Sales Guide for Microsoft Dynamics Industry Solutions

Chemicals Manufacturing
Industry Overview
This sales guide offers a detailed overview of the chemicals manufacturing industry,
based on information from Stratascope, Inc., and Microsoft Internal resources.
The chemicals manufacturing industry is a keystone of the world economy, converting
raw materials (oil, natural gas, air, water, metals, minerals) into more than 70,000 different
products. Although large chemical companies produce hundreds of chemicals, most
companies specialize in one or two product lines. The typical chemical company has
annual revenue under $10 million USD. While the industry as a whole is fragmented,
the concentration in many segments is very high: A handful of manufacturers
hold 80 percent or more of the segment.
Products/Services
This major group includes organizations that produce basic chemicals, along with
organizations that manufacture products by predominantly chemical processes.
Establishments classified in this major group manufacture three general classes of
products: (1) basic chemicals, such as acids, alkalis, salts, and organic chemicals; (2)
chemical products to be used in further manufacture, such as synthetic fibers, plastics
materials, dry colors, and pigments; and (3) finished chemical products to be used for
ultimate consumption, such as drugs, cosmetics, and soaps; or to be used as materials
or supplies in other industries, such as paints, fertilizers, and explosives.

Major US chemicals manufacturers include: Procter & Gamble, Dow Chemicals, DuPont Geography
EI Nemours & Co, Lyondell Chemical Co, Colgate-Palmolive, and Equistar Chemicals. US chemicals companies are being kept afloat by an increase in exports during this
recession. As the US dollar has weakened, it has also substantially lowered the cost of US
Major non-US chemicals manufacturers include: Deutsche Pentosin-Werke (Germany),
products in other countries. The European and US domestic chemicals markets are mature
BASF (Germany), S.I.S.A. (Italy), Alcan Inc (Canada), L’Oreal (France), Mitsubishi Chemical
and are only expected to grow in line with real GDP. Contrast that with developing Asian
Holdings (Japan), and Eastern Petrochemical Company (Saudi Arabia).
and Latin American countries, where chemical markets are expected to grow at much higher
rates. As a consequence, most large chemicals manufacturers are building production
facilities in developing countries in order to pursue faster growth. A host of petrochemical
Prospective Customers companies that are planning or are constructing giant factories in the emerging markets
will begin operations in the 2009–2011 timeframe. Petrochemical reserves in those regions
C-Level CEO, CFO, CIO, COO, CTO should double. Surplus petroleum will be sold at lower costs to foreign countries. Industries
that use chemicals can speed up production due to lower heating and fuel costs.
VP Level Finance, Operations, Manufacturing,
Supply Chain, Engineering Current Market Scope
The chemicals industry has fundamentally changed the way we live, but past success
Upper Management GM, Plant, Materials, Quality, does not guarantee future results. Chemicals companies face numerous challenges.
Compliance, Supply Chain, Engineering Local and national tax requirements, often managed across multiple territories, are
increasingly complex and under continuous review. New regulations have resulted in
SIC Coverage 2812-13, 2816, 2819, 2821-24, 2833-36, additional obligations with respect to internal controls and management certifications.
2841-44, 2851, 2861, 2865, 2869, As costs rise, managements are trying to figuring out how to get the most out of
2873-75, 2879, 2891-93, 2895, 2899 investments in IT and people. At the same time, in search of profitable growth,
chemicals companies are pursuing emerging markets, seeking new partners,
Gross Revenue and shedding non-core product lines.
$50M–$2B USD
per Annum Prices of most chemicals moved up in 2007 in response to the giant leap in oil prices.
Chemical buyers in 2008 can expect further, though modest, price increases, especially
Number of Users 50–2000 if producers seek to boost their margins.
Source: Microsoft Industry Perspective
Source: Stratascope, Inc. • www.stratascope.com

