Distribution channels, once seen as mere conduits for product delivery, have now transformed into strategic assets. The digital age has further amplified the importance of distribution, offering new avenues such as e-commerce, direct-to-consumer models, and sophisticated logistics networks that were unimaginable just a few years ago.  

Leading experts discussed the evolution of distribution strategies at the 4th edition of NextGen Chemical and Petrochemical Summit 2024 organized by the Indian Chemical News in Mumbai on July 11-12, 2024.  

 The eleventh session, ‘Distribution Strategies for Fuelling Industry Growth’ was moderated by Dr Alok Sharman, Ex Regional Director – South Asia and MD – India, Brenntag Ingredients. 

Outlining the latest trends and need for robust distribution mechanisms, Dr Sharman stated: “When you manufacture a product it has to go out of the factory and the right distribution is one of the most fundamental ways is to export or distribute nationally. The Indian chemical industry that was at US$ 212 billion in 2022 is expected to reach U$ 1 trillion by 2040. There is a growing demand for automotive, personal care, construction, lubricant industries and also agrochemical, dye-stuff, intermediates and vaccines. Going forward, we need to have R&D, digital transformation contract manufacturing, focus on quality and the four parameters of safety such as environmental compliance, talent management, training and obviously sustainability. The question is whether we are abiding by these parameters in distribution?”

 “Globally, there is talk about transport safety to distribution efficiency to emergency response in terms of what happens when a tanker leaves a factory. When we are transporting explosives or hazardous products, it is important that driver knows how he is going to handle any problems. I was surprised that a lot of transporters who actually have these hazardous chemicals don't even know what they are transporting. We need to train the transporters and also have the first responder training. We see a lot of tankers being cleaned on the roadside and the water just being drained out. We need to get into the basics and have ISO containers and adopt good practices. The green warehouses are coming up which means we save 30% of energy there as we have water harvesting, natural lighting, natural ventilation, and solar energy,” added Sharman. 

Explaining the current scenario with examples, B. K. Sethuram, Former MD - India, Celanese said, “In the speciality chemical space, the multinational and large companies who are actually looking to use a lot of distribution, want to focus on their core competencies and key accounts besides new application development. Hence, they leave a lot of the distribution to third parties. Then there are the second group of companies, a lot of the Indian companies and others too who actually have large sales forces. Firstly, what distributors bring to companies is the market and geographic access. The second basic expectation is solid inventory and we want them to become the buffers for our business with our customers. Third is financial and credits which is something that many of the large companies don't want to deal with and so we expect them but these are what I call stakes but if I look at value additions. 

“Let me take two aspects that perhaps distributors should think about. One is all this whole technical and application support kind of space, whether it be to new applications for existing customers or it be totally new customers. The specialty chemicals companies want distributors to be doing a lot of that work. For example, thermoplastic elastomers versus replacing theros set rubbers there. It not simply taking a product and telling a customer to run this and approve. You have to tell them the benefits of thermoplastic elastomers and need to invest in equipment because they have to change their equipment. We expect distributors to be doing these kinds of value added things. The second aspect could be about serving certain specific customers in a high tech manner. The automotive industry or the electronic industry that will become really big in India in the coming years, and will require very different services from what has traditionally been. The simple things like real time monitoring of inventory and ERP systems so they are able to operate efficiently. It is about a lot of digitization that is coming and also about this whole safety and sustainability. Automotive, electronic and increasingly most of the industries are going to expect suppliers through Scope 1 and Scope 2  kind of standards. Distributors are an extension of their sales house and thus extend the CRM system to them,” added Sethuram. 

Speaking on how green logistics will play a critical role in the future distribution system, Rajnish Khandelwal, President, J.M. Baxi & Co. said, “Logistics partners are equally important for the companies to be competitive in an international forum. We have a big challenge but at the same time we have a client which also understands the important role that we play. As logistics partners,we are working over time to ensure that when your product lands in any part of the world, it is equally green as it would have been in some other developed countries. In Indian setup wherein you find even some of the ISO tanks are not being cleaned at proper cleaning stations as a few players take shortcuts which is not the right way of doing things and the day is not far off when your customers in other part of the world would not be accepting your product unless you have followed that green path. Given the seriousness, logistics players are trying to make the entire supply chain green. To explain it, I will divide it into three parts, mainly right from your factory to the customer's warehouse you have a road movement happening from the factory to the nearest port. You have the cargo being handled at the port and you have a shipping leg and once it reaches the final destination there is the same activity at the other end also.” 

