logichem.wbresearch · 2020-03-09 · logistics and category leaders from some of the world's...

logichem.wbresearch.com

2E X C E L L E N C E I N C H E M I C A L L O G I S T I C S 2 0 1 7

IntroductionThe global market for chemicals is expected to double by 2035, up from 2.6 trillion Euros in 2015.

However, the path for European

companies seeking to capitalise on this

growth is not clearly defined. The outlook

for European recovery is not fantastic, and

chemical producers are facing increasing

competition from imports originating in

the USA, Asia and the Middle East.

In addition, the European chemical

industry has tended to lag rather than lead

the development and implementation of

new logistical practices and technologies.

Chemical companies will have to overhaul

their supply chains to meet this series of

external challenges.

In advance of the LogiChem 2017

conference we wanted to investigate how

those responsible for the chemical supply

chain in Europe are facing up to these

challenges. To find out, we interviewed

100 European Heads of Supply Chain,

Logistics and Category Leaders from some

of the world's most important chemical

logistics companies.

The results have been aggregated,

anonymised and are presented here to

provide a benchmark on some of the most

crucial issues facing chemical logistics and

supply chain.

Discover the full range of conversations

and interactive sessions at LogiChem

2017

Additional contributors

Richard Barnett, Vice President, Industry & Solutions Strategy, GT Nexus

Gemma Burns, Conference Director, Worldwide Business Research


Supply Chain – An Opportunity to Deliver Value By Richard Barnett, Vice President, Industry & Solutions Strategy, GT Nexus

1. What are the emerging challenges chemicals companies are facing in 2017 with regards to global supply chain and logistics?

Macroeconomic pressures and numerous challenges continue to come and go but some key trends are recurring. At the moment, for example, the industry is seeing growing competition from Asia. This year’s survey indicates more than 70% see this as a significant threat. This is indicative of the increasingly global and complex nature of the industry. The European market is facing greater competition, forcing moves to transform the way it orchestrates fulfillment and customer centricity while maintaining profitability.

The supply chain function continues to rise towards the C-level amid growing awareness of the need for supply chain visibility and agility to mitigate risk and manage cost to serve across key channels. These areas demand constant, continuous operational improvement. The desire for change and innovation continues to spark transformational initiatives, such as digital strategies, that take advantage of new technologies and processes. This includes supply chain operating networks, IoT information sources drawn into the context of end to end supply chain process orchestration, and cross functional integration.

2. What is the greatest opportunity to better respond to abrupt changes such as M&A or disruption?

The surge in chemicals megadeals continues. Dow Chemical and DuPont will form a $130 billion giant. ChemChina’s deal for Syngenta is another major move. Companies seek to clean up portfolios, achieve functional excellence and expand market coverage. All of these come amidst greater pressure to deliver returns to

investors from inorganic growth.

M&A presents significant challenges and opportunities, and companies must move quickly to hit expectations. The biggest opportunities to accelerate shareholder returns come from new supply chain strategies based on network thinking. For example, rethinking outsourcing models such as new 4PL orchestration, as Syngenta has deployed, and rapidly leveraging a supply chain network to accelerate integration across new operating entities - rather than time-intensive and costly enterprise system investments (like ERP consolidation). These offer significant opportunities founded in network thinking, opposed to $400 million ERP consolidations that take 3-5 years.

3. How has the concept of supply chain visibility evolved and expanded in recent years as supply chain organizations matured?

The primary focus today is on building the right supply chain platform for shared visibility. But the definition of “visibility" is expanding to include manufacturing work in process, orders, payments, quality/compliance reports, logistics, and customer fulfillment. As we have seen in other industries, the notion of supply chain visibility is often incomplete. It is not enough to have just visibility. Chemicals companies and their trading partners seek multi-party value chain orchestration. This can only happen once a shared information model is in place. This is where the real transformational opportunities lie.

The 2016 Logichem report calls out an increased desire for shipment visibility to customers and customer-driven innovation. The 2017 survey shows visibility ranked as the top priority above Speed, Price and Reliability. While improving speed, price and reliability are

essential, there’s growing recognition that deep visibility is the foundational element to each of these. Once a visibility platform is in place, a greater emphasis can be placed on customer-driven innovation.

