Supply chain management is essential in every industry that relies on partners and suppliers, but perhaps no more critically than in the chemical industry.
Growing global competition, increased expectations for quality from customers, and the complexities of creating final chemical products all put pressure on chemical companies to ensure that supply chain management is robust, dynamic, and effective. As seen in the recent post, 8 Operational and Accounting Challenges for the Chemical Industry, there are many pressures forcing chemical companies to innovate, automate, and use tools like enterprise resource planning (ERP) software to drive operational excellence.
How does a company go about achieving supply chain excellence in the chemical industry? It is only by understanding the complexities and identifying technologies and processes that can improve performance.
The Supply Chain Pressures on Chemical Companies
The $5 trillion global market for chemicals is truly global today. Competition from new players in Asia and the Middle East is threatening U.S. chemical manufacturers’ ability to retain and grow market share. Pricing is becoming a crucial factor at the same time that the costs of raw materials and commodities are volatile and rising. Managing the changes to the costs of supplies and how to reflect those changes in pricing is a complex process requiring real-time decision-making.
Companies today need transparency throughout the supply chain to understand costs, anticipate future costs and prices, and understand supply and demand issues.
Keeping prices down means having better supply chain information that can be used by the entire enterprise, from sales and marketing to finance and customer service. These insights can be the differentiators that distinguish firms from their competitors.
At the same time, many companies are shifting to niche products in niche markets, which require smaller production runs and specialized source materials.
Maximizing Supply Chain Efficiency
To make an impact, chemical companies must change the way they operate, with a particular focus on leveraging supply chain operations. Needed steps include:
- Better alignment of supply chain segmentation to customer and business needs
- Optimized new products
- Warehouse and transportation consolidation and lean processes
- Optimal inventory management, with improved strategy and skills
- Improved forecasting and planning due to segmentation
- Optimized capacity usage to maximize operational usage
- Full compliance with regulatory obligations
- A responsive approach to customer-articulated needs
- Better distribution and placement of products
- Data analytics that drives insights and allows for better decision-making in real time
Companies also need to be always forward-thinking in their approach to supply chains, focused on continuous improvement and innovation. Doing so enables pioneering products, customer service, and operational efficiency.
Importance of an ERP Solution
ERP software provides the tools that drive better insights, reporting, and results. ERP platforms integrate data and reporting across the enterprise, from finance and human resources to sales and marketing to operations, scheduling, recipe management, inventory management, and logistics.
With data generated from operations, sales, and suppliers themselves, chemical companies can collect and store information, apply deep analytics, and provide real-time reporting and recommendations that enable senior leaders and other workers to make better decisions when needed.
NexTec Group helps chemical companies identify their technological needs and select the right ERP solution. With insights into the key vendors, products, and features available, our teams can help companies quickly leverage technology to improve performance. Contact us to learn more about how NexTec can help your company gain deeper insights and results from your supply chain.