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 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Industry Trends and Issues
Key Industry Trends
China’s Plastics Import Market Slows as Domestic Production Picks Up: There is a
steady relationship between GDP per capita of a country and its demand per capita for
a certain commodities. Chemicals imports have risen steadily as domestic production
struggles to fulfill rising demand.
Middle East Booms: The number of manufacturing and industrial enterprises in the
Saudi Arabia now totals more than 3,800 and these employ 415,000 people. There is
a tangible economic benefit with exports of non-oil products amounting to $21 billion
USD last year. This level of manufacturing and industrial production requires massive
amounts of chemical inputs.
India’s Plastics and Chemicals Sectors Post Rapid Growth: In India, it is estimated
that the industry has grown about 14 percent in the last ten years. But there is still a
huge potential opportunity in the plastics industry waiting to be tapped. The demand for
plastic material will also increase with the rising concern for hygiene. Low-cost polymers
offer a hygienic option due to pilfer-proof properties in the packaging of healthcare
products and medicines. Plastic waste management industry has also emerged as a
parallel option for work. Thus, it is obvious that plastics have a great future in India.
Key Industry Issues
Opportunity in Innovation and New Technologies: Specialty chemicals often provide
higher margins, but companies need a continuous stream of differentiation for new
products, add-on services, new distribution and packaging, and more. A few examples:
• Nanotechnology is emerging for new materials and production processes.
• Biotechnology is increasingly important: For example, getting bacteria to generate
required compounds.
• The “Green” movement demands that companies recycle products, eliminate waste,
and exclude hazardous materials.
Aging Infrastructure: Many companies operate with a plant that is reaching the end of
its life. Maintenance is costly, but opening a new plant is VERY expensive, with costs that
can reach billions.
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Key Industry Issues (continued)
Competition from Developing Regions: New competition and product
commoditization increase the need to differentiate products and services. New and
lower-cost competitors are emerging from Asia in both generic and specialty chemicals,
and from the Middle East for petroleum-based products. To integrate with customer
processes and/or adjust to commodity pricing, companies need to change the scale
and efficiency of operations. Developing strategies to sustain premium pricing
demands new skills, such as consultancy services.
Regulatory Requirements: Chemicals (and pharmaceutical) companies are subject
to more regulations than any other industry. Everyone agrees on the objective: Safe
products. Production, transport, storage, and disposal won’t damage the environment,
but sometimes the paperwork and restrictions just seem to add cost to the business.
In addition, companies face rules for safe management of facilities that make or use
chemicals and other hazardous materials and for the publication, management, and
use of information. One particular requirement is the need to trace and trace
compounds across the value chain, from supplier to final customer.
Complex Supply Chains: Chemicals companies serve as the starting point for many
manufacturing supply chains. For mid-sized and specialty companies, these chains
can be long, making demand visibility difficult.
Alignment of Customer Demand with Product Lifecycles: In the face of increasingly
complex customer requirements, companies face additional competitive pressures to
reduce product lifecycles and get products to market more quickly.
Increasing Competition for Skilled Staff: Many companies need to address the
increasing number of employees who are approaching retirement age. Replacements
can be difficult to find. Companies need to capture “tacit” knowledge from employees
in useable ways.
Rising Energy and Feedstock Costs: The continuing rise in oil prices increases costs
for chemicals companies in three distinct areas: Cost for feedstock, which is typically
petroleum-based; energy costs for plant maintenance; and transportation costs for
delivering products to their customers.
Source: Stratascope, Inc. • www.stratascope.com
 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Industry Value Chain
Although their end products may differ, most chemicals manufacturers work with the same
high-level processes: Formulate, Produce, Buy, Sell, Service, Manage, and Staff. The activities
or processes that make up each stage comprise the chemicals manufacturing value chain.
Functional processes are all interconnected; many activities flow across multiple stages.
Project & Quality Management, Enterprise Management, and CRM span the entire value
chain. Other processes—such as those related to human resource management or finance
and accounting—also work in concert with manufacturing processes.
Processes specific to the chemicals manufacturing value chain include:
• Formulate: This process spans research and development, including input from
customers, suppliers and internal sources, as well as recipe development and testing.
• Plan: The planning process begins with the forecasting of demand and then proceeds
through planning, scheduling, and execution to dispositioning of products to the
points of demand.
• Buy: The buying or “procurement” process encompasses everything from sourcing
Source: Stratascope, Inc. • www.stratascope.com
and bidding to supplier selection, contract awards, negotiations, receipt of goods
or services, and payment processing.
For chemicals manufacturers, key attributes influencing the value chain include: • Sell: Sales begins with marketing and lead generation and proceeds through
• Complexity in both products and business processes customer and opportunity management, ordering, shipping, and finally to collecting
• Customer-specific product requirements of cash.
• Long product lifecycles (design to retirement) • Service: Once products have been delivered, services organizations play an important
• Sales cycles driven by estimating and quoting role in customer satisfaction, handling customer calls, problems, complaints, returns,
• Project-centric manufacturing and repairs as needed.
• Myriad testing and regulatory requirements • Manage: Managing the business includes functions from strategic planning and
accounting to reporting, facilities and property management, along with technology
Source: Microsoft Industry Perspective
and information assets.
• Staff: Managing the human capital of an organization requires commitments to
recruiting, interviewing, hiring, compensation, bonuses, benefits, and workforce
and professional development programs.
Source: Stratascope, Inc. • www.stratascope.com

