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Demand & Supply Chain Management Evolution

17 Aug 2020
How to achieve end-to-end supply chain excellence in the chemical industry

Mihir Shah

Some of the business drivers facing chemical manufacturers today may seem like the same challenges the industry has been fighting for years, but the specifics have evolved—requiring companies to take a fresh look at their business and core competencies in order to determine the best path for the future. In this blog series we will dig deeper into the challenges and complexities of supply chain management and discuss how chemical companies can succeed by taking a proactive, informed, and responsive approach to end-to-end supply chain management.

While manufacturing in general has been adopting new technologies and seeing benefits, chemical manufacturers have mostly lagged behind. According to a study by LNS Research, an average of only 25%–50% of chemical manufacturers (depending on sub-vertical) have implemented new, cutting edge technologies. The study also found that discrete manufacturing counterparts fared much better than any chemical segment—specialty, basic, and bulk. A similar study done by Accenture indicates that 55% of chemical companies that invested in digitalization report profit increases of 5–20%, while about 25% of the companies saw profits grow greater than 20%.

End-to-end supply chain management requires information—data from numerous entities—both internal and external to a chemical company. To make informed decisions based on data, you first need to have the right data, from the right sources, in a useable format. Unfortunately, many of the legacy business systems in place at chemical companies aren’t capable of providing the breadth of data capture required by today’s modern business practices. In fact, some older systems may not capture data at all. Alternatively, the data might need to be created manually (and therefore seldom updated)—or data is available digitally, but it’s in an incompatible format that prevents cross-pollinating across solutions, platforms, and entities.

Both business practices and technology evolve—but rarely hand-in-hand. In today’s highly competitive chemical industry, companies that don’t modernize are likely to experience diminishing productivity. Effective planning needs optimization, which in turn requires reliable, up-to-date, and detailed data.

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

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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