Operating an Integrated Business Model

This chapter provides an in-depth overview of Clariant’s integrated business modelBusiness ModelThe business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders.View entire glossary . It presents the company’s holistic approach to creating value, providing an overall understanding of the different aspects of Clariant’s business, which are depicted in more detail in the subsequent sections of this report and in the Review on Performance, People, and PlanetPerformance, People, and PlanetComprises a discussion of Clariant’s material topics previously provided in the Multicapital Review.View entire glossary . The chapter also explores the company’s external environment and its organizational structure, two important parameters affecting business activities. In addition, it portrays Clariant’s core processes for creating value.

A holistic approach to value creation

Long-term value for all stakeholders

Clariant’s business modelBusiness ModelThe business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders.View entire glossary reflects how the company creates long-term value for all stakeholders – customers, employees, shareholders, and the environment. Figure 005. It offers a detailed overview of the company’s multidimensional approach to value creation, covering both tangible and intangible, financial and non-financial aspects of the business – categorized under Performance, People, and Planet:

Performance

Performance covers the pool of funds to produce goods and provide services, which is available through both financing and sales. Moreover, Performance includes knowledge-based intangibles used and created by the company and its partners: intellectual property (e.g., patents, trademarks, copyrights, software rights, or licenses) and »organizational capital« (e.g., tacit knowledge, systems, procedures, and protocols). In addition, Performance covers physical objects owned by the company (e.g., buildings, equipment, and products).

People

People includes Clariant’s employees and their competencies, capabilities, experience, and drive to innovate, as well as their identification with the corporate values and their ability to understand and implement Clariant’s strategy. Furthermore, People covers the company’s key relationships with primary stakeholders and network partners, in particular, Clariant’s strong customer relationships. This can include shared values, trust, engagement, and related intangibles associated with Clariant’s brand and reputation.

Planet

Planet includes the renewable and nonrenewable environmental resources and processes that support or affect the company’s prosperity. Examples include air, water, and land resources that Clariant utilizes for its activities.

External environment

Clariant’s integrated business modelBusiness ModelThe business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders.View entire glossary provides a strong foundation for the company to successfully navigate the current market dynamics in the specialty chemical market, including the ongoing challenges posed by the COVID-19 pandemic. Read more in external environment

Core processes for value creation

Idea to MarketIdea to MarketCore business activities that create additional value are structured into three value creation phases at Clariant. Idea to Market encompasses scouting global trends and ideas, scoping out customer needs, executing product development and commercializing, and monitoring product performance.View entire glossary , Market to CustomerMarket to CustomerCore business activities that create additional value are structured into three value creation phases at Clariant. Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process.View entire glossary , and Customer to CashCustomer to CashCore business activities that create additional value are structured into three value creation phases at Clariant. Customer to Cash encompasses planning to balance demand and supply, optimizing sourcing for spend effectiveness, constantly monitoring production for high efficiency, and delivering finished goods on-time and in-full as required by the customer.View entire glossary – these are the three key value-creation processes at the core of Clariant’s business modelBusiness ModelThe business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders.View entire glossary . By turning customer needs into innovative and sustainable solutions, the company creates value for all stakeholders. Clariant’s Innovation Excellence, Commercial Excellence, and Operational Excellence initiatives support these processes.

005BUSINESS MODEL

Idea to MarketIdea to MarketCore business activities that create additional value are structured into three value creation phases at Clariant. Idea to Market encompasses scouting global trends and ideas, scoping out customer needs, executing product development and commercializing, and monitoring product performance.View entire glossary : This process involves scouting global trends, identifying business opportunities, exploring unmet customer needs, developing products, as well as commercializing and monitoring business performance. It is essential for developing a well-filled product and service pipeline that delivers innovations to address customer needs. Read more in Core processes for value creation
Market to CustomerMarket to CustomerCore business activities that create additional value are structured into three value creation phases at Clariant. Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process.View entire glossary : This process includes assessing market attractiveness, developing clear value propositions, and capturing the value created through the relationship-building and sales processes. To achieve a seamless customer experience, these steps are well connected and focused on customer needs. Read more in Market to customer
Customer to CashCustomer to CashCore business activities that create additional value are structured into three value creation phases at Clariant. Customer to Cash encompasses planning to balance demand and supply, optimizing sourcing for spend effectiveness, constantly monitoring production for high efficiency, and delivering finished goods on-time and in-full as required by the customer.View entire glossary : This process balances supply and demand, optimizing sourcing for spend effectiveness, monitoring production efficiency, and delivering finished goods to customers on time and in full to achieve safe, reliable, and efficient operations that support profitable growth. Read more in Customer to Cash