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 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Key Chemicals Manufacturing Pain Points/Needs
Chemicals manufacturing can be broken into several sub-categories, each of which has
their own unique subtleties: Industrial Inorganic Chemicals; Plastics and Synthetics; Drugs;
Consumer Goods (soaps, detergents, etc.); Paints; Agricultural Chemicals; and Miscellaneous
Chemicals. Microsoft taxonomy breaks out the Biotechnology, Pharmaceutical, and
Consumer goods separately from the traditional Chemicals, Rubber, and Plastics
categories. Key challenges to the industry include:
Operating Costs Out of Control: The rising cost of fuel, utilities, and ingredients is forcing
chemical manufacturers to re-evaluate their manufacturing methods and systems. As their
product mix increases, manufacturers need greater visibility into inventory levels, inventory
mix, pricing changes, cycle times, demand, and production constraints. Industry leaders
must drive efficiencies throughout their supply chain to improve demand forecasting,
balance the flexibility of recipe and formula adjustments versus inventory levels, and
effectively manage labor hours and fixed assets.
Poor On-Time Delivery and Throughput: Automating manual business processes,
connecting internal systems, and extending appropriate information to customer and
suppliers play critical roles in improving operations. Making rapid decisions becomes
possible by connecting supplier, production, laboratory, and customer data. Business
agility improves, so process and packing variations can be handled quickly, which
improves overall asset utilization. Greater order promising confidence and improved
customer service are a direct result of sharing organization-wide data.
Varying Product Quality, Traceability; Failure to Meet Compliance Standards:
Compliance with increasingly complex regulatory and customer mandates requires
chemical manufacturers to manage and quickly pinpoint production, raw material, and
source information amid a sea of details. End-to-end transparency includes tracking
ingredients from the suppliers through operations with lot traceability, identifying
co-products and by-products, logging quality assurance activities, and monitoring
packaging to customers and consumers. Compliance documentation and product recalls,
if required, become easier and faster to manage. Timely and accurate decision making
requires rapid access to data to reduce production variability, maximize yields, and
minimize scrap.
Source: Microsoft Industry Perspective
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Microsoft Dynamics Industry Messaging
Microsoft Dynamics® and a rich ecosystem of ISVs and partners offer end-to-end
solutions tailored to chemicals manufacturers. Built on a unified Microsoft® platform,
these solutions work as native extensions to Microsoft products, enabling efficient,
cost-effective integrations and customizations across multiple systems and locations.
Low total cost of ownership and built-in integration point to other Microsoft products:
• Microsoft Dynamics works like and with familiar Microsoft software—easing adoption
and reducing the risks inherent with implementing a new solution.
• Businesses can minimize additional IT investments by leveraging existing
Microsoft applications such as Microsoft SQL Server®, the Microsoft Office system
(including Office SharePoint® Server, Office Project and Project Server, and Microsoft
BizTalk® Server.
• Industry-specialized partners work with proven methodologies to ensure efficient
implementations.
• Maintenance pricing is lower compared to major competitors.
• Total solution financing options help businesses manage IT spend effectively.
Deep industry experience in process manufacturing and built-in, industry-specific
features include:
• Recipe and formula management • Multiple units of measure
• Inverse bill of materials • Batch optimization and balancing
• Yield planning and tracking • Dynamic formula adjustment
• Co-product/by-product management • Centralized quality control regulation
• Catch weight • Shelf life and dating
In addition, customers can realize quick time to benefit:
• Combining financial management, CRM, supply chain management, and industry
specific functionality form a unified solution.
• Connecting people, process, and information improves productivity by improving
collaboration and eliminating data silos.
• Critical information is rapidly available, empowering employees to take the best
course of action to service the business and its customers.
We do not force companies into a “best practices” model; instead, we offer the flexibility
and industry experience to enable an implementation that closely matches a customer’s
business model:
• Flexible solutions don’t enforce a strict industry template that may not align with
a customer’s unique business processes.
• Integration to other systems does not require a mandated infrastructure.
• Rapid industry functionality improvements can be achieved.
 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Opportunities and Resources
Primary Solution Opportunities Analyst Research
• Process Industries for Microsoft Dynamics® AX Leading research organizations offer comprehensive market intelligence and advisory
• Microsoft Dynamics AX services across industries and verticals.
• Microsoft Dynamics NAV Gartner, Inc.
• Microsoft Dynamics GP AMR Research
• Microsoft Dynamics CRM Forrester Research, Inc.
IDC
Additional Solution Opportunities
• Windows Server® Microsoft Dynamics Partner Vertical Resource Center
• Windows Vista® Differentiate your business and increase your competitive advantage. Visit the
• Microsoft® SQL Server® Microsoft Partner Program site, and see how the Microsoft Dynamics Partner Vertical
Resource Center provides a wide range of tools and resources to help you develop and
• Microsoft BizTalk® Server
refine a vertical market strategy for your company.
• The Microsoft Office system, including:
— Office SharePoint® Server
— Office Project and Office Project Server
• Windows Mobile®

