Overcoming Status Quo Bias in the Chemical Industry

Read Time: 4-minutes

The status quo bias impacts all aspects of our lives and is THE major hurdle I battle against with my chemical distribution business.

Today, we’re going to look at how it hurts us in the chemical industry, and how we can overcome it.

Sticking with the way things have always been done leads to missed opportunities and increased risks. If we don’t challenge the status quo, we might miss out on better deals, more efficient processes, and innovative solutions.

Understanding this bias is crucial if we want to make better decisions that can save time and money and, ultimately, help our businesses thrive.

I get it though, people prefer comfort over change. It’s easy to stick with what we know, even if it isn’t the “best” choice. Fear of the unknown and the effort required to change can keep us from taking necessary actions.

In the chemical supply chain, this can mean overpaying for materials, ignoring new suppliers, or failing to adopt new technologies.

Choices which ultimately impact competitiveness and profitability.

So, let’s look at:

1. Status quo bias

2. The risks

3. New opportunities

4. Embracing change

5. Making informed decisions

"If you don't like change, you're going to like irrelevance even less." – General Eric Shinseki

Status quo bias is a tendency to prefer things to stay the same rather than change, even when there are better options available.

This bias can lead to complacency, where businesses continue with existing processes, suppliers, and strategies without evaluating if they are still the most effective.

Recognising Status Quo Bias

Start with the decisions you make regularly. Are you sticking with the same suppliers out of habit? Have you evaluated their performance recently?

Ask yourself questions like:

• Why do I prefer this suppler over others?

• Have I compared the costs and benefits of alternative options recently?

• Am I resisting change due to fear of disruption, or is there a valid reason?

This will start to show if decisions are based on habit/ease or if they are truly in our best interest.

Understanding The Risks

The risks in the chemical supply chain can be significant. By hanging on to outdated practices or suppliers, can result in:

• Increased costs: suppliers may raise prices, or the market may decrease, and if we are not actively seeking competitive bids, we could be overpaying.

• Poor reliability: reacting to issues when they arise, rather than actively strengthening our supply chain with plan Bs and Cs. Read “strengthening supply chain reliability” here.

• Reduced competitiveness: self-explanatory, but if we are not proactive, we will fall behind.

Explore New Opportunities

The chemical industry is constantly evolving, with new suppliers and technologies emerging regularly.

Consider the following:

• Attend industry conferences: in order to learn about the latest trends and innovations. Networking can also open doors.

• Research new suppliers: regularly assess potential suppliers to find better pricing, quality, or services. A diverse supplier base also reduces your risks substantially. Read a how to here: https://www.alchemtrading.com/distribution-hub/how-to-id-and-eval

By being proactive, you really are playing a long-term game.

Embrace Change

Yes, change can be daunting.

Yes, our supply chains ‘work’ most of the time. But they don’t always… and this is all about protecting our businesses in terms of reliability, competitiveness and so on.

Start small, most of the time it seems daunting. Take an important raw material, or high-risk material. Start with a new supplier for a single product line.

Involve the team and encourage open discussion to get everyone moving in the same direction.

If you have long winded internal processes, can these be looked at? If there is huge complexity in approving additional sources, can it be simplified? Is there a better time of the year?

Make Informed Decisions

This is essential if we are going to overcome status quo bias, by making decisions based more on evidence.

• Utilise data: collect and analyse data on supplier performance, market trends, feedstock information etc.

• Seek expert advice: consult with industry experts or advisors to validate choices. Their experience can provide valuable perspectives you might overlook.

• Continuously evaluate: review regularly, and don’t be afraid to adjust based on the above. Flexibility is key to maintaining a competitive edge.

Informed decision making helps to eliminate personal bias and takes emotion out of the decision-making process.

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So, there you have it.

By recognising this bias, understanding its risks, and actively seeking new opportunities, you can make informed decisions that help keep your business competitive.

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Thanks for reading, and see you next week.

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Whenever you’re ready, there are 3 ways I can help you:

1. Take the CLEAN Scorecard - test your supply chain. In less than 3-minutes you’ll receive a free personalised report detailing areas where you are strong or weak, and ways you can improve.

2. Follow my YouTube series introducing the CLEAN Framework - learn how to build reliable, ethical, and sustainable supply chains.

3. Book a 15-minute introductory call to see if we would be right to work together.