First Source Worldwide- A high-value model for manufacturing & distribution
Throughout the decades, the chemical and colorant industries have swayed the ebb and flow with the demands of its consumers. Before, chemical or colorant manufacturers could produce their products and provide adequate supply chains to regional and national users. As costs increased and environmental regulations expanded, the chemical and colorant manufacturing base in the America’s began to change. Many multi-national corporations had to seek locations where they could manufacture unimpeded by rising costs and regulations.
As companies began to “pull out” of manufacturing chemicals and colorants in the Americas, this left a void in the market that caused significant issues. Many downstream users who relied on the chemistries were left with drastic reductions in supply chains and long lead times to import the necessary products. At times, they needed to import a one to two-year supply of product. This caused long term cash flow versus inventory turn.
Regional players picked up the slack for several years, but only if they had the right position and prior investments in their capabilities and infrastructures. Those that did not invest in the future became stagnant, and either died a slow death or merged with a larger regional company. The only positive part for the downstream user was imported chemistries had very attractive price points even when factoring importation costs. But, over time, that benefit began to erode. Thus, the demand for simple in-and-out distribution, a stable supply chain, and quick availability of products rose swiftly. The Americas saw an aggressive increase in the number of distribution companies. For a while, only the prepared regional companies filled the void for the downstream user.
While providing a “service” model worked for a long time, these companies lacked any capability to manufacture, innovate new products, and provide technical support. Their “model” was simply based on oversaturation of distribution companies. There was little, if any, innovation and technical support.
In recent years, this trend reversed course with the acquisition of distribution companies by larger companies or capital investment firms. This forged a model of bigger entities, yet still with little or no innovation and technical support. A market opened for a high-value, small-to-midsize partner in the chemical and colorant industry. Here is where First Source Worldwide built our business, and the path we continue to take to support our clients beyond the demands of today’s market.
FSW is not only a value-driven distribution partner with ties to global multinationals, we are also a company providing technical and laboratory support for distribution products. This along with added features of manufacturing, supplying multitudes of chemical, and colorant products to multiple industries.
It is not uncommon for a prospective client to ask us for a particular pigment or dye product, and evaluate the need for laboratory analysis that may improve the client’s process and end product. We are able to manufacture a product better suited to their needs or offer specialized packaging options. By building the relationship this way, a client can take advantage of many services in one package. This highlights options they had not experienced from one, single “first source.”
Simple distribution entities merely flipping product at a high margin have their place, but are becoming less attractive to consumers. Established demands will continue to evolve for a versatile chemical and colorant company who manufactures and distributes their own products, provides technical and laboratory support, and combines this with competitive market pricing and stable supply chains that can be provided on a short notice basis.
The demand for the new model of supply chain is now in the spotlight. We continue to invest in ourselves to better serve our clients. We welcome the challenges ahead. To learn more about First Source Worldwide, click the picture below!
About the Author: Jerry Fitzpatrick
