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Chemical Supply Chain Optimization – Simplifying the Complex Supply Chain

Aug 3, 2017

Product complexity, multiple suppliers, complex compliance requirements, and changing commodity prices are the major reasons behind the complexity of the chemical supply chain process. Sometimes buyers have to procure dangerous or hazardous materials from multiple distant locations. Complexity in the chemical supply chain is like cancer which can destroy the supply chain efficiency. Chemical companies are always on the lookout to optimize the supply chain and maximize ROI by managing safety, ensuring on-time delivery, flexibility, responsiveness, and sustainability.

Managing Uncertainties and Risks

Chemical supply chain planning faces various uncertainties and risks such as demand changes, machine breakdown, natural disasters, and cost and price fluctuations. Optimization techniques are used in managing such uncertainties for supply chain optimization. Analysis of historical data along with forecasting models can help determine optimal inventory levels and ascertain transportation and sales costs. Also, chemical companies use sophisticated statistical models, scenario planning, and decision model to forecast optimal production levels.SE2

Pricing Strategies

Pricing is a complex affair in the chemical industry due to the volatility of raw materials and increasing fluctuations in the financial markets. The price has to be just right in order to stay competitive in the market. Traditional models and strategies can’t withstand the rigors of complex pricing decision. As a result, automated pricing software is being used to optimize the pricing by taking into consideration various real-time data and simulating the impact of multiple price points.

Sharing of Information

The chemical supply chain is complicated due to the fact that most of the functions are outsourced for cost savings, leading to the proliferance of multiple stakeholders and suppliers. It is essential to have a streamlined communication to optimize the chemical supply chain by reducing the inventories and smoothing production. Enabling information sharing allows for the exchange of knowledge between suppliers for product co-creation.

Geoanalytics based on Big Data

The chemical industry usually procures materials from multiple suppliers dispersed across a broad geographic location. Managing such a complex supply network can be a hassle as errors could lead to increased time to market. Geoanalytics based on big data can simplify the supply network and multiple supply networks can be merged and optimized. The use of such tools ensures timely delivery of materials that are required for production and improves the time to market.

Want to know more the best procurement practices for optimizing your chemical supply chain?

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