Input

To create value, Clariant draws upon a variety of resources and relationships for its business activities. For three areas, Clariant identified key performance indicators to monitor its performance.

Performance: e.g., R&D spend, raw material spend, active innovation projects, scientific collaborations, production facilities, raw material procurement
People: e.g., new employees hired, training hours provided, client interviews conducted, percentage of raw material supply base by spend covered by sustainability evaluation
Planet: e.g., energy consumption, water consumption

Output

In line with the inputs, Clariant also monitors the outputs of its business activities. The company identified key performance indicators for three areas.

Performance: e.g., sales growth, return on invested capital (ROIC), EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary margin, patents at year-end, production volume, products awarded the EcoTain® label
People: e.g., lost-time accident rate (LTAR), staff at year-end, net promoter score, outcomes of the biennial customer satisfaction survey
Planet: e.g., greenhouse gases, wastewater

Purpose-led strategy with ambitious financial and non-financial targets

Based on Clariant’s newly developed purpose »Greater chemistry – between people and planet,« and based on its clear vision, mission, and strong corporate values, Clariant developed a new strategy. With this purpose-led strategyPurpose-led strategyClariant aims to move toward top-quartile results in specialty chemicals in terms of growth, profitability, sustainability, and people. Based on its new purpose, »Greater chemistry – between people and planet« Clariant unveiled a new purpose-led strategy with four dimensions, accompanied by new financial and non-financial targets. The strategy reflects Clariant’s ambition to create value with innovative chemistry and a sustainability focus, putting customers, employees, and the planet at the center of all activities.View entire glossary and the related financial and non-financial targets, the company is committed to creating value while striving to achieve top-quartile performance compared to specialty chemical peers. Read more in Purpose-Led strategy

Impact on global sustainable development

In addition to Clariant’s strategic objectives, the company follows the objectives set by the United Nations Sustainable Development Goals (SDGs). In relation to the SDGs, Clariant evaluates the positive and negative impacts of its products and services, operations, value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary , corporate citizenship activities, and collaborations. Read more in Contributing to the SDGs

While contributing to all 17 SDGs in varying degrees, Clariant identified six priority SDGs: SDG 3 »Good Health and Well-being,« SDG 7 »Affordable and Clean Energy,« SDG 9 »Industry, Innovation, and Infrastructure,« SDG 12 »Responsible Consumption and Production,« SDG 13 »Climate Action,« and SDG 17 »Partnerships for the Goals.«

Value creation in the financial year

With customer-oriented products and solutions, Clariant and its business areas created value for the company and its stakeholders in the 2021 financial year, enhancing Clariant’s growth and profitability. Read more in Value Creation

Reviewing value creation

To measure and track the financial and non-financial value that Clariant creates for all stakeholders, the company monitors key performance indicators, including the ones mentioned under »Inputs« and »Outputs.« These indicators are associated with Clariant’s material topics, which were identified through a comprehensive materiality assessment.

Performance: »Business Growth & Profitability,« »Engaging in Growing and Emerging Markets,« »Corporate Governance,« »Risk and Crisis Management,« »Business Ethics and Compliance,« »Supply Chain Resiliency,« »Innovation and Technological Advances,« »Product Stewardship,« and »Growth Opportunities from Sustainable Products and Solutions.«
People: »Employee Engagement and Well-being,« »Diversity, Equity, and Inclusion,« »Occupational Health and Safety,« »Customer Relationships,« and »Human and Labor Rights.«
Planet: »Resource Efficiency and Environmental Protection,« »Climate Protection,« »Circular Economy,« and »Bio-Based Economy.«

External environment

Clariant had to navigate a dynamic business environment in 2021. Enduring trends, such as the increasing industry focus on sustainability, continued to shape the business agenda, while high inflation and COVID-19 continued to significantly impact the value chains we are operating in.

