Revolutionizing Customer Engagement: A New Approach for Compounders

Business as usual in the compounding industry received a major wake-up call during the COVID-19 pandemic. Suddenly compounders were facing supply chain disruptions, acute material shortages and price swings that continue to this day. Adding to the ongoing uncertainty are emerging regulatory restrictions, new sustainability mandates and the encroachment of large resin suppliers into the traditional compounding space.

How can compounders best manage all these variables while meeting diverse and fast-changing customer requirements on one hand, and competing successfully in a fluid business environment on the other?

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One solution is to shift from a reactive to a proactive approach to customer engagement, or to phrase it differently, from a transactional to a collaborative process. Instead of simply formulating compounds in response to customer requests, build a deeper relationship that can provide insights into upcoming requirements, emerging industry trends and issues, and new applications.

Through strategic partnerships with customers, compounders can position their business to anticipate needs and challenges rather than react to them. Through collaboration and ongoing communication, compounders can learn about unmet material needs and develop new products to fill them, find mutually acceptable replacements in the event of shortages or price spikes, and devise ways to help customers comply with new regulatory restrictions and sustainability mandates.

In this article, we’ll explore several core elements of establishing a strategic partnership between a compounder and its customers that is based on open, candid communication and shared objectives. These elements contribute to a trusted relationship that can endure during challenging times.

Multilevel Engagement

Establishing engagement at multiple levels within the compounding company and the customer can create strong points of contact and collaboration that extend beyond the sales team. Senior leaders from both parties can discuss business goals and industry trends to be sure there is alignment regarding upcoming material requirements, potential supply constraints, turnaround times, pricing and regulatory changes.

Pellets used as base materials for formulating specialty compounds. Source: (all) SACO

Product managers at the compounder should engage with their customers’ designers and engineers to offer guidance about selecting the best materials for specific applications. Technical teams from the compounder should be available to work onsite at the customer’s manufacturing location to assist with process optimization and troubleshooting. And of course, compounders should reinforce their commitment to developing custom formulations that meet each customer’s specific performance, aesthetic and sustainability requirements.

While some large resin suppliers are expanding into higher-margin, advanced materials and enhanced technical support, value‑added services remain a hallmark of the compounding industry. Since compounds are more complicated to supply than virgin resins and typically carry a higher cost, many compounders must compete based on value rather than price. Services are a major part of that value.

Historically, services offered by compounders have included custom color matching, creating masterbatches and providing toll manufacturing, which involves processing customer-supplied raw materials into finished pellets.

However, the scope of compounder services has expanded to meet new customer needs, enhance competitive advantage, and support sustainability and regulatory requirements. Some recent examples of value-added services include resin buy-back programs that pay for and reuse customers’ postindustrial scrap materials in compounding lines, and local warehousing and made-to-inventory programs that help ensure just-in-time fulfillment.

To help customers achieve their circularity goals, many compounders have invested in processes for incorporating post-consumer recycled (PCR) content into their compounds. These processes include identifying and vetting sources of recycled feedstocks, implementing in-house quality testing, and developing new PCR-based compounds that deliver performance and processability equivalent to those of virgin materials.

Regulatory restrictions on certain additives are becoming stricter and more pervasive. Examples include antimony trioxide (ATO) synergists for fire resistance, the brominated flame retardant decabromodiphenyl ethane (DBDPE), which faces an upcoming ban in Canada as a toxic substance, and per- and polyfluoroalkyl substances (PFAS) used in lubricants. Compounders can assist customers by exploring alternatives to these chemicals, validating them in formulations and locating reliable suppliers. This service can be invaluable to customers facing unexpected price increases or supply disruptions by relieving them of the burden of finding acceptable substitutes.

Specializations: Expert Guidance Matters

Another key element in a strategic partnership is two-way knowledge transfer. A compounder that learns the details of a customer’s particular industry, key applications and business model can tailor specific material formulations and order fulfillment more accurately. Equally important, a compounder with deep technical expertise can provide detailed, up-to-the-minute guidance to the customer that further strengthens the relationship.

To get up to speed quickly about an industry or application area, and acquire specialist expertise, a compounder has a few options. Some companies hire staff with specialized training, niche skills or specific industry experience. Others invest in training and education for their employees. Compounders can also leverage consultants, especially those with knowledge of a new material technology, an emerging application area, a regulatory issue or a novel processing method, as a short-term investment.

