Optimizing supply chain processes in the chemical industry

chemicals workers in a warehouse

August 27, 2020By Mihir Shah

The importance of supply chain management in chemical companies can fall under the radar. When operations run smoothly and on-time-in-full (OTIF) orders are successfully received by customers, chemical supply chains are often taken for granted. Supply chains usually don’t come into the limelight unless something goes wrong.

For example, the supply chain function in bulk chemical manufacturing is a well-oiled machinery. These companies focus on volume-push strategy and need to optimize their freight, warehouse and distributor spend to the end. When there’s an unexpected glitch in operations and the plant is not able to produce enough, the supply chain must be able to “see” inventory in the entire supply chain and come up with a supply plan based on customer commitments, allocation strategy, and more.

Specialty and custom chemical producing companies, however, must make frequent decisions on what, when, where and how much to produce. While they are probably more attuned to making balanced supply plan decisions, they often do it manually. Working in spreadsheets is not only prone to errors—but it can lead to suboptimal decisions as well. There are almost no checks against failures, making the downside risk significant.

Chemical companies need to take a more proactive, informed, and responsive approach to end-to-end supply chain management. Old clunky enterprise resource planning (ERP) systems and Excel spreadsheets aren’t enough. Chemical companies need modern, end-to-end, supply chain management tools to help optimize end-to-end supply chain processes, such as:

  • Demand forecasting
  • Material requirements planning
  • Planning and scheduling
  • Adhering to a plant’s constrains and bottlenecks
  • Material/process compliance
  • Asset/personnel allocation
  • Document generation
  • Packaging
  • Warehousing and logistics management
  • Tracking and recalls

Many modern, digital tools are already providing high-value-add to chemical companies that have invested in Industry 4.0 technologies. The latest supply chain management technologies are helping to augment productivity, reduce costs, positively impact working capital, increase plant throughput, improve customer satisfaction, increase market share, and more.

To learn more about this topic and gain some practical information about 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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