Global economic setting

In 2021, the global economy recovered strongly from its low level in 2020, especially in Europe and North America, although momentum decreased slightly at year-end due to renewed COVID-19 outbreaks. Strongly increasing demand for goods combined with some COVID-19 induced constraints caused disruptions in supply chains with strong global effects, such as inflated commodity prices, constrained production due to missing components in some sectors, low inventories of natural gas and oil, shortage of labor, logistical delays, and massively increased transport costs. These factors in combination with fiscal policy contributed to rising consumer prices across the globe. On an annual basis, global consumer price inflation increased from 2.2 % in 2020 to 3.8 % in 2021.

Impact on the chemical industry

Typical raw materials for the chemical industry include crude oil, natural gas, metals, and minerals. Figure 006 Supply chain difficulties arising from the pandemic caused a shortage in these primary products such that prices increased significantly. Strong demand for chemical products and restocking led to strong order books, rising prices, and a strong recovery in sales and margins in the chemical Industry, with capacities often well utilized, with a few exceptions where supply or demand was constrained by stretched supply chains, notably in the automotive sector.

006THE ROLE OF SPECIALTY CHEMICALS FIRMS IN THE CHEMICAL INDUSTRY VALUE CHAIN

graphic: Clariant: the role speciality chemicals firms in the chemical industry value chain

Even under these dynamic trading conditions, customers and suppliers continued to develop their sustainability road maps, with alternative future feedstocks and sustainable products and solutions looking more attractive in both sustainability and economic terms.

COVID-19 challenges attenuated

Apart from supply chain issues, the overall chemical market evolved to overcome COVID-19 difficulties in 2021. Based on their 2020 experiences, many companies established open lines of communication with their customers through well-tried digital channels. They also learned to switch to remote work and operations as needed.

Focus on sustainability and performance

Globally, the chemical industry is one of the largest consumers of energy. This results in significant contributions to global greenhouse gas emissions. Chemical companies also use oil and gas as feedstock and handle hazardous materials. While this confers great responsibility, it also creates opportunities for companies to become industry leaders in sustainable development, capturing competitive advantage in the process.

Despite the challenges from the pandemic, the trend toward increased sustainability continued in 2021 with new proposed legislative initiatives and increasing customer and investor focus on the topic. Chemical companies are expected to substitute unsustainable products, while offering innovations for a low-carbon, circular economy. Consequently, an increasing number of companies set new sustainability targets and announced sustainability initiatives.

Mounting importance of the Chinese market and industry

China is the world’s largest market for chemical sales. It accounts for about 35 % of the global specialty chemical markets. There is a particularly high demand in its growing petrochemical industry. China’s current five-year plan centers on innovation as the core concept to drive the country’s modernization, promoting high-end, intelligent, and green production.

Local presence on the ground is a key to success in the Chinese market. This goes for manufacturing, lab support, products, and management. Therefore, chemical companies are making increased efforts to be close to their Chinese customers and partners and to work locally.

While chemical markets rebounded from the lows of 2020, recording growth in all regions, the Chinese market outperformed the other regions, increasing its relative market share compared to Europe and the U.S. in 2021.

Organizational structure

Clariant is headquartered in Muttenz, Switzerland. The Group’s continuing operations comprise five business units: Industrial & Consumer Specialties, Catalysts, Oil and Mining Services, Functional Minerals, and Additives. These business units and the Business Line Biofuels & Derivatives are reported in the three Business Areas Care Chemicals, Catalysis, and Natural Resources. The business areas form the basis for Clariant’s reporting on a quarterly basis. For the former Business Unit PigmentsPigmentsPigments are substances used for coloring; they are used in a technical manner, for example in the manufacture of dyes, varnishes, and plastics. In 2020, Clariant launched the divestment process of its Pigments business, which was completed on 3 January 2022.View entire glossary , which had been reclassified as discontinued operations in 2019, Clariant signed a divestment agreement in 2021. The closing of the transaction was completed on 3 January 2022.

