safe and productive, no matter where they were. It also helped to automate routine processes and improve efficiencies.
This was a good opportunity for an otherwise traditional industry to reset and focus more on digital, notes McCusker.
“During this period, companies were offering employees the flexibility to work from home and had to set up the infrastructure to do that. Now, more and more companies are taking advantage of those choices and are able to offer greater flexibility,” he says.
“In the past, for example, the policy was to print out a piece of paper and hand it to the truck driver ready for them to go and make a delivery. But with people unable to do that because they weren’t in the office, they started looking into how they could digitize that process.”
The report showed that recruitment was regarded as another key priority but unfortunately, it has never been tougher to find new talent. Even if you can find the right candidates, the interviewing, training, and onboarding has been quite a challenge because of the pandemic and its many restrictions.
“Hiring has been really difficult during COVID-19, particularly as people who normally would be looking for change aren't because they're afraid to leave their current jobs,” says Schofer, “and there are just not as many technically-savvy people available to companies today either. The twentysomethings want to work in other sectors rather than the sciences. It’s become really hard to find the drivers, customer service reps, and the sales people we need. This is a long-term problem and there’s still a real shortage of skilled workers.”
Certainly, distributors are having to do more with fewer people, notes McCusker, and technology is again proving the best way to do that.
“In the current environment, it's difficult to hire people and inflation is higher than it's been in most of our lifetimes so they’re going to want significantly bigger salaries than they’ve had historically. Datacor believes the answer to both these problems lies in technology. If you can get by with five people rather than eight because you’ve got better technology that allows them to work more efficiently, that's where the real savings come in.”
The remainder of the top 10 listing had posed few surprises, with safety, succession, sales growth, and sustainability still top of mind for chemical distributors.
Sustainability, in particular, has become an increasingly important issue of late, with most forward-looking companies now incorporating it into their strategies. In response to member feedback, NACD will be including more of these sustainability concepts into the next phase of Responsible Distribution – something we’ll be discussing further in the coming months.
NACD and Datacor are teaming up once again and will be attending the AFPM International Petrochemical Conference. If you’d like to come see us to talk about the State of the Industry report or any other issues, go ahead and book a time here. We look forward to seeing you in San Antonio, Texas from March 27-29.
This blog post was originally published on March 31, 2022 by the National Association of Chemical Distributors (NACD).