For Chemical Leasing to be successful, the following nine elements are very important; the first three are critical.
- The supplier should have experience and excellent know-how in order to be able to recommend chemical and/or process changes and provide value-added services.
- The unit of payment must be correctly defined.
- It should be possible to measure, record and demonstrate units of payment.
- Quality standards must be maintained at a high level.
- Employees of both supplier and user need to be committed to the new working methods.
- In most cases, in-depth know-how on the application of the target chemical should not be part of the user’s core processes.
- The supplier and user should enjoy a relationship of cooperation and mutual trust.
- Benefits should be shared fairly between supplier and user.
- The legal agreement between supplier and user should clearly define the critical terms, such as technical specifications of chemicals, unit of payment, terms of payment, the liability and responsibility of each party, etc. An example is available at https://chemicalleasing.com/learn-and-implement-3-step-guidelines.
(More information can be found in the section on Dos and Don’ts, Chemical Leasing Book (Section 7.3))
Practical considerations and examples related to the critical success factors
Factor 1: Excellence of Know-How
Suppliers must have additional process expertise to offer the users with respect to the target chemicals. For example, in the case of metal cleaning by solvents, users usually know how to use the equipment, when to change the solvent etc., but do not know the physics and chemistry underlying the process – what happens to the solvent during the cleaning process – and thus how to prolong the cleaning lifespan. Suppliers have this knowledge. They can therefore offer users the capability of optimising the cleaning process and so reduce chemical consumption. In addition, knowing better than users the toxic and hazardous properties of their chemicals, they can offer users new formulations that are less or non-hazardous to the environment and human health.
Valamar Laundry in Croatia purchased its laundry chemicals from the supplier Ecolab. The supplier has developed laundry chemicals that ensure the required washing quality at lower temperatures. Thanks to a knowledge exchange between the two partners, the process became more efficient and the quantity of laundry chemicals was reduced. Partners selected the unit of payment that corresponded to the key function of the chemical: kilogram of washed laundry.
Chemical Leasing does not benefit only users in terms of knowledge acquisition. It is a two-sided learning process. Often, suppliers gain experience on the workings of specific processes, thus further improving their know-how.
Factor 2: Appropriate Unit of Payment
It is not always easy to define a unit of payment. For example, in the metalworking industry, there are many different sizes and shapes of metal parts, different types of dirt to be cleaned (for instance, different types of oil used for different kinds of metal processing), so it is not possible to use cleaned surface or number of cleaned pieces as the unit of payment. However, cleaning machines work continuously, and the number of working hours is a solution for a unit of payment that can be measured, recorded and demonstrated.
Picture 1. Metal parts of different sizes and shapes
Factor 3: Constant Monitoring of Unit of Payment
It is important to have a unit of payment which can be accurately monitored, recorded and demonstrated. For example, in the case of conveyor lubrication, the unit of payment is the number of working hours of the conveyor (this corresponds to the function of the chemical, which is to ensure that the belt works smoothly). To control the number of working hours, Ecolab, the supplier of Knjaz Milos in Serbia, installed a counter for working hours (only the supplier can make modifications to the equipment). This counter measures, records and demonstrates the units of payment, the number of working hours of the conveyer.
Picture 2. A counter for working hours