It’s no secret that the coatings industry has been struggling with intermittent raw materials shortages for years. Much of this is due to the complex supply chains manufacturers have to rely on and the ripple effect that delays or shortages of even one material can have.¹

Shortages cause price surges,² which makes the manufacturing process more expensive and makes it harder for businesses to stay competitive in a crowded market. The coatings industry has a lot to contend with, but innovative technology and smarter supply chain strategies are offering a new way forward.

Unpacking the Raw Material Crisis in the Coatings Industry

Before we look at solutions, it’s worth painting a brief picture of the interconnected factors that have resulted in the raw materials crisis and why it’s holding up a billion-dollar industry:³

• Global supply chain disruptions triggered by the pandemic: Supply chain disruptions⁴ have always been a challenge, but the pandemic brought about a two-year crisis that the coatings industry is still recovering from. In a relatively short time frame, the number of raw material producers shrank, and prices and lead times shot up. Rebuilding has been a slow process, especially in the wake of other contributing factors that we’ll explore below.

• Petrochemical price volatility: Petrochemicals needed to produce many coatings have had their own set of issues related to inflation, shortages and increased demand. This has made these raw materials more expensive and difficult to source.

• Geopolitical conflict: The Russian-Ukrainian war set off a string of consequences for coatings manufacturers. It interrupted the supply of titanium⁵ feedstocks and other raw materials while also adding to inflation⁶ problems. Conflict in the Middle East has also caused massive interruptions⁷ along important shipping routes for the chemicals industry.

• Regulatory and environmental hurdles: Sustainability measures have resulted in restrictions or outright bans on some chemicals. As coatings manufacturers have transitioned toward more eco-friendly approaches, they’ve had to turn to alternative raw materials, which are often trickier to source, especially as the industry tries to catch up to demand.

Key Pain Points for Coatings Manufacturers in Supply Chain Management

As the pandemic recedes into the distance, key pain points still haunt coating manufacturers trying to build more efficient and resilient supply chains:

• Supply chain visibility: Most coatings manufacturers have supply chains that span multiple countries and transport routes, making it extremely challenging to track where everything is. The consequence of this limited visibility is that manufacturers can’t plan production schedules accurately.
• Unreliable raw materials availability: The price volatility of petrochemicals and various geopolitical issues we mentioned have created ongoing shortages of raw materials. What’s available today might not be available next week. That kind of unpredictability is a nightmare for coatings manufacturers trying to manage their supply chains.
• Shipping delays: Whether it’s blocked routes through the Red Sea or everyday port congestion, the impact of shipping delays is largely the same — manufacturers don’t get their materials on time. This slows down production schedules and pushes prices up.
• Poor inventory management: Manufacturers have to weigh the risk of overstocking to avoid delays or landing with too much raw material and it going to waste because of a demand drop or regulatory change. Maintaining the balance between those extremes is a constant pain point for supply chains in the coatings industry.
• Rising production costs: Many coatings manufacturers can’t do what they do without a key set of raw materials. When those materials go through shortages and subsequent price hikes, manufacturers often have little choice but to pay. That places huge pressure on overall production costs. To maintain competitive prices, businesses then have to find ways to offset these costs.

Emerging Strategies to Navigate Supply Chain Disruptions

Here are some of the main supply chain strategies that coatings manufacturers can use to solve their raw materials crisis:

• Diversify supplier networks: you know what they say about putting all your raw materials in one basket — it makes shortages inevitable. Diversifying suppliers is one of the best ways to mitigate this risk as it ensures that if there’s a delay, manufacturers have a backup at the ready.
• Nearshoring: Instead of relying solely on suppliers halfway across the world, nearshoring keeps things a little closer so that if there is a supply chain disruption, it’s easier to intervene.
• Real-time visibility: Real-time transportation visibility platforms (RTTVPs) and technology like IoT devices, AI and more can all assist with making supply chains and inventory more visible. This allows manufacturers to track supplier performance more easily, catch delays early and prevent fallout from shortages.
• Embracing sustainability: Environmental regulations are only getting tighter. Staying on top of sustainability prevents supply chains from falling behind on compliance. Beyond that, better energy efficiency in general makes supply chains more resilient in the face of disruptions in the petrochemical industry, for example.

The Role of Technology in Reinventing Supply Chain Operations

Technology such as IoT and GPS trackers that can provide real-time data, along with the AI-powered systems used alongside them to analyze that data, are reinventing supply chain operations. They’re making supply chains more visible for coatings manufacturers and helping them respond more quickly to disruptions and shortages as a result.

This technology is also being used for more efficient routing and transport planning that helps cut fuel costs and delivery times, benefiting production schedules and budgets significantly. Solving the materials shortage is a complex task, but embracing innovative technology in supply chain management is a key part of that process.

Learn more here. 

References

¹ Financial Times. Global Supply Chain Disruption and Its Economic Impact. Finance Times. Available: https://www.ft.com/content/3f4a1579-2733-40e9-b052-cb0629296765. Accessed Mar 2025.

² Daily News Egypt. Paint Industry in Crisis as Raw Material Costs Surge. Daily News Egypt, Mar 28, 2021. Available: https://www.dailynewsegypt.com/2021/03/28/paint-industry-in-crisis-as-raw-material-costs-surge/. Accessed Mar 2025.

³ Grand View Research. Paints and Coatings Market Analysis. Grand View Research. Available: https://www.grandviewresearch.com/industry-analysis/paints-coatings-market. Accessed Mar 2025.

⁴ Sheer Logistics. Supply Chain Disruption: Causes and Solutions. Sheer Logisics. Available: https://sheerlogistics.com/blog/supply-chain-disruption/. Accessed Mar 2025.

⁵ Raw Materials Information System (RMIS). Briefing on Titanium Supply Chain Impact. Raw Materials Informatics Systems. June 16, 2022. Available: https://rmis.jrc.ec.europa.eu/uploads/220616_Briefing_Titanium.pdf. Accessed Mar 2025.

⁶ KPMG. Russia-Ukraine War Impact on Supply Chains and Inflation. KPMG, 2022. Available: https://kpmg.com/us/en/articles/2022/russia-ukraine-war-impact-supply-chains-inflation.html. Accessed Mar 2025.

⁷ Chemistry World. Red Sea Shipping Attacks Are Impacting the Chemical Industry. Chemistry World, 2024. Available: https://www.chemistryworld.com/news/red-sea-shipping-attacks-are-impacting-the-chemical-industry/4018832.article. Accessed Mar 2025.