Chemical Manufacturers Are Losing Customers as Fast Repricing Erodes Margin

A new executive report from Zilliant found that chemical manufacturers repricing under economic volatility are losing customers at high rates even as they move faster on price. The report, Economic Volatility Is Putting Chemical Manufacturing Margins at Risk, is based on a survey of 150 senior manufacturing executives and identifies a widening gap between pricing activity and pricing control.

Price increases were large and fast: 98% moved prices by 6% to 20%, and 86% implement a change within three months. Most lost customers following price changes. The findings name ERP processes, spreadsheets, surcharge logic, and rebate structures as part of the execution layer where margin is leaking.

What the Survey Reports for Chemical Manufacturing

The pressures on chemical pricing are multidirectional. Respondents named competitor price wars, interest rate uncertainty, and US policy uncertainty as the top pricing pressures, at 33% each, with tariff changes cited by 30%.

Zilliant ties those forces to chemical-specific exposures — such as feedstock movement, energy, freight, supply availability, and contract obligations — and characterizes volatility as the operating environment for the sector, rather than a temporary disruption.

Manufacturers are responding on multiple fronts at once. Nearly half said they are adjusting offerings or supply sources, 45% are passing costs through to customers, and 42% are absorbing costs to maintain pricing. The report frames these overlapping responses as necessary in a sector that operates across many product families, grades, applications, and customers. But cost recovery is inconsistent inside that response.

Technology investment is following the same shape as pricing activity — high adoption, limited return. Nearly 75% of respondents are using or adopting AI-driven pricing, but only 27% can point to a clear payoff.

Where the Execution Gap Sits for Chemical Manufacturing

Zilliant locates execution gaps inside systems chemical manufacturers employ. The report names ERP processes, spreadsheets, formula updates, surcharge logic, rebate structures, contract terms, and customer-specific agreements as the places where volatility turns into margin loss. It characterizes legacy pricing processes as designed for slower-moving markets, and argues that continuous volatility exposes their limits.

The failure is sequential. When an input cost moves, a formula has to be updated, a surcharge or freight adjustment applied, and rebate accruals recalculated before the change reaches net price. Each step depends on the one before it. Volatility widens the window in which a lag at any step turns into margin loss.

The mechanisms the report describes should be familiar to SAP customers. Surcharge and freight logic sit in pricing procedures and the condition technique in SAP S/4HANA. Rebate accruals and payouts run through SAP Settlement Management. Customer-specific terms flow through SAP CPQ and SAP S/4HANA for advanced variant configuration.

What Pricing Control Looks Like for Chemical Manufacturing

Zilliant’s conclusion turns on a single idea: uncontrolled pricing compounds the same way volatility does. Delayed pass-throughs accumulate into margin leakage. One-off exceptions harden into precedent. Rebates and discounts obscure what a customer is actually paying. Margin variance becomes too difficult to explain.

The company advises chemical manufacturers to consider pricing as a governed system: pass-through that is controlled, margin that is visible before it reaches the P&L, and rebate, surcharge, and exception logic that holds across contracts and customers.

Many chemical manufacturers have already bought speed. They can reprice in weeks, and most are adopting AI to move faster still. The key findings of the report show that this was not enough, because a price change still has to travel through formulas, surcharges, rebates, and contracts before it reaches net price. Governed pricing, Zilliant argues, is what keeps a price change intact on that journey, protecting the margin the increase was meant to capture.

What This Means for SAPinsiders

• Speed does not protect margin on its own. Many treat repricing agility as the goal, but the survey shows fast movers lost the most customers. When everyone can reprice in weeks, the differentiator shifts to whether the change holds together on the way to the invoice.
• The AI payoff gap lives downstream of the model. Nearly three in four manufacturers adopted AI pricing, yet only 27% saw a clear return. The recommendation is sound; what fails is the handoff into formulas, surcharges, and contracts, which means better algorithms alone will not close the gap.
• Pricing control is an SAP architecture decision. The mechanisms Zilliant faults live inside condition technique, Settlement Management, and CPQ. That places the fix within the domain of SAP owners and system integrators, turning a pricing conversation into a landscape and integration question few chemical IT teams currently own.