Optimising direct spend in the chemical sector to strengthen supply chain resilience

Volatile markets and increasing supplier risks are forcing chemical companies to rethink how they manage direct spend. By adopting structured sourcing strategies, organisations can both unlock significant savings while also enhancing supply chain resilience.

Why direct spend optimisation matters

In the chemical industry, direct materials such as resins, solvents, and catalysts make up a significant portion of production costs. Yet many companies continue to rely on long-standing supplier relationships and static procurement approaches.

This traditional model often results in missed savings opportunities, heightened supply chain risks, and unnecessary exposure to raw material price volatility. By contrast, structured sourcing strategies enable organisations to capture savings, strengthen resilience, and improve supply assurance.

The challenges facing chemical procurement

In the current environment, chemical companies must navigate three recurring challenges:

• Price volatility: Raw material costs fluctuate due to geopolitical tensions, global crises, and demand shifts, requiring constant monitoring and proactive supplier engagement to mitigate cost risks and ultimately avoid unnecessary price increases or threat to profit margin. 
   
• Supplier dependency: A narrow supplier base, particularly if limited by geography, may simplify operations but reduces negotiation leverage and increases risk in the event of supply chain disruption.
   
• Regulatory constraints and homologation timelines: Unlike other industries, supplier qualification in chemicals is a lengthy, complex process, limiting procurement flexibility. Proactive collaboration with R&D is critical to prioritise homologation activities with the highest savings potential.