4. What are the biggest opportunities on the horizon for chemicals supply chain executives to deliver new forms of strategic value?

Digital supply chain transformation presents the greatest opportunity to innovate and deliver new products and services around specific customer needs. To achieve these goals, great supply chain agility downstream is needed to meet specific customer segments based on a more predictive/proactive approach. Additional value is created when the “push-pull buffers” are managed across the value chain – and then balancing asset utilization upstream with agile fulfillment models, based on cost to serve and new services enablement downstream. Our key observation is that "sustainable" digital innovation in supply chain takes an operating network combined with investment in new "digital capabilities" such as advanced analytics, IoT data integration, and digital experiences. Best practice today is a bi-modal approach to IT investment: one mode focuses on rapid, interactive innovation that is transformational; the other mode is a continuous improvement mindset for sustaining operations.

A great example of transformation is the idea of starting your strategic thinking at the agrochemicals downstream consumer, the “grower” or “farmer”. Assessing and anticipating their specific needs and related services in the context of weather patterns for example, instead of the standard view of order lead times, opens the door to innovative customer-centric services.


Supply Chain is increasingly seen as a strategic partnerTo what extent does Supply Chain influence your overall business strategy?

y 2016 y 2017

Given the impact of supply chain disruption upon shareholder value, revenue and brand, it’s disappointing to see only 24% with C-level representation. Supply Chain touches every part of the organisation and in many ways it is the leading force in business transformation. We expect to see more Supply Chain representation at the C-level in the coming years.

– Richard Barnett, Vice President, Industry & Solutions Strategy, GT Nexus

Supply Chain is represented at

board level

The department is heavily involved an company strategy

Supply Chain is consulted on major changes and asked

for input

Supply Chain is re-active rather than

strategically involved

17% 23% 53% 8%24% 36% 35% 5%


M&A impact viewed as the biggest challenge for 2017 What is your single biggest challenge within SCM?

Managing M&A impact on the supply chain continues to be a major concern. But if you look at all four of the response areas, they all have a common denominator: the need for greater connectivity and collaboration across the supply network. All parties need to be plugged in, in a way that can foster agility, flexibility and visibility into inventory, trading partners and data.


If M&A is top of your agenda too then join us at LogiChem to hear from Miguel Gonzalez, Director of Global Logistics at Dupont and Tim Bett, Head of Supply Chain at Archroma, on how to maximise potential and minimise disruption from M&A.

– Gemma Burns, Conference Director, Worldwide Business Research

y How to optimise the service provided in order to increase customer satisfaction and loyalty

y How to develop strategic relationships with 3PLs/4PLs:

y How to best manage the impact of M&A on the supply chain in order to minimise disruption

y How to strengthen internal relationships between planning, logistics and customer services 37%

23%

21%

19%

http://bit.ly/1S7sTpL


Visibility and transparency are thought to be most important What matters most to your customers?

Visibility is the foundation for all four supply chain strategies. But it’s important to have a clear definition of visibility. Chemical companies need visibility beyond knowing the hemisphere where their goods sit. They need granular visibility to know that when a crisis like Hanjin erupts, they can pull up a dashboard and know within minutes the amount of exposure they have, or the volume of inventory that sits in harm’s way.


y Visibility and transparency

y Speed of delivery

y Price

y Reliability

Rat

ing

Ave

rage

0.50

1.00

2.00

1.50

2.50

3.00

3.50

2.92 2.872.73

1.48


Two thirds of companies do not have full visibility over all modes of transport in their supply chain How much visibility do you have into inventory and shipments across all modes of transport?

Most companies do not have sufficient inventory visibility. This correlates to current strategies and tools being deployed for visibility. Most chemicals companies are still relying on traditional enterprise software, such as ERP and TMS, that don’t have the foundational capabilities for complete visibility across modes and regions, or across multiple supply tiers.


y We have some inventory and shipment visibility,

but not across all modes of transport

y We have complete inventory and shipment visibility across all modes of transport

y We have very little inventory and shipment visibility across all modes of transport

y No opinion / I don't know

44%

29%

23%

4%


70% of companies are segmenting the supply chain based only on customer-identified needs or service-level agreements alone How are you segmenting your supply chain to improve the customer experience?