Source: Microsoft Industry Perspective

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 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Benchmarking Performance Example: BASF AG
This Benchmark Report offers one example of more
than 2.2 million companies available to licensed users of
Stratascope, Inc., for benchmarking analyses. The Benchmark
Report showcases financial and business-focused evidence
that you can share with prospects to drive a discussion
focused on their business performance. This information also
can be used to help build a business case and economic value
statement for purchasing Microsoft Dynamics solutions.

Understanding Business Value

When compared to its industry peers, BASF AG is
performing best in the areas of Fixed Assets, Selling,
General and Administrative Expenses (SG&A), and Cost
of Goods Sold (COGS). This company is performing
adequately in the areas of Days Payable Outstanding (DPO)
and Days Sales Outstanding (DSO). This company is facing
its biggest opportunities in the areas of Days in Inventory
(DII) and Revenue Growth.
Note: The comparison was based on each company’s latest
4 quarters of operational performance.

Addressing its challenges could be very valuable to

BASF AG. Operating at the same level of efficiency as
the benchmark company in the area of Revenue Growth
would yield a €515 million EUR per year improvement.
Addressing Days in Inventory (DII) would yield an
additional €162 million EUR per year.
Note: Impacts are one-time benefits for capital categories (blue
bubbles) and recurring benefits for P&L items.

Help: How to read Bubble Chart—On this graph the size of the
bubble indicates the size of the opportunity, and the placement of
the bubble indicates the distance from the benchmark. The lower
the bubble is on the graph, the further the target company is from
the benchmark.
Source: Stratascope, Inc. • www.stratascope.com

