The biggest supply chain challenge facing chemical manufacturer

In order to remain competitive in today's chemical industry, chemical manufacturer must maintain a high level of productivity. In addition, current problems, such as rapid commercialization, complex supply chain, aging assets and increasing demand for dynamic business plans, make it more demanding than ever to achieve productivity levels that drive differentiation and innovation. Manufacturers often fall into a pattern where they implement short-sighted cost cutting measures, which may have a negative impact on operational productivity and reduce the overall market responsiveness.

To make sure you don't fall into these traps, it's important to understand not only the industry challenges you face, but also the top trends that are reshaping manufacturing. Acquiring this knowledge is the first step in building the foundations of digital transformation.

This post summarizes the major challenges facing today's chemical manufacturer supply chain. If you want to learn more about how to turn these barriers into opportunities, please read our recent executive briefing to learn more about this topic.

Complexity of supply chain

Chemical production can run continuously or in batches; different processes and chemical processes can be merged, separated, produced intermediate (bulk) materials or finished products, and produced to stock (MTS) or production to order (MTO) at different asset portfolios and different starting points. These variables complicate planning, cost, formulation, and quality management because the supply chain must operate under constant pressure to minimize asset downtime and maximize asset utilization.

Most importantly, chemical manufacturers are often unable to foresee the full range and range of their products or molecules, and these are often just intermediate steps to another end product - usually downstream products. In addition, due to the nature of its materials and products, the chemical manufacturing industry is under constant supervision and must balance these demands as it deals with unique supply chain pressures.

One result of this complexity is low productivity, which is often undetected because staff are simply trying to continue to use outdated, generic, or poorly integrated software solutions. Today's fast-paced technology environment has changed the way business operates. In fact, Accenture pointed out in a report in 2019: "due to all the technical interruptions, the typical sequence of activities from customer demand perception to order fulfillment will soon look very different from what it looks like today. "The nature of many chemical industry challenges has changed and will continue to change.

Unpredictability of supply and demand

The supply chain is volatile. Disruption can occur anywhere in the supply ecosystem and cause ripple effects up and down the value chain.

For example, the rapid commercialization of the chemical industry means that customers often have many sources from which they can obtain the materials they need. If you don't have what customers need, in the right quantity, at the right price, when they want it, they can go to your competitors.

Moreover, since chemical manufacturers (and their customers) are usually at the top of the value chain, they may become victims of the "bullwhip effect" - small changes at the "tip of the tail" (end market) turn into major changes when they reach the "handle" (producer).

All of these take place in the interrelated and interactive global business cycle. In such a dynamic environment, it is difficult to provide accurate prediction. Even confirmed purchase orders can be transferred, which makes it a problem for manufacturers to meet the most profitable demand in the best time.

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