DSM: Building a Platform for Innovation in a Volatile Raw Material World
8:43 AM MDT | April 4, 2011 | By DIMITRI DE VREEZE
By Dimitri de Vreeze, President, DSM Resins & Functional Materials
Last year at DSM we announced a new strategy to address unmet needs in relation to three key global societal trends; global shifts; climate and energy; and health and wellness. We said that innovation, along with sustainability, a focus on high growth economies and partnerships and acquisitions, would be a key driver in helping us meet these needs.
At DSM Resins & Functional Materials, we have set ourselves on a path that we feel will help us meet this ambitious agenda by creating a new structure for our specialty resins and functional materials businesses that aligns our business to the changing needs of the markets we serve.
Under this new structure, we have combined two specialty resins Business Units – DSM Powder Coatings Resins and DSM NeoResins+ - into a single new Business Unit, DSM Coatings Resins. The move, we believe, will help us concentrate our innovation on those areas of our business that will enable us to help our customers in the coatings industry grow.
We believe this is necessary as the pace of change in our industry is only going to accelerate, as customers continue to respond to the demands of end users and regulators by asking us for better, lighter, greener products and solutions.
Aligning our approach to the coatings industry more closely with that of our customers will also help us optimise our cost structure, which continues to be affected by raw material price volatility.
This volatility in the specialty resins and functional materials segments in which we operate is the dominant price dynamic. This means that, as a resins supplier, we often find that by absorbing costs, we give ourselves little opportunity to explain to our customers the actual value we are able to generate for them through our innovation.
The danger is a creeping commoditisation in value chains where innovation ceases to be recognised to the point where, ultimately, it becomes no longer viable for us to re-invest in our business, thus starving our customers of the future innovation they need to grow and forgetting the undisputable trend in stricter legislation to come up with more sustainable products.
This situation has not been reached yet in the specialty resins segment but it is a threat. We believe, however, that our customers see the value of innovation and see the stricter upcoming legislation and recognise that we need sustainable margins if we are going to keep on providing them with possibilities for growth in the years to come. By creating DSM Coatings Resins, we believe we have built a structure that will do just this, as one business unit, with one vision, one approach and a full commitment to our customers.
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