The organizational structure further comprises nine service units, and eight corporate functions. The responsibilities of the Executive CommitteeExecutive CommitteeManagement body of joint stock companies; at Clariant the Executive Committee currently comprises four members.View entire glossary include the financial and operational management of the Group. Figure 007

007CLARIANT ORGANIZATIONAL STRUCTURE

graphic: Clariant: organizational structure

The composition of the three business areas is shown in Figure 008.

008BUSINESS AREAS

graphic: Clariant: overview business areas

Corporate Governance Report

Beyond the organizational structure, the Corporate Governance Report provides detailed information on the governance aspects underlying Clariant’s business.

Core processes for value creation

The processes Idea to MarketIdea to MarketCore business activities that create additional value are structured into three value creation phases at Clariant. Idea to Market encompasses scouting global trends and ideas, scoping out customer needs, executing product development and commercializing, and monitoring product performance.View entire glossary , Market to CustomerMarket to CustomerCore business activities that create additional value are structured into three value creation phases at Clariant. Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process.View entire glossary , and Customer to CashCustomer to CashCore business activities that create additional value are structured into three value creation phases at Clariant. Customer to Cash encompasses planning to balance demand and supply, optimizing sourcing for spend effectiveness, constantly monitoring production for high efficiency, and delivering finished goods on-time and in-full as required by the customer.View entire glossary are essential to create value for all stakeholders. Turning customer needs into innovative and sustainable solutions, they form the core of Clariant’s business modelBusiness ModelThe business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders.View entire glossary .

Idea to Market

Clariant believes that continuously investing in innovation is key to future success – even in times of economic uncertainty. Innovative chemistry is one of the four dimensions of the company’s new purpose-led strategyPurpose-led strategyClariant aims to move toward top-quartile results in specialty chemicals in terms of growth, profitability, sustainability, and people. Based on its new purpose, »Greater chemistry – between people and planet« Clariant unveiled a new purpose-led strategy with four dimensions, accompanied by new financial and non-financial targets. The strategy reflects Clariant’s ambition to create value with innovative chemistry and a sustainability focus, putting customers, employees, and the planet at the center of all activities.View entire glossary . Based on the strategic approach to innovation, as well as on extensive Research & Development resources, Clariant develops high-performing solutions to satisfy unmet customer needs, while adding value with sustainability. To find these solutions, Clariant places a particular emphasis on the understanding of market and customer needs through collaboration and the leveraging of digitalization throughout the innovation process.

Market developments characterized by sustainability

Sustainability considerations become more and more important for the entire value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary . With end customers attaching increasing importance to product ingredients and sustainability performance, these topics are critical for Clariant’s customers as well, particularly in customer-facing market segments, such as the electrical and electronics, cosmetics, and home care segments. Regulatory requirements like the European Union’s Green Deal or similar developments in other regions also highlight the fact that sustainability includes both operations as well as the transformation of the product portfolio.

Due to its systematic link between sustainability and innovation, Clariant is in an excellent position to benefit from this ongoing shift. The business areas have launched new products in 2021 that combine excellent performance with clear sustainability benefits.

New business opportunities through circularity

Enhancing circularity is one important dimension of adding value through sustainability. Companies in the chemical sector need to find new ways to close material loops by reusing products at the end of their life cycle. This offers new business opportunities for Clariant, as the company has been developing new business models systematically for many years, using redirected waste streams for new applications.

Digitalization: step-changing R&D and innovation processes

With a strong focus on sustainability-driven innovation, digital tools are powerful enablers of Clariant’s innovation strategy. Digitalization of R&D and innovation processes enables significant gains in efficiency, increasing speed and optimizing resource consumption. Data capturing, advanced data analytics, computational science, and the setup of the required IT infrastructure, combined with lab automation and high-throughput experimentation (HTE) capabilities, allow Clariant to shorten its innovation cycles and reduce the time to market. In addition, Clariant uses digital tools to develop new digital business models and explore new ways to collaborate with customers. Digital collaboration solutions have become even more important due to the COVID-19 pandemic.

