Supply chain optimization: preparing chemical companies to better perform in a volatile world
Supply chain optimization
Shifting patterns in supply and demand, cost pressures, market segmentation, third-party distribution, and other factors mean that chemical supply chains need to be increasingly agile, sustainable, cost-effective, efficient, and responsive to customer demands. New solutions are on the way that involve supply chain customization, improved people management, industrial parks for suppliers and manufacturers, and disruptive technology such as ‘big data’ and predictive analytics that are turning risks into opportunities for today’s chemical companies.
Never waste a good risk
The recent global downturn has showed us that a crisis can spur new ways of thinking and innovation that result in improved performance and profitability. In the same way, chemical companies can turn supply chain risks into business opportunities for sustainable growth.
Companies can leverage big data and social media to realize customer intelligence across channels, enabling them to provide proactive and personalized customer service. Data analytics can be used to identify waste, monitor overcapacity, prevent shortages, understand the true cost to serve a particular market, and gauge the impact of new customer channels.
A company’s risk posture can also be changed by rethinking how manufacturers and their suppliers can work together to help save resources and energy. For example, verbund manufacturing enables companies to create efficient, value-adding supply chains starting with basic chemicals and extending to higher value products like coatings and crop protection products. In addition, by-products from one plant can be used as raw materials elsewhere, further increasing supply chain efficiencies.
Toward a better supply chain
Although the ideal supply chain may not exist, we can propose a number of characteristics and capabilities that chemical companies should keep in mind as they optimize their supply chain.
End-to-end visibility: You need to know what has happened, what is happening, and what you think will happen. Predictive analytical capabilities also require new skill sets, and these are sometimes more important than IT capabilities.
Horizontal collaborations: Siloed departments and units need to be replaced by more vertically integrated teams of workers sharing information, KPIs, ideas and processes.
Shared accountability for the bottom line: The supply chain needs to be understood as less a cost factor than a way to support profits for the company as a whole.
Segmentation according to regions and products: Supply chains need to be customized to support specific regions and products, whether the company produces commodities or specialties.
Smart growth in partnerships: Upstream partnerships need to be developed on a long-term, strategic basis that takes into consideration cost, quality and reliability. Downstream supply chain partnerships need to have the capacity to react quickly to volatile markets and new opportunities, especially in consumer and/or retail markets.
A “supply chain” of new ideas: A steady inflow of new ideas from internal and external stakeholders is critical for successful supply chain optimization in today’s global chemical industry.
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