Insights from a Roundtable of Industry Leaders
The chemical industry is navigating one of the most turbulent periods in decades. Geopolitical shifts, soaring energy prices, evolving sustainability requirements, and changing customer expectations are reshaping supply chains globally, and the chemical industry, traditional and generally inflexible, is bound to be affected. A recent executive roundtable conducted by EyeOn revealed how industry leaders view these dynamics and the implications for supply chain strategy.
Regionalization and shifting footprints
Executives highlighted a marked shift of chemical production capacity toward North America and Asia, largely driven by energy costs, trade tariffs and competitive capabilities. One participant noted: “There’s a clear relocation from Europe to North America, often driven by energy prices. We furthermore observe full supply chains move to Asia. For some companies, however, customers remain in Europe, so we must rethink how to supply them with longer lead times.” Another stressed the growing imbalance: “Europe is under increasing pressure and at risk of becoming a net importer, while capacity is growing in China.” As uncertainty grows, regional strategies are increasingly seen as a buffer: “Increased focus on localised, regionalised production to mitigate risks.”
Cost vs. resilience: An uneasy trade-off
Despite lessons from COVID-19, cost still dominates decision-making. “We are as vulnerable today as ten years ago. There is a clear sequence: cost over resilience. Resilience has little room to breathe,” one executive admitted. Others echoed the tension: “The risk everybody is willing to take is only further increasing, and that comes at the expense of resilience.” Executives acknowledged that while chemical supply chains are typically inflexible, the speed of decision-making is becoming critical. As one phrased it, “constant re-evaluation of our network, in search for the right balance between agility and cost competitiveness.”
Sustainability pressures and customer reluctance
Sustainability is reshaping strategy, but cost barriers remain. As acknowledged by all participants, sustainability must be profitable, which is increasingly challenging considering e.g. recent shifts in energy sources. Next to that, legislation is becoming a stronger driver than consumer demand. “We used to have one person in government relations. Now we have a whole team. If legislation changes and you’re not ready, you’re done.”
The new supply chain design agenda
Supply chain design considerations today extend well beyond the traditional challenge of site location, which is particularly complex in the chemical industry due to structural rigidity. In practice, this encompasses issues such as evaluating single versus multi-sourcing strategies, managing capacity expansions or reductions, optimizing demand allocation across supply sources, and quantifying risk exposure. It also involves reassessing allocation models, for example, weighing outsourced supply against floating inventory, and identifying opportunities to embed greater flexibility across the value chain.
The frequency of supply network studies is also rising sharply. What used to be a once-in-five-years exercise is now entering the Integrated Business Planning (IBP) horizon, supported by a multitude of “what-if” scenarios. Increased uncertainty and the push for resilience are driving this trend. The line between strategic network design and Sales & Operations Planning (S&OP) is blurring. Executives agreed that the value of such studies is not only in the solution itself, but in its explainability and the insights gained along the way: “The value of a solution is in the ‘why’.”
An adaptive supply chain keeps your company ahead
The roundtable revealed that resilience, agility, and adaptability are now central in decision-making, also in the chemical industry. External forces such as energy economics, regulation, ESG requirements, and geopolitics are accelerating structural changes. Although chemical supply chains are not easily adaptable in terms of footprint, reactive processes and tools also contribute to supply chain adaptability. As one participant concluded:
Beyond tools, people, process, and data
The old model of long, cost-optimized supply chains is increasingly unsuited for today’s volatile business environment. Frequent reassessments have become the new norm, forcing leaders to question not only tools, but also people, processes, and data to enable timely response to ongoing changes.
Key questions now stand out:
- How should organizations balance cost efficiency with resilience?
- What new skills and roles are needed to support rapid reassessments?
- How can governance and data management keep pace in a world where strategy may shift every quarter?
The future of chemical supply chains will be defined by dynamic operating models, where resilience and adaptability sit alongside cost efficiency as core strategic goals. With deep chemical industry expertise, advanced modeling capabilities, and state-of-the-art tools, EyeOn is uniquely positioned to help organizations navigate today’s uncertainty with confidence. Want to explore how we can strengthen your supply chain and decision-making? Connect with Stijn or Dina to get started.