Five Technology Platforms for Clariant’s research activities

Clariant’s innovation activities are based on a strong network of more than 860 employees. R&D is performed in three flagship Innovation Centers in China, Germany, and India, where several BUs are represented. Dedicated centers with a focus on biotechnology, high-throughput experimentation for catalysts and consumer care innovation complement the global network of Clariant’s R&D Centers based on a contract R&D model. Moreover, Clariant operates 45 Technical Centers across all regions to ensure proximity to customers. The company structures its research activities along five Technology Platforms Figure 009, which collaborate closely with the business units to provide them with crucial technology expertise and innovative solutions:

Chemistry & Materials: This Technology Platform focuses on new chemistries and formulations that meet emerging value propositions of Clariant’s customers, while providing a clear sustainability benefit. Hosted within Business Unit Industrial & Consumer Specialties, this platform serves all business units to leverage synergies.
Biotechnology: This Technology Platform focuses on the valorization of biomass toward biofuels and biobased chemicals by supporting the Business Line Biofuels & Derivatives in further developing the EcoTain®-awarded sunliquid® technology and all relevant business units.
Catalysis: This Technology Platform develops innovative catalysts to increase the resource and energy efficiency of chemical processes and to reduce their environmental footprint. Hosted within Business Unit Catalysts, one specific focus of the Techology Platform lies in using greenhouse gases such as carbon dioxide as feedstock to be converted into valuable chemicals, e.g., methane and methanol.
Process Technology: This Technology Platform focuses on process development and scale-up to commercial scale production by providing a comprehensive chemical engineering toolbox with the aim to provide safer and more sustainable high-performing manufacturing processes. Among others, the Data Science team makes use of advanced data analytics and artificial intelligence to further boost process performance.
Emerging Technologies: This newly implemented Technology Platform focuses on emerging technology trends with high relevance for Clariant’s business units and with high transformational impact. Current activities include high-throughput experimentation, digital formulation technologies, as well as cutting-edge analytical methodologies, to widen the solution space and accelerate time to market.

Centralized functions to support the technology platforms and business units

Several other units complement the five Technology Platforms. Figure 009

009CLARIANT INNOVATION CHAIN

graphic: Clariant: the innovation chain including "technological platforms", "application Plattforms" and "Markets & Customers"

Group Engineering, one of the functions of the newly created transformational Service Unit Group Operational Excellence (GOE), is responsible for managing and executing major and complex investment projects.

The Sustainability Transformation department is responsible for integrating sustainability in the company’s products and processes. The department aligns innovation management practices with Clariant’s sustainability programs to enhance its transformation roadmap.

Sustainability Transformation collaborates closely with Global Product Stewardship, a function responsible for monitoring all global regulatory developments, evaluating the impact and risk for Clariant’s portfolio, and ensuring complianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors.View entire glossary of Clariant’s products with regulatory requirements. The close interaction between Sustainability Transformation and Global Product Stewardship allows joint action in advocacy and regulatory affairs to tackle the wave of new legislation to be expected from the Green Deal in Europe and other regions likely following. Global Product Stewardship and Sustainability Transformation are involved early on in the innovation process to assure from the beginning that the product developed will be safe and sustainable by design.

By securing Clariant’s patents and trademarks, Global Intellectual Property Management leverages the value creation from innovative products for Clariant.

Collaborations for innovation

To drive its innovation strategy, Clariant strongly relies on collaboration across functions and businesses, as well as with external partners. The company’s Open Innovation initiative identifies collaboration partners in the private sector as well as at universities and other research institutions to source creative ideas.

Complementing its strong ties to different partner networks, Clariant strives to collaborate closely with partners in the supplier industry to develop solutions that are more sustainable when considering the entire value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary . Thus, the company’s innovation team is collaborating closely with Group Procurement Services to create opportunities for joint supplier innovation.

Market to Customer

Clariant’s success relies on its ability to understand customer needs and market trends along the entire value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary , to develop solutions that address those needs, and to capture the value created. To foster this ability, the company constantly builds and adapts its marketing and sales capabilities, optimizes its pricing, and continues to strengthen its customer relationships, supported by digitalization.

