ChemVM Blog

7 Criteria to Select a Chemical Service Provider

August 11, 2021   |   4 min read time    Michael Van Marle Michael Van Marle

Finding the right chemical service provider (SP) for your project requirements and services needs can be quite difficult. Service needs range from chemical and physical blending to packaging, warehousing and transportation. Most companies actually spend 70% of their time on searching and quoting activities and only 30% on sample testing and purchasing. There are many factors to consider when making a selection, such as assuring the potential partner:

  • Has the precise capabilities that you seek
  • Handles IP management
  • Has established quality practices and business processes

 

Advantages of Outsourcing

Outsourcing can provide many advantages like eliminating the need to invest in equipment and skilled labor, resulting in lower asset costs and fixed costs. It also offers increased flexibility and cheaper raw materials. By outsourcing, you can focus on what’s important to your company and let the service provider solve common problems by providing:

Technical capabilities: You may lack in-house R&D, manufacturing, packaging, warehousing and logistics capabilities. Whether it is a new product that is being introduced into the market or an existing operation, you can outsource the capacity either partially or completely to an experienced partner.

Flexibility: You may need a partner to manage surges in demand caused by factors such as seasonality. A professional SP should be able to assist in turning on production when it’s needed and off again when required.

CAPEX/OPEX: A project may require certain equipment needs that you would otherwise have to purchase. Outsourcing can give you access to a wide variety of different equipment without having to pay for the purchasing costs or the overhead costs of the space needed to house the equipment.

Logistics: Partnering with SP’s closer to the final destination prevents you from having to ship products over long distances, bringing cost and delivery efficiencies.

 

7 Criteria to Consider When Choosing a Chemical Service Provider

Selecting a service provider for your chemical project is a critical decision that requires careful analysis. Here are 7 criteria to consider:

  1. Equipment & Processing Capabilities Does the SP have the appropriate processing and equipment capabilities, raw material storage and laboratory equipment to satisfy your needs? How flexible are they - can they handle situations of increased demand? Do they have the capability to scale?
  2. Packaging and labeling Different chemicals require specific packaging options. A SP should have the optimal packaging solutions for your product, whether it is packaging into jars or repackaging liquid bulk chemicals into drums or IBC’s.
  3. Warehousing & Logistics Some SP’s can serve as a temporary warehouse for your raw materials and finished goods. Logistics is also a critical issue to consider – for instance, do you need a SP with multiple locations and with national coverage? Choosing a SP close to the delivery point can increase savings. Long transit times mean higher costs, less flexibility and responsiveness. This may result in overstock because of fear of running out of inventory.
  4. Quality systems The SP needs strong quality systems in place. Whether you’re talking quality assurance (QA) or quality control (QC), it’s important that your future partner has a strong quality system in place before you initiate a business relationship. When selecting your SP, it’s in your interest to verify if your potential partner has a system of safeguarding quality throughout the whole process, and the ability to focus on the detection of issues with a product or service.
  5. Experience Seek partners that are both experienced and established. Look for factors like years in business, customer retention rate, customer reviews, growth rate and financial stability.
  6. Technical requirements & Certifications Make sure that the selected SP has the necessary market certifications like EPA and Kosher; quality certifications like, for example, ISO and process certifications.
  7. Materials/Material planning Look for turn-key SP’s that can include the raw materials and logistics as well as have the required blending & packaging capabilities. With a turnkey facility, you only need to provide your formula and the SP can do the rest. The SP's relationships with their suppliers should be strong to ensure the best materials and process. Ask for references to double check this. 

Conclusion

Outsourcing your chemical project to a SP is a critical decision that can save you time and money but requires careful research and analysis of numerous factors to ensure success. Unfortunately, the traditional search and quoting process is inefficient and often leads to undue frustration, sub-optimal partnerships and compromised quality. ChemVM Technologies aims to change this with a customer-centric online experience that is efficient and thorough. Using our precise matching software that efficiently matches your unique project to ideal service providers, you can cut the time spent on searching and quoting activities from months to days. In turn, using ChemVM, SP’s can connect with best-fit customers matched to their capabilities to maximize profit and capacity utilization.

 

Chemical Process Engineers and Procurement Leaders Get Started with ChemVM

Chemical procurement and supply chain leaders, chemical process engineers, entrepreneurs and other buyers needing a private label product made, market testing, production outsourcing, or formulation and process engineering support can get started by entering their project at chemvm.com/customers.

 

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