How a Bulk Chemicals Company Identified Its Supply & Demand Triggers and Integrated Them for Profitable and Sustainable Growth?

China-based bulk chemicals turned its business to advance its global economic growth year-on-year. International oil prices changed dramatically, with a big rise in the first half and a significant reduction in the second. Domestic demand for natural gas, petrochemical goods, and oil products was poor due to a variety of issues. The company leadership sought the services of Research Nester Private Ltd to integrate efficient supply and demand equilibrium strategies through technical and marketing innovation.

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An overview:

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A bulk chemical company in China ventured into the production of bulk chemicals in February 2000. With a wide range of applications in various industries, there was a high demand for bulk chemicals. However, just analyzing historical demand patterns and supply trends of competitors was not enough to strategize growth and productivity.

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The Company was not able to identify potential risks such as supply chain disruptions, raw material price volatility, and regulatory changes. Hence its growth was stunted.

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By 2022, after several failed attempts the Company’s leadership realized that it would need professional help, to devise a plan of action for estimating the future market scenario related to demand and supply. It then sought out Research Nester’s services to facilitate long and sustainable growth with profitability.

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Research Nester analysts helped the company to incorporate a strategy that enabled it to manage market dynamics and build up sales little by little and finally reach its planned business objective.

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The Story

The company was started in 2018 to provide wealth management services such as financial and accounting services, tax services, investment advice, legal or estate planning, and retirement planning. The company officials decided to start their new venture in fintech. During the early years, the company was doing well. But as time passed, the company started facing losses for many reasons. OThe bulk chemical company was established in July 1998. It had accomplished a strong market for its products in a short span of time. In February 2000, anticipating a lucrative market scenario of advanced materials it proceeded to take its next big step by plunging into the production of bulk chemicals for the production of oil & gas products. However, in 2022, the global economy recorded slow growth and China registered a GDP growth of 3% year-on-year. International oil prices fluctuated widely, with a sharp rise in the first half and a remarkable drop in the second half. Domestic demand for natural gas, petrochemical goods, and oil products was poor due to a variety of issues. Apart from that, the company being new in the business was not able to anticipate the demand for oil prices and the slack market of the bulk chemical it produces. The preferences of the clients and the specific demands of bulk chemicals in the production of oil & gas production, crude oil production, natural gas production, etc. This led to overproduction of less needed materials and missed sales opportunities of the ones high on demand. The excess inventory of unsold materials resulted in financial losses to a huge extent. This major setback in the very 2nd year of the company’s new venture, made the authorities turn to Research Nester to act on their behalf to find out a solution for the problem.ne of the most important reasons for the loss was security and fraud. Being a technology-oriented service, it was facing security issues. Moreover, the service was also not maintaining regulatory compliance. However, the company was not able to retain its customers. The company soon realized that it would need expert advice to overcome these problems. The company officials then reached out to Research Nester to seek help and guidance. The consultants at Research Nester analyzed the problem and suggested some solutions that would help them regain their position in the market.

Our Solution:

The major pain point of the company was the lack of in-depth research related to the supply and demand scenario of bulk chemicals such as chemical fertilizers. Research Nester offered its supply and demand analysis consulting services solution to enable the organization to understand the market logistics and focus on mitigating supply and demand risks. RNPL consultants suggested the following road map for a better future.

  • Analyzing the external business environment.
  • Determining the targeted applications and preferences of industries and accordingly prioritizing the production.
  • Having scope for scalability.
  • Assessing the strengths and weaknesses of the finished products.
  • Brainstorming the forces that affect the supply and demand patterns in the market.
  • Many Innovations could positively impact society.

By utilizing these analytical tools, the company could optimize its inventory, manage its suppliers, and figure out the current market trends to strategize its production.

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Results

The Company was facing severe supply-demand fluctuations and very low return on investment. The Y-o-Y growth was challenged. The percentage growth of the company in the first-year end (2019) was 21.4%, which went down to 0.5% by the end of 2020. After the end of the first quarter of 2021, Research Nester was brought into the picture to help the business stay afloat and manage sustainable growth. The analysts created a comprehensive action plan for the company’s supply and demand business model considering its offer to suppliers, consisting of the market price of its products, the margins, and the supply chain mechanism. The prevailing demand in the market, the end-use industries with high product requirements, and the current competitive landscape were also analyzed. The top sources for supplying superior quality raw materials such as natural gas and oil petroleum that could be lubricants and fuel cards were included in the analysis. Furthermore, the ratio-based requirement for each depending on the finished product was also studied for better quality purposes. The percentage growth reached 27.8% by the end of 2022 and it gained momentum to reach 51.95% by the 1st quarter of 2023. With a better understanding of the market mechanisms and crucial analysis of the current and future trends, the company was able to build a better market position and subsequently, profitable growth. All of it contributed to the maximization of its revenue.

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Swara Keni

Head- Global Business Development

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