Customer demand for sustainable products increasing continuously

Driven by end consumer interest as well as anticipated policy and regulatory changes, customer demand for sustainable products further accelerated in 2021. Clariant supports the overall vision of such regulation, as it has the potential to foster innovation of sustainable products while preserving the competitiveness of Europe’s industry. Clariant continues to promote new solutions that are more sustainable without compromising on performance or on the commitment to fulfilling customer needs. In 2021, Clariant awarded 18 new products the EcoTain® label for an outstanding sustainability profile. The screening, based on 36 sustainability criteria across the products’ entire life cycle, is part of the Portfolio Value Program (PVP).

Furthermore, the company intensifies its efforts to demonstrate how its sustainable products can support customers in reaching the sustainability targets they have set regarding their supply chain.

Standing out in the market through specialized solutions

To meet the evolving ecological standards and its customers’ quality expectations, the company aims toward ever increasing innovation and specialization, despite the ongoing commoditization, consolidation, and integration in the chemicals market. As a specialty chemical company, Clariant is working to maintain and strengthen its market position by delivering services tailored to customers’ demands, both remotely and in person.

Biennial customer satisfaction survey

On a biennial basis, Clariant conducts customer satisfaction surveys to gain insights into how its customers perceive the company’s operational, commercial, and innovation performance. The last survey in 2020 revealed improved values of the Customer Satisfaction Index, the Customer Loyalty Index, and in particular the Net Promoter Score (NPS) compared to 2018.

New organizational setup to challenge commercial performance

Customer centricity is important to stay ahead of the competition. That is why Clariant keeps challenging its commercial performance and reinventing its portfolios. After a reorganization in 2021, Clariant now embeds the Commercial Excellence initiative in the renewed Corporate Planning & Strategy (CP&S) group. With deep functional expertise, Commercial Excellence facilitates dialogue with current and prospective customers to improve commercial strategies, customer engagement, as well as sales and marketing operations. It concentrates on three areas that are central to all business units: Sales Force Effectiveness, Pricing Excellence, and Digital@Commercial.

Sales Force Effectiveness for improved marketing performance: Sales Force Effectiveness (SFE) aims to increase sales performance and holistically assesses sales-related areas to identify levers for targeted improvements. In addition to its focus on improving sales force productivity, the team runs in-depth analyses of market gaps and of the performance potential for key market segments. This provides the basis for growth analytics, including lead identification, in cooperation with the business units. When analyzing short- and long-term market trends, Clariant always follows a triangulation approach, considering various sources and looking at a situation from different angles to avoid bias. Clariant continues to adjust and to differentiate customer profile development to ensure that profiles stay relevant. Observing the customer experience reveals both apparent and hidden needs of different roles at different points in time within the decision cycle and allows Clariant to tailor the value proposition accordingly. In 2021, the company made progress segmenting its broad market and product portfolio into logical blocks and profiles, taking into consideration differences across business lines and business units, as well as proximity to the end consumer.
Mutually beneficial pricing through Pricing Excellence: By determining mutually beneficial price points, Clariant transforms value created for customers into profitable growth for the company. Value calculators that can quantify and visualize the financial benefits of using Clariant’s products as compared to the next best competing alternative are helpful to demonstrate a product’s value to customers. Clariant’s Pricing Excellence identifies intrinsic margin potential and supports the implementation of the pricing, based on data lake-driven analyses. New digital pricing tools integrate both internal and external sources, such as weather influences and commodity stock prices, and accurately execute the value calculations for customers and for Clariant.
Advancing customer relationships with Digital@Commercial: Clariant’s commercial activities are driven by digitalization. To help the business units offer tailored products and solutions for the customers, Digital@Commercial seeks to understand each touchpoint along the customer journey, systematically investigating potential digital opportunities for go-to-market approaches. The team initiates new projects together with the business units and supports the implementation in the initial phase. Furthermore, Digital@Commercial plays an important role in maintaining long-term customer relationships. Together with Group IT, the team develops, deploys, and rolls out updates of the Customer Relationship Management (CRM) system across business units. This includes user trainings, commercial analytics, and the development of relevant steering indicators.

Customer to Cash

Clariant continuously optimizes its operational chain. The company fosters process efficiency using digitalization, improves CAPEX efficiency with so-called front-end loading, responds to customer demands with agile approaches, and reacts to COVID-19 effectively with flexible short-term changes. Beyond that, Clariant strengthens its overall profitability with continuous cost savings in procurement, with safe, functional operations, and by further integrating sustainability into the value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary .

Connecting commerce and operations with end-to-end supply chains

Clariant continues to build integrated end-to-end supply chains, connecting the commercial with the operational value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary . The company translates customer requirements into demand planning, using an agile mindset as well as digital solutions and technology, including machine learning, demand sensing, and advanced analytics.

An organizational setup to foster operational excellence across business units

In the new organizational setup established in 2021, Operational Excellence forms part of the new transformational Service Unit Group Operational Excellence (GOE). The service unit helps Clariant’s business units to deliver best-in-class operations performance, advancing continuous improvement from a Lean Six Sigma approach to a data science-driven, advanced-analytics approach. GOE also aims to reduce CAPEX consumption for every significant CAPEX project across business units.

Digitalization for optimal processes

Digitalization optimizes process efficiency in various ways. Digital lean methods use computer-based optimization to go beyond manual improvements of a classical lean approach. Drawing from increased data availability, this allows digitally steered processes with advanced controls, including in-time raw material delivery, improved plant throughput, system and employee scheduling, and energy use optimization.

Front-end loading for CAPEX efficiency

For CAPEX projects, Clariant established a new governance, introducing a stringent stage-gate process. With front-end loading, project teams can only tackle a new project phase after completing the previous phase, beginning with a clear definition of the business case. This approach leads to more stringent project management and requires systematically identifying and assessing potential innovation needs.

Well-positioned through agile approaches

Benefits for customers are the primary driver for improvements in the operational chain. To satisfy the customers’ evolving expectations, Clariant keeps improving its agility. The company has fully adapted agile approaches like the SCRUM methodology, which are established through team trainings and a black belt curriculum. To offer optimal lead times, the company fine-tunes improvements based on feedback from users along the operational chain, including controllers, procurement officers, and production personnel.

Global supply chains under pressure due to COVID-19

COVID-19 keeps challenging Clariant’s supply chain management and demand planning. The pandemic influences raw material availability, product delivery, and logistics performance at customer sites. Flexibility and a global sourcing network that mitigates supply shortages allow Clariant to respond to these challenges quickly and effectively.

Coordinated procurement for cost efficiency

In 2021, almost 3 200 vendors delivered raw materials worth CHF 1.9 billion to Clariant’s continuing operations. Given these figures, aligned and coordinated procurement activities are vital for overall cost competitiveness and related efficiency. Clariant keeps a structured value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary approach, combined with improved and digitally supported processes. Thus, Group Procurement Services contributed to achieve relevant savings to support all business units. Additional cost efficiency measures, supported by digital enablers, resulted in further cost savings to reach top quartile level among industry peers.

Operational safety: a key priority

A safe operational chain is of utmost importance for Clariant as a responsible employer. It is also necessary to minimize disruptions in production. Thus, Clariant has defined a safety target of zero accidents in its operations. In 2021, the lost-time accident rate (LTAR) remained constant at 0.16 days lost per 200 000 hours of work. Because of the COVID-19 pandemic, Clariant established additional security and safety concepts to guarantee the health and safety of employees at all times.

Sustainable operations for sustainable success

Sustainability is a key priority for Clariant’s own operations, but also across its entire value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product.View entire glossary . The company continues to increase its renewable energy share, a cost-effective measure with positive environmental impacts. Clariant also keeps rethinking its operations in the pursuit of climate-neutral production. For instance, the design of plant construction aims toward an optimal flow of energy to minimize consumption. Driven by customer demand for sustainable chemistry, Clariant considers carbon footprint and origin when sourcing raw materials. In cooperation with the business units, Clariant continuously seeks solutions for alternative materials.

Operating an Integrated Business Model

A holistic approach to value creation