Case Studies
Supply Chain Optimization: |
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“We found CrossChem’s creative supply chain solutions were right on target. Not only was product ramp-up well above pace, the backward integration proved cost effective. They improved our businesses bottom line.” Saint-Gobain |
HiPure™ Phenyl Acetate (phenyl acetate) |
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Saint-Gobain is one of the oldest companies on record. They were established in France in 1665 by Colbert who built the Hall of Mirrors at the Château de Versailles. Since their inception more than 300 years ago, Saint-Gobain has continued to grow. Today they employ 180,000 people with 2 out of 3 employees living outside France. They supply glass to 50% of all cars in Europe and provide the insulation to more than 20% of all homes in the United States. In 2004, Saint-Gobain spent more than 10% of its overall revenue on R&D producing 240 patent applications. With more than € 32 billion in annual sales, Saint-Gobain is not only one of the oldest global companies but also one of the largest.
Product Notifications Announced In 2001 one of Saint-Gobain's US business units was notified that a key intermediate chemical they purchased, phenyl acetate, was to be discontinued by their long term supplier. Phenyl acetate (C6H500CCH3) is a niche product in terms of commercial volume. It is a water white liquid, soluble in alcohol and ether, and slightly soluble in water. Over the years Saint Gobain sourced phenyl acetate from the only available and viable global supplier. Incremental price increases were implemented by the supplier over the previous 3 years affecting the profitability of its product. Saint-Gobain was faced with a product that was increasing in cost and decreasing in supply. CrossChem recognized the opportunity to meet the challenges Saint-Gobain and other customers faced as the supplier chose to exit the product and market. The Supply Chain Analysis CrossChem's business model seeks unmet or underserved products within the specialty chemical industry. When they discover a potential unmet or underserved need like phenyl acetate, they assess its strategic fit within its portfolio and the value they may bring to the customer. With an analysis of the discontinued supply chain and the chemistries and equipment required to produce the product, CrossChem felt they were able to accomplish two objectives: 1) Continue to commercially supply phenyl acetate and 2) create an optimized supply chain that would not only maintain the high product quality standards, but also creatively optimize the supply chain to provide significant cost saving to Saint-Gobain and others. Backward Integration CrossChem was aware that a crude grade of phenyl acetate was produced by a large pharmaceutical chemical company for internal use only. The potential product was not isolated in production and did not meet commercial specifications. CrossChem worked with the manufacturer to identify and implement the capital improvements that produced a product that met customer requirements. The partnership proved incredibly successful. Because the pharmaceutical company already possessed many of the reactors, storage tanks and chemistry capabilities, the usual lead time for commercialization of a new product was significantly reduced. The ability to backward integrate the production of HiPure™ Phenyl Acetate into one of the key raw material suppliers meant CrossChem would be able to remove as much as 20% of the costs to customers like Saint-Gobain. Exit Strategies Will Continue The changing specialty and fine chemical landscape continues today with firms actively reviewing their competitive advantage and skill sets. These activities require companies to routinely evaluate their portfolios to ensure they are providing all stakeholders with optimum value based on core competencies. CrossChem will continue to maintain its niche in the market by evaluating those voids where product exit strategies leave unmet needs. |
