Set up your chemical supply chain for success: Step 4-6

warehouse oil barrels

September 24, 2020By Mihir Shah

Today’s cutting-edge forecasting, planning, optimization, and predictive capabilities come directly from digitizing business processes. But many chemical companies face an uphill battle trying to optimize their end-to-end supply chains with so much data existing outside of their organizations. Ernst & Young reports that “up to 80% of a large enterprise’s supply chain data is likely in the hands of other companies.”

End-to-end supply chain digitization puts all stakeholders—internal and external—on the same platform. In this blog post, we’ll explore the last three steps chemical manufacturers should consider to help them digitize the end-to-end supply chain. Click here if you missed the first three steps.

4. Improve chemical storage, inventory levels, and warehouse operations
The task of storing chemical products at the production plant presents a lot of challenges. Since most products can’t be mixed together, a standard cleaning operation must be implemented between storing different products in the same tank. Warehouse capacity, multiple SKUs, specific storage requirements for different types of chemicals and their packages, shelf-life—along with rising fulfillment costs—are other challenges modern warehouse operations encounter. To keep costs as low as possible, while delighting the customer, it’s pivotal for manufacturers to keep the right amount of material at the right place at the right time—whether it’s raw material or finished goods. Combining a warehouse management system with an ERP system enables an accurate view of goods inventory and accurate costing and invoicing. Ideally, the ERP system should be built specifically for chemical manufacturing, with support for back-flushing, catch-weight, by-product and co-product credits, etc. This allows for accurate planning, storage, and a real-time view of materials—no matter where in the supply chain cycle they are.  

5. Run a smooth sales and operations planning process  
Supply chain planning should be approached as a science. When done right, it helps to remove demand and supplier variability, optimize planning, harmonize scheduling, right-size inventory, develop warehouse strategy—bringing it all together into a sound, sales, inventory, and operation planning (SI&OP or S&OP) process. Unfortunately, a smooth SI&OP process is virtually impossible. There are almost always changes lurking on the horizon. It could be economic fluctuations that lead to changes in demand, or freight and logistics-related changes, such as a scarcity of truck drivers or the increasing monopoly of railroads. These changes present multiple scenarios to the supply chain function that can’t be evaluated or analyzed without proper data and tools—certainly not using Microsoft Excel® spreadsheets or old ERP systems. Advanced, what-if, scenario management—with budget, financial, and KPI reconciliation—provides the potential solution to these dilemmas. Scenario analysis with embedded analytics allows chemical companies to breakdown these problems by solving for maximum profit, minimum cost, or best lead-times.  

6. Use transportation management to gain real-time visibility of materials 
Moving the flow of goods from plant to warehouse, distribution network, and end-customer can’t be done with “old-school” logistics systems in a competitive marketplace where customers have high expectations. Chemical companies must be able to see beyond the four walls of their operations in order to control all moving parts and improve supply chain performance. Advanced, cloud-based, digitally transformed networks are connecting supply chain partners, events, and devices—enabling stakeholders to respond quickly and decisively to disruptions, seize opportunities, and orchestrate and fulfill demand from anywhere along the supply chain. The networks are designed for the global enterprise to orchestrate and optimize global chemical flows. This business-to-business connectivity creates savings, augments throughput, and improves customer service—resulting in increased sales and margins.

To learn more about this topic and gain some practical information about additional steps your organization can take to create an end-to-end digitized supply chain, download the best practice guide “Achieving end-to-end supply chain excellence in the chemical industry.

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