Chemical Leasing Toolkit

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Task 3: Pre-define units of payment

The third task is to identify possible units of payment based on the services rendered by the chemicals.

As previously noted, Chemical Leasing is based on a shift from a volume based payment (e.g. $/t of chemical) to a benefit oriented payment (e.g. $/m2 cleaned surface). Table 2 provides examples of possible units of payment in different industry sectors and processes.

Table 2. Possible units of payment for different processes

Categories of chemicals Processes Possible unit of payment Sectors/Subsectors
Adhesives Packaging/Bonding Number of bonded pieces
Bonded square meters
Food and beverage sector
Construction of buildings (e.g. for bonding of windows)
Manufacture of footwear
Manufacture of wood products
Labeling Packed (labeled) bottles
Bonded square meters of label
Food and beverage sector
Detergents, disinfection materials Cleaning/
Occupied room Accommodation (Tourism) sector
Healthcare sector
Number of cleaned (disinfected) bottles  Food and beverage sector
Solvents and detergents Cleaned pieces
Cleaned area
Working time /operations (see note below)
Manufacture of fabricated metal products
Automotive industry
Detergents, disinfection materials Laundry Kg of laundry Accommodation (Tourism)
Healthcare sector
Oils, greases Lubrication Working hours Mining and quarrying
Other types of lubricants Lubrication of packaging conveyor Working hours of conveyor
Packed product
Food  and beverage sector
Powder coatings, solvent- and water-based paints, chemicals for phosphating Surface protection Square meters of treated area
Number of pre-treated/painted products
Manufacture of fabricated metal products
Manufacture of vehicles and machinery
Manufacture of wood products
Manufacture of electrical  equipment
Manufacture of rubber and plastic products
Inks Printing Printed copy Publishing and printing
Coagulants, Flocculants, defoamers Waste water treatment Cubic meters of treated water Different sectors
Bore hole chemicals (Calcium bromide, zinc bromide, caesium formate) Oil drilling Daily fee Oil and gas field services
Catalysts Chemical reactions t of synthesized product Manufacture of chemicals and chemical products

As the table illustrates, in some cases the unit of payment may be based on the operating hours (working time) of equipment rather than on the direct services rendered by the chemicals. For example, in the production of metal parts, there are many parts with different shapes and sizes. It would be difficult to apply as a unit of payment the number or surface area of cleaned parts, and would make more sense to relate the unit of payment to operating/working hours.

Picture 2: Different sizes and shapes of metal parts

Once the chemicals and units of payments are pre-defined, it is essential to check which measurement devices, equipment, and/or information are required to measure, monitor and verify these units of payment. In some cases, several options are possible. The supplier should be able to check whether actual results/outputs correspond to reported figures.

For the lubrication process of a packaging conveyor, the unit of payment could be the number of working hours of the conveyer but also the number of packed bottles. To monitor the number of working hours, the supplier could install a counter on the packaging line (see Picture 3). To monitor the number of packed bottles, the supplier would need to have access to the production company’s database, to check how many bottles were produced.
Picture 3: A counter on the production line


▶ Continue with Step 2 - Development and implementation