“In terms of shipping, all ships are regulated by the International Maritime Organization (IMO) which has laid up a very stringent ambitious Target for itself wherein it has said by 2030 all ships in the world would net zero up to 30% by 2040 and 80% by 2050. Ships are moving in that direction and we already have all the ships in the world today are using BLS 4 that is very low sulphur fuel oil. The next step is to switch over to cleaner oils such as LNG and later hydrogen and after that we are also looking at ammonia which are still not available in the commercial state. In Asia if you see a ship going out from China to Europe, you have LNG bunkering available in China, you have one available in Malaysia and you have two options in Singapore and then right up to Europe you don't have anything available. Hence, we need to develop these ecological systems in India such as at Port of Cochin where we can have ships adapting to bunker fuel. We are moving towards cleaner fuel and it is happening in stages, maybe one year to two year down the line, there will be more bunkering options available,” added Khandelwal. 

Pratyush S. Kadam, Head – Procurement & Logistics, Evonik India while stressing on the need for alliances mentioned: “Like we see strategic alliances at global level or maybe at MNC level, we similarly need to have those alliances at warehouse level which means whenever producers are available in one area or one region, they distribute it to across different parts of the country by clubbing together a system on the lines of Blinkit. In a similar way, I expect this to happen somehow in an industry where we have different transporters and definitely the companies are supporting different sustainability initiatives. While saying that, those companies, warehouse service providers and transporters where they have visibility into customer details and  different types of supply chain. For example, we have a paint industry running in different regions, supplying paint to different areas and then for some FMCG industries we import a lot of things. This can be utilized for each and every segment in this industry including speciality chemicals. In terms of how it can be done together or how this can be treated separately, overall awareness in this industry has to go up and there are certain exercises going on to make sure that this happens very soon and this will benefit the overall supply chain a lot. Costing is certainly a reality and it seems that this may not be very cost economical model but definitely to save the carbon footprint this will definitely help companies to claim those green credits and then in turn it will help us to evaluate to a next level of supply chain strategies or alliances in smaller scale where this will directly or indirectly benefit small suppliers. Then this can be done through warehouse service providers as well as partners.” 

“I learned from the market about certain companies who are working to bring those 20 litre plastic drums back to their industry or processing unit. They have certain IP and processes developed to clean those drums and they are directly discussing with the paint companies for those requirement they have come up with the facility as well uh and these companies are making sure that these drums can be sent back for relabeling and this packaging requirements will also be taken care of by these companies. So how to use the life cycle for a particular drum and that can also be effectively passed on to different areas with different packaging requirements slowly but also there are examples in the industry where this has been taken care of,” Kadam added further. 

Outlining the need for customization of distribution services as per customer needs, Daljit Singh Kohli, India Representative, Port of Port of Antwerp-Bruges said: "With all the disruptions happening, you don't know where your supplies are going to end. Exporters are very concerned about their deliveries to the customer and now the trend has slightly shifted from just in time to just in case something goes wrong. The companies are thinking whether their customers have to suffer or can they actually stock these products. They are also turning to all these warehousing companies that are there at the port now, actually tuning to give in a lot of value addition and customization. In case the things go wrong, customization could help tackle the delays such as custom clearance, quality control etc, ensuring smooth transition. Inventory management at ports including customization helps in mitigating a lot of issues. Now customization is different for each product and it could be either a service customization or a product customization. The service customization is more like when you send your product to offloading. The unloading is one aspect of the companies that they do but they would also assist you in arranging the next mode of transportation to your end deliveries plus you also ensure that your freight forwarding to your customers are taken care of, quality control is taken care of.” 

“When it comes to product customization you know every product will require a different kind of customization and it depends upon where what kind of product it is. For example, steel actually goes from India in coil forms so that it can be decoiled and spitted, and galvanizing can happen at the port area. You have a lot of end product customization where  our galvanizing can happen and your product could actually be sand blasted in the port area. These are really value additions that can happen in terms of the chemical sector. While sitting in India you are sending a product and then in their warehouse or the storage tanks, these companies can do your complete end-to-end delivery for the customer as they can manage your inventory and offer services based on whether your product requires a lot of cooling or heating. The bonded warehousing at the port can help companies stock their products and only pay custom duty when they release the product out of the warehouse,” added Kohli. 

The Summit was supported by DCM Shriram Chemicals as principal partner, Somaiya Vidyavihar University as academia partner, Cadmatic as platinum partner and Andhra Pradesh Economic Development Board (APEDB), Govt. of Andhra Pradesh as state partner.

Gold partners for NextGen Chemicals & Petrochemicals were Epsilon Carbon, Forbes Marshall, Gharda Chemicals, Indofil Industries, Ingenero, IPCO, Jaaji Technologies, Moglix, PIP, Port of Antwerp - Bruges, RIECO and Re Sustainability. Associate Partners are: HPCL and Nuberg EPC.

Supporting partners included Aarayaa Advisory Services, Archroma, India Glycols and Tata Steel Special Economic Zone and industry association partners are: ACFI, AMAI, CropLife India, Gujarat Chemical Association and PMFAI.