Chemical Technology March 2015

Profitability through supply chain excellence − A ‘Technology Insight’ for specialty chemicals producers

Article supplied by IChemE and Aspentech

Globalisation and the uncertainties of an ever-changing economic landscape have introduced new complexity to the specialty chemicals business. On a daily basis, specialty chemicals producers must navigate multiple variables to determine the most profitable products to produce, when and where to produce them and how to successfully execute against that plan.

Supply chain excellence through software

Challenges facing the specialty chemicals business

Specialty chemicals companies who implement supply chain excellence programs report as much as a 10 % in- crease in margins. This tangible impact on the bottom line demonstrates that supply chain excellence is not an esoteric term, but an actionable initiative that specialty chemicals companies cannot afford to ignore. Supply chain leaders need to evaluate the critical issues that prevent their supply chain operations from adapting to their business needs. Typical issues include operating in business silos, lack of visibility, and lack of decision support tools, which compounded, significantly hinder the ability for the business to respond quickly to customer demand. It is important for business leaders to identify these challenges in their organisation and to take action to achieve supply chain excellence to successfully navigate market complexity and unlock opportunity. This article discusses the challenges of effective supply chain operations and decision making, introduces software solutions to transform the Sales & Operations Planning (S&OP) and Scheduling functions, and outlines the benefits and opportunity for specialty chemicals producers to maxi- mise profitability to gain a competitive edge.

Specialty chemicals companies navigate a number of external and internal variables on a daily basis that chal- lenge decision making around forecasting, planning, and scheduling on both short and long-term time horizons. The typical challenges that add complexity and place pressure on operations include: • Globalisation – The rise of multinationals has had a dramatic effect on the industrial sector. For specialty chemicals producers, globalisation has heightened the focus on the supply chain, introduced new complexity and narrowed the margin of error between profit and loss. Producers face the double-edged sword of pursuing new markets (and new opportunities) and opening themselves to new competition. The net result has been a new drive for supply chain excellence. • Uncertain demand patterns – Specialty chemicals producers face uncertain and unpredictable demand patterns with limited visibility of future customer orders. Events, such as the introduction of new products, expiration of patents, the appearance of generics or announcements by regula- tory boards, may introduce minor shocks to demand. In turn, the impact on product pricing creates major swings

This article is published with the kind permmision of IChemE and Aspentech

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Chemical Technology • March 2015