Seven Strategic Components for a Proactive Process Chemical Supply Chain
Process chemical manufacturers face complex supply chain challenges including dealing with hazardous and perishable ingredients whose characteristics (potency, color, composition, etc.) can vary from lot to lot. Adjusting formulas based on available ingredients and ensuring finished products meet the exacting tolerances of customers and regulating agencies requires flexibility and superior planning capabilities. Add to these factors razor-thin margins, SKU-proliferation, globalization, long lead times to increase capacity, and products that tend to be heavy and expensive to move and you start to understand the complexities involved with running an efficient process chemical supply chain.
I believe there are several key ingredients to formulating a winning process manufacturing supply chain. For the biggest bang for the investment (excuse my pun), process chemical manufacturers should focus their precious resources on these seven strategic supply chain areas.
1. Accurate demand forecasts lay the foundation for an effective supply chain. Chemical manufacturers faced with shrinking margins must put the right product in the right location at the right time. Demand forecasts drive raw ingredient acquisition and manufacturing lead-times which are often longer than the order lead-time. Too many companies still rely on spreadsheets and basic ERP forecasting solutions both of which provide inadequate planning capabilities. Advanced demand planning applies science to deliver a better forecast, including “best-fit” algorithms that automatically select the right forecasting approach for each stage of a product’s lifecycle.
2. Optimal Multi-Plant Scheduling
Multi-plant operations require two levels of production planning: