In a competitive business environment, innovation and technology development are key factors of a business’s long-term survival and growth. In the chemical industry, companies strive to stay ahead of the competition by offering innovative products, distinct services, superior quality or competitive pricing. Regardless of which strategy a business adopts, technology development must drive the company’s efforts for growth.

The commodity chemical business is characterized by low profit margins and high volumes. A small enhancement in a production process that delivers improved yield, reduced energy requirements or a shorter processing time can significantly improve margins. Existing profit margins can disappear if the competition takes the lead in process improvement and drives the market price down by passing on the savings. Specialty chemical businesses are similarly characterized by lower volumes and higher profit margins. The intrinsic variability in the specialized requirements of the specific application, for which a speciality chemical is produced, necessitates continuous technology evolution. The products must evolve in response to customer demands or changes in safety and environmental laws. Product evolution necessitates changes in production technology.

Successful businesses anticipate, or even drive the change rather than respond to changes in the market. They have a supportive corporate culture where technology development is integrated at all levels of the business. Multi-functional project teams are formed to identify the need and provide support for technology development. The actual process of technology development, however, does not need to be carried out by the company itself.

The benefits of outsourcing R&D:

Collaborating with an external technology partner offers a number of key benefits:

  • Engaging an external partner helps the business identify and prioritize the key deliverables.
  • Technology commercialization is accelerated as the company’s resources are invested directly into technology development rather than in the development of infrastructure that can later be used for R&D.
  • Interacting with outside experts broadens the technical expertise of the company’s own staff.
  • Process safety is improved as external experts recommend and help implement industry best practices.

Choosing the right R&D partner:

In order to derive maximum benefits from an external technology partnership, a business must carefully choose its technology partner. The R&D partner must have an understanding of key commercialization deliverables and a track record of successful commercialization.  The partner must also have the necessary skills and facilities to develop the targeted technology and be trustworthy to protect the intellectual property of the customer. Most importantly, the technology partner must understand that successful technology commercialization requires creating economic value for a business.

— For additional information on MATRIC’s capabilities, contact Jack Dever.