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 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Customer Evidence
Customer
Selling Situation
Based in Russia, United Chemical Company Shchekinoazot (UCC) represents the
interests of large Russian chemical companies that manufacture industrial chemicals,
engineering plastics, and synthetic fibers, producing 1.1 million tons of chemicals a
United Chemical Company year. The distributed organization challenged the company’s 6,500 employees to
Shchekinoazot (UCC) share data. To manage information, UCC used a mixture of software, including
Case Study spreadsheets and custom-built tools, but this restricted access to data and
workflows across the business.
Chemcolour—a leading supplier of specialty chemicals and solutions based in New
Zealand—found that after 13 years, its system was no longer adequate to its needs.
To continue serving 700 customers located across several international markets,
Chemcolour needed a solution that could better connect business processes, meet
Chemcolour Industries NZ, Ltd expanding reporting requirements, work with Microsoft desktop software, and fuel
Case Study a growing e-commerce business.
The DoveChem Group is Asia Pacific’s leading chemical solvent distributor, offering
more than 130 types of chemicals and chemical-related services. DoveChem wanted a
flexible system to standardize financial reporting, increase real-time information access,
enable seamless information sharing, enhance controls, and increase inventory costing
DoveChem Group management. Existing, disparate systems used in its regional offices required tedious
efforts to manipulate and consolidate business figures for management reporting.
Case Study
SCIB Chemical became a subsidiary of Asian Paints in 2002. SCIB employs almost
300 employees at its Cairo factory and in nine branches throughout Egypt. A lack of
integration in SCIB’s business management system led to manual errors and delayed
reports, hampering decision making and timely service to dealers. The parent company,
SCIB Chemical Asian Paints, needed a solution for SCIB and its other subsidiaries that would connect
Case Study with the central ERP system.
Olympia Chemicals—the second largest producer of soda ash in Pakistan—is a public
limited company that employs 1,200 people and has 96 personal and 6 portable
computers. The company struggled with paper-based processes that reduced
Olympia Chemicals staffers’ efficiency. The CEO wasted time looking for business information to
Case Study improve operations. Mobile employees needed better access to corporate
data while on the road.
Microsoft Case Studies Site: www.microsoft.com/casestudies
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Results
After evaluating solutions that included SAP and Oracle, UCC chose Microsoft Dynamics
AX. The solution centralized information within an interdepartmental, unified data
source, while meeting international standards and compliance requirements. A flexible
platform opened the door to further change and growth. Built-in functionality enabled
fine-tuned process automation. Integration with the Microsoft Office system and SQL
Server Analysis and Reporting Services has improved user adoption and fueled effective
reporting across all business areas.
Microsoft Dynamics AX delivered deep reporting capabilities and integration with
the Microsoft Office system and other Windows-based applications. ASP hosting has
dramatically reduced IT efforts. Real-time product and order management, based on
centralized information and process workflows, has improved efficiencies and customer
service. The solution also enables the company to cut “paper” costs, add and extend
functionality to meet growth, and expand e-commerce.
DoveChem replaced its disparate systems with Microsoft Dynamics NAV and
a customized ISV industry solution. The new system meets complex requirements for
formula management and regulatory compliance. It offers flexible and centralized
production, inventory management (including enhanced lot tracking), standardized
reporting processes, fast access to critical business information, multi-currency
capabilities, and low total cost of ownership (TCO).
Asian Paints chose Microsoft Dynamics NAV for SBIC and other subsidiaries. The
solution provided: A common technology platform that connected with the central
SAP system, ease of implementation and use across multiple independent sites,
system-wide data integration (including the Microsoft Office system), multi-lingual
support and international modules, and more. SCIB Chemical has improved its
customer service, increased productivity of administrative and IT staff, streamlined
financial operations, and enhanced business planning.
Olympia deployed Microsoft Dynamics GP for finances, supply chain, and manufacturing
processes, along with Business Portal for Web-based access. The company has seen 400
percent improvement in requisition management and reduced delivery delays by 85
percent. The CEO has gained better access to data using Business Portal, and remote
workers can take advantage of Business Portal and improved mobile messaging services.
 Sales Guide for Microsoft Dynamics Industry Solutions
Chemicals Manufacturing
Competitive Landscape
Competitor Name Product(s)
Additional Competitors

Chemicals • Ross Enterprise

• Oracle Discrete Manufacturing
• Oracle Flow Manufacturing Ross Enterprise Solution Suite
• Oracle Supply Chain • QAD
• Oracle Transportation Management
• Oracle Demand Planning QAD Enterprise Applications Suite (addresses very specific
Customer Centricity process markets)
• Siebel CRM • Infor
• Siebel Contact Center
• Oracle Fusion Middleware Infor ERP Adage, Infor ERP LX, relevant standalone solutions
• Oracle Data Hub
Oracle • Sage
Increased Asset Utilization
• Hyperion EPM Sage MAS 500, Sage Accpac, Sage PFW ERP (small business)
• Oracle E-Business Suite • IQMS
• Oracle Performance Management
• Demantra EnterpriseIQ ERP
Improved Logistics and Manufacturing • Lawson
Operations
• Oracle Business Intelligence
Lawson M3 Manufacturing Operations Suite
• Oracle Transportation • Ramco
Management Ramco Enterprise Series
• Agile
• 3i Infotech
All-in-One for Chemicals ORION PFM (specifically for process chemicals), ORION Enterprise
SAP • Same code base as SAP 6.0 ERP and SAP CRM + Chemical Industry Business Suite
• SAP offers 24+ industry solutions

Source: Microsoft Industry Perspective

Additional Competitive Resources The Microsoft Dynamics PartnerSource site also offers a rich range of sales and marketing
Visit the Microsoft Dynamics PartnerSource site, and see how Microsoft Dynamics information, tools, and resources.
Competitive Information provides you with the latest intelligence and tools to position
Microsoft Dynamics solutions against our competition.

©Copyright 2009 Microsoft Corporation. All rights reserved. Microsoft, Microsoft Dynamics, The Microsoft Dynamics logo, BizTalk, SharePoint, Windows Server, Windows Mobile, and Windows Vista
are all registered trademarks of Microsoft in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.
This document is for informational purposes only.

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