Laura Rokohl, supply chain manager, AspenTech
Outstanding customer service sets the standard for specialty chemical companies to differentiate their value proposition. As oil prices remain low a chain reaction has opened up opportunities to improve margins and strengthen market position. Chemical companies are optimising assets through cost reduction logistics, segmenting demand versus supply strategies and tackling complexity. Managing the unknown more effectively and being more flexible across the organisation will reap greater rewards.
With increasing pressure to respond to demand and provide quality products on time smart businesses are optimising six key supply chain areas and embracing cutting-edge software to achieve competitive advantage.
Despite volatility the chemicals market is projected to grow significantly in the near future. As competition increases best practices and innovative technology adoption remains key to competitive advantage. Chemical companies in the US are increasingly focused on emerging regions. China is expected to increase in population over the next decade resulting in more internal consumer demand for differentiated products that are specialty chemicals related.
Specialty chemicals are mainly manufactured in chemical plants using batch processing techniques. Products are high value with many specification variations and differentiators. By being more demand-driven businesses can maximise market potential while mitigating risk. To do this effectively they must address six links in the supply chain:
Improve customer service
Customer service levels are measured by on-time shipments of the right quality product in the appropriate quantity.
Demand-driven chemical companies can optimise their inventory and reduce inventory buffers, typically kept at higher levels than necessary to maintain customer service levels.
Production lines need to perform smoothly to ensure batch quality is maintained within specifications. Having an effective supply chain management system that can optimise sequencing means production is more likely to run efficiently, less time is spent in setups and clean-outs and delays or disruptions can be addressed before they impact customer orders or incur significant transportation costs.
The ability to respond quickly to supply chain shocks is essential to remaining profitable. By being equipped to analyse different responses to the unexpected, companies can choose the most appropriate response and take corrective action that secures plant profits.
Procurement, working capital, inventory storage, distribution and labour are key areas to potentially reduce supply chain costs.
Managing fluctuating raw material costs is especially important in order to set the right price expectations to customers. Robust planning and effective communications will protect customer relationships, and can significantly impact margins.
Cutting-edge, end-to-end supply chain software improves forecasting, enables greater collaboration and assists with customer prioritisation. Empowering operations with easy-to-use planning and scheduling tools facilitates better decision-making to respond quickly to disruptions in plant operations.
Many companies have adopted AspenTech’s supply chain software as the link to optimise end-to-end supply chain capabilities. Aspen Supply Chain Planner can navigate supply chain complexity and identify problems in the plan that needs urgent attention. Planners can determine the optimal production plan and maximise the potential of assets. Using powerful analysis capabilities, Planners can develop and evaluate an unlimited number of ‘what-if’ scenarios to quickly optimise inventory management, minimise transportation costs and balance supply with demand. This can be done knowing that the software tools accurately model production activities with sufficient fidelity to allow the Planner to accurately evaluate alternatives.
Aspen Plant Scheduler is a dynamic tool that enables Schedulers to react to operational changes within minutes. Crucially, Schedulers can personalise their workspace, simultaneously view inventory levels and immediately see the impact of changes for a common group of production activities or facilities. This greater visibility means they have access to information needed to gain detailed insights into production scheduling, such as raw material availability or batch dependencies and make better scheduling decisions. In addition, the tool’s Campaign Manager feature can be used to define preferred sequences for each facility, enabling the entire sequence to be scheduled all at once when appropriate for a particular asset.
Specialty chemicals companies survive by reacting quickly to market forces and offering added value, such as impeccable service, quality products and on-time deliveries. Therefore, chemical companies require knowledge of best practices and on-going innovation to differentiate from the competition.
Having a holistic view of the supply chain makes it possible to build an optimal procurement, production, distribution and inventory plan, which will profitably meet customer demands. With integrated planning and scheduling software, plant complexity is mitigated and key decision-makers can easily analyse all costs and constraints to ensure a globally optimal plan.
To meet financial targets integrated supply chain software helps companies cut costs and produce products faster and more efficiently. By focusing on asset optimisation and tackling the key areas of best practice, chemical producers can gain the upper hand and significantly improve customer service across the entire value chain.