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EY helps build Indonesia’s first digital B2B marketplace for plastics producers and manufacturers, solving market inefficiencies.
The better the question
The traditional distribution model in plastic materials has led to inefficiency, higher costs and frictions.
Suppliers of plastic resins in Indonesia face a number of challenges. The industry is heavily commoditized, leading to small margins and margins are further eroded by multilayer intermediaries taking their cut. There is also competition from distributors able to offer credit to the company’s main customer base — manufacturers in food and beverage packaging.
A dominant player in the production of plastic resins, a sector worth some US$2b, was seeking to disrupt the market before it was itself disrupted by changing market dynamics. Narrowing profit margins and increasing competition from distributors were symptoms of a business model no longer fit for purpose. Furthermore, the many intermediaries built into the traditional distribution model excluded smaller and medium-sized manufacturers that would otherwise have been a good source of growth for the company. Disruption was essential, while preserving the company from cannibalization.
The better the answers
Building Indonesia’s first disruptive B2B digital platform would bring benefits to its whole plastics ecosystem.
How EY can help
EY-Parthenon's Digital Strategy Consulting teams design and deliver digital business strategy to help accelerate business transformation and fuels growth.
Read moreThe company engaged EY-Parthenon to create a new business model — a new strategy for survival in an increasingly hostile market.
The proposed solution was to build a B2B marketplace on an online platform to bring producers and manufacturers together. This would allow efficiencies to be shared by all, while other players in the ecosystem, such as third-party logistics and lenders, would all be able to participate. The key to a successful platform-based business is giving all participants the opportunity to gain.
The design and functionality of the platform had to be carefully specified based on a deep knowledge of the plastics market and its levers. EY-Parthenon teams were able to harness the expertise and experience of EY technology professionals globally who had built platforms serving different sectors together with local market knowledge to design the digital solution.
The platform would not only enable fewer exchanges (with attendant cost and time benefits) but also open the door to a greater number of local and regional producers as well as small and medium-sized manufacturers, democratizing the market.
Removing frictions in the supply chain was a key objective, but there were many other beneficial features. Lenders would apply financial due diligence to manufacturers so that a “buy now pay later” model could be adopted, while real-time tracking kept control over credit limits. Delivery apps would offer tracking and certification, back-end support would be automated, and logistics providers could put in competitive bids. In addition, producers would gain much greater insights into manufacturers’ purchasing habits, while industry and market news could be shared quickly and openly for the benefit of all. Automated back-office support would also greatly enhance employee productivity.
EY-Parthenon worked with professionals vendors on not just envisaging and designing the platform, but also managing its implementation and seeing the project through.
The better the world works
The platform allows every participant in the value chain to share in greater business opportunities, paving the way for other industries.
How EY can help
Our team can help respond to business challenges, providing leadership and crisis management that help companies recover and preserve value.
Read moreThe digital managed marketplace launched in the face of the global pandemic and economic crisis of 2020, but still managed to log some US$100m in gross merchandise volume (GMV) in less than its first six months of trading from launch.
Producers are now able to expand their ability to service small and medium-sized customers directly, while their challenges are addressed. Customers are now able to source their raw materials at competitive prices earlier enjoyed by only big players. Platform partners, such as logistics firms and lenders, have all been able to add a new industry to their respective portfolios.
The project has delivered much more than the market disruption needed by the company. The platform is built for scale — across product portfolios and geographies. Its proven success is expected to disrupt other heavily commoditized industries that would benefit from disintermediation and a digital solution.
It also opens the door to further innovations in the plastics industry in Indonesia. For example, it will be easier for players in recycled plastics to find customers and for customers to find a greater range of producers, meeting different needs efficiently and cost-effectively. The closer proximity of suppliers and customers will lead to faster cycles of innovation as market demands shift.
How EY can help
EY corporate finance consultants combine deep financial and capital markets experience with advanced decision support capabilities and analytics to help the CFO drive sustainable value for all stakeholders.
Read moreDiscover M&A advisory services from EY when you buy and integrate. We help enable strategic growth through integrated mergers and acquisitions, joint ventures and alliances.
Read moreEY-Parthenon professionals recognize that CEOs and business leaders are tasked with achieving maximum value for their organizations’ stakeholders in this transformative age. We challenge assumptions to design and deliver strategies that help improve profitability and long-term value.
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