Technological Innovation

Customers expect their compounding partners to investigate and adopt, if appropriate, new technology that can improve formulation speed and precision, compound quality and production efficiency. One of those tools is artificial intelligence (AI), along with its subset machine learning (ML).

By implementing AI- and ML-based solutions, compounders can optimize formulations, monitor quality and process control in real time, and conduct virtual testing. For example, ML systems can learn to analyze material properties and processing conditions to predict optimal compound formulations, helping to speed the development of new materials. In production, AI solutions can adjust compounding line controls and parameters in real time to improve throughput and reduce energy usage. This approach helps stabilize the entire process, even when variable raw materials like PCR content are involved.

Operational Flexibility

Business agility and operational flexibility have become increasingly critical in the face of continued supply chain volatility, raw material shortages and global trade issues. A compounder’s ability to anticipate these challenges and take action quickly — such as by finding alternative additives or replacing suppliers — can create and sustain loyalty from customers.

Close-up of base resins used as feedstock for developing custom formulations. 

Even during normal operations, flexibility is a big asset for a compounder. Unlike large resin suppliers that tend to prefer large, extended production runs and impose shipping minimums, a compounder may stand out by supplying materials in small amounts for prototyping, expediting shipments, or quickly switching production from one type of compound to another to meet an urgent request. Successful compounders must be able to smoothly accommodate a wide range of resin systems, additive packages and filler loadings.

Another aspect of flexibility is permitting direct interaction with the customers instead of asking them to work through a distribution system, as large resin suppliers sometimes do. Bypassing a middleman can improve the speed, simplicity and efficiency of the transaction while strengthening the partnership between compounder and customer.

Speaking is essential when it comes to material customization. Rapid technology advances in areas such as electric and hybrid vehicles, high-speed data centers and 5G networking are accelerating the rate of change in material specifications and also shrinking application development timelines. The faster a compounding company can formulate products to meet these new specifications, and the more accommodating it can be regarding customer deadlines, the more competitive it will become. This need for speed is prompting some firms to offer new capabilities such as rapid prototyping and small-batch production.

Global Reach and Scale

As supply chains become more globalized, manufacturers increasingly rely on compounders that can deliver consistent materials across geographies, particularly the dominant Asia-Pacific region, which held about a 47% share of the global plastic compounding market in 2025, according to a market study conducted by Yahoo Finance. However, these compounders operating in multiple regions must effectively handle variability in raw materials and suppliers to avoid quality concerns. To ensure material consistency for their customers, compounders need to follow standardized process methodologies, share technical expertise among teams at regional locations and enforce rigorous quality standards worldwide.

SACO AIE pellets produced in Wisconsin.

The ability to scale up rapidly is essential to accommodate urgent customer requests and time constraints. One approach is mapping laboratory-scale compounding equipment to production-scale equipment, which facilitates accurate translation from small to large quantities of material while eliminating potential issues. It is also important to develop strong relationships with manufacturing equipment suppliers, who can provide expert guidance on challenging processes and compounds.

In today’s plastics industry, compounding is no longer just about formulating materials to fulfill customer orders or to address a general market need. Instead, many compounders are changing their approach from reactive to proactive, and from transactional to collaborative. This major shift is proving to be an effective way to adapt to technology innovation, evolving application requirements, new regulations and environmental goals, and above all, an unpredictable and challenging global business environment.

Compounders are finding success by forging strategic partnerships with customers based on mutual understanding, flexibility, open communication and trust. By enriching their core competencies with value-added services, specialized technical knowledge and skills, and advanced technologies, compounders can deliver greater customer value while clearly differentiating themselves from competitors vying for a share of the roughly $80 billion global plastics compounding market.

ABOUT THE AUTHOR: Danielle Sherman is business unit manager – custom solutions at SACO AEI Polymers, Sheboygan, Wisconsin. She began her career with SACO in 2015 as a chemist on the technical team and later transitioned into product management before assuming her current leadership role. In her position, Sherman leads the commercial team in her business unit, drives business unit growth, and guides technical development to deliver innovative, customer-focused solutions. She brings a strong commercial and leadership focus to delivering tailored solutions that meet evolving market and customer needs. Contact: 920-803-0778; Danielle.Sherman@sacoaei.com; sacoaei.com.