Achieving Operational Excellence:

Five Elements of Success in the

Global Chemicals Industry
The chemicals industry has been hit by a steady
stream of difficult events, centered on a set of
market-changing discontinuities.
Remaining unease across global markets, ongoing price pressures
caused by new competition and decreasing demand, changing
regulations, and an emphasis on “green” supply chains continue
to add volatility and uncertainty to the global chemicals sector.

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After a period of sustained growth in
the early part of the last decade (15%
CAGR between 2002-2008), the $2.6
trillion chemicals industry is looking
to recapture its lost momentum—and
lost profits.
Where to turn? Given the “new
normal” economic climate, we believe
a razor-sharp focus on operations will,
perhaps more than ever before, help to
separate the winners from the losers.
Operationally excellent companies
historically have demonstrated an
ability to emerge from a downturn in
a stronger position. These companies
achieve superior capital efficiency,
operating margins and growth through
a laser focus on leading industry KPIs.
Regardless of a company’s market
position, winners consistently
deliver results by getting the five
big operational calls right:
First, they have a deep understanding
of their “competitive essence,” which
they have rigorously aligned with their
operations and structures.
Second, they build organizations that
out-structure their competition.
Third, they have the capabilities,
processes, and skills to out-execute
competitors.
Fourth, they find a unique blend of
structural and executional changes
to drive operational excellence.
And finally, they define the right
“change journey” that will lead them to
operational excellence and consistently
high performance.
“Profitable growth in a competitive
global market can only be achieved
through operational excellence,” says
Dr. Jürgen Hambrecht, chairman of
the board for BASF. “Only a long-term
view creates sustainable value.”
BASF has sustained its growth through
a global operational excellence program
intended to generate €1 billion in
additional earnings annually. But not
all companies can demonstrate such a
track record of operational excellence.
Accenture research shows that 95
percent of senior executives across
industries doubt that their companies
have the right operating model to
support their international strategy.
As discontinuities grow in consequence
and in frequency, managers run ever
greater risks of making poor decisions.
They can no longer afford to do so.
Still picking up the pieces from the
global financial crisis, most executives
are already on a journey to change
their company’s operational models,
whether they recognize it or not.
How they make the journey will
have a significant bearing on their
company’s eventual positioning. It
is imperative, therefore, to select the
appropriate change journey with care,
and to embark on it with wholehearted
commitment and full preparation.