Chemical management services (CMS) is a business model where a customer purchases chemical services instead of chemicals. In this model, the supplier is compensated based on the quality and quantity of services provided. It helps to reduce chemical lifecycle costs, risks, and environmental impacts. Both supplier and customer achieve benefits through reduced chemical use, cost, and waste. CMS is extensively used across automotive, aerospace, and microelectronics sectors where environmental benefits observed include reduced chemical use, reduced emissions, and reduced waste generation, as well as substantial cost savings. Following are the key services of CMS:
Procurement: Best price purchasing, tier 2 supplier management, research on substitutes
Inspection: Quality assurance and quality checking
Inventory management: Container management, minimalize on-site storage, reduce waste
Delivery: Implementing JIT and point-of-use delivery systems
Use: Monitoring, controlling, use reduction initiatives, substitution/elimination of chemicals
Collection/disposal: Waste collection, transportation and disposal management, recycling
The global chemical management services market is valued at USD 3.8 billion in 2020 and it is expected to grow at a CAGR of 7.5% from 2020 to 2025 due to the increasing adoption of CMS across multiple industries as it helps to reduce cost along with emissions, waste, the number of accidents on-site, and liability for the customers. APAC is leading the global chemical management services market with more than 40% market share followed by North America and Europe. In terms of application, the food and pharmaceutical sectors are the largest customers of the chemical management services market.
Chemical management services cost can be categorized into two parts, chemical purchase cost, and chemical management cost. Chemical management costs hold more than 70% of the overall cost of CMS. The major cost drivers in chemical management costs are inventory management, transportation, and EHS data management.
The cost of implementing a sound CMS system is very high. Hence, many small and medium-sized manufacturers are continuing with the conventional chemical procurement strategy. Moreover, after the Covid-19 pandemic, many businesses have struggled financially and are not looking to implement CMS system on priority.
Haas TCM, Chemcept, PPG Industries, Henkel, ChemicoMays, KMG Chemicals, Intertek, Quaker Chemical, CiDRA, SECOA BV, Aviall, Houghton are some of the key supplier of chemical management services. Leading suppliers are strengthening their regional presence through multiple mergers and acquisitions. Grand View Research will help our client identify the best-suited suppliers by mapping their core capabilities and operational efficiency.
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Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process
Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier
Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.
A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.
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