It’s disturbing to see so many chemicals companies formalising a segmentation strategy without taking into account the total “cost to serve”. If chemical industry leaders cannot manage with precision total costs including logistics and fulfillment by lane to a customer location, prioritisation by segment may not be optimized or even profitable. Often times, companies do not have the necessary data to know actual cost to serve. This could play into the survey responses.


y Based on customer- identified needs and value alone

y Based on distribution channel service-level agreements

y Based on customer- identified needs and value vs. actual cost to serve

y Segmentation via other methods

y Do not segment

40%

30%

17% 9%


Talent management is a key to the development of the supply chain leader How important is talent management to safeguarding the evolution of the supply chain leader?

Talent continues to be a major issue for companies in chemicals and other industries. There’s a demand for supply chain and logistics talent, and a growing need for leadership within organisations up to the C-level.


Very important

69%Fairly important

26%Not important

5%

If you’re among the 69% who believe that talent management is very important to the future of your Supply Chain leadership then you shouldn’t miss our opening panel discussion at LogiChem focuses specifically on this very topic: Taking talent in the supply chain to the next level: What are the critical success factors?

Featuring:Jan Roed, Head of Global Logistics, BorealisTove Andersen, Head of Supply Chain, Yara InternationalKarl Huhn, Vice President, Strategic Supply Chain Management, Wacker Chemie AGHenning Schussmuller, Senior Supply Chain and Logistics Manager, Sumitomo ChemicalMaarten Cornelissen, Head of Supply Chain, Teijin Aramid




The future’s bright, the future’s… digital?Digital transformation initiatives are becoming increasingly important to streamline supply chain operations.

It’s interesting to see such a high number recognising the importance of digital transformation, yet the numbers show chemical companies are still stuck in neutral. It appears there’s thirst for innovation and rewiring the underpinnings of the chemicals supply chain, but many are unsure where to begin.


Agree

83%Disagree

17%

Digital transformation is such a key issue that we have dedicated an entire day at LogiChem to this rapidly expanding and challenging field. We’ll tackle the big issues like: What does digital transformation of the supply chain actually mean? And how can you transform your supply chain with digitalisation in order to achieve a competitive advantage?




More can be done to enhance inter-departmental collaboration How much do you collaborate with logistics procurement in order to reduce Total Cost of Ownership?

Logistics procurement needs to be rolled into a broader, end to end supply chain strategy. Not only for reducing TCO, but for going on offense with the supply chain and identifying ways to become more customer-centric.


We have a working relationship with logistics procurement in regard to TCO

59%

We work closely with logistics procurement to reduce TCO

21%

Working with logistics procurement on TCO is not a priority for us

20%



Supply chain sustainability is a key concern How important is supply chain sustainability to your company?

Sustainability is important to everyone. The question is, how to bring sustainability goals into the context of operational decision making and trade-offs in transportation, logistics, and fulfillment. It’s still early in the days of sustainability strategy and there is a lot of work to do that goes beyond carbon footprint tracking, but getting into socially responsible production, working conditions, and environmental protection.


y Very important

y Fairly important

y Not important

70%

26%4%


3PLs and 4PLs are increasingly seen as a critical part of the chemical supply chain Do you believe that 3PLs and 4PLs are a critical component to the chemical supply chain?

Logistics providers are viewed as critical to the supply chain but there’s risk of over-dependence on 3PLs and 4PLs. The survey opens questions about the degree of outsourcing. How much control is being lost? Are companies taking advantage of historically low transportation rates? If you use multiple 3PLs and forwarders, how do you get access to real time shipment information and merge it with order/inventory status? Can your company move to the next level of supply chain maturity without access to real time, always on data exchange? The stakes are higher today and the demand for end-to-end visibility is greater than ever. Chemical manufacturers have to look beyond 3PLs, with visibility into the partner network, control from inbound to outbound lead time variability, service levels, and costs.


Yes, theyare critical

No, they’renot critical

76% 24%


Nearly half of respondents rely on licenced TMS for supply chain visibilityWhat technology do you rely on most for Supply Chain Visibility today?

TMS, EDI and 3PLs offer small glimpses of limited visibility. These may have been sufficient a decade ago. But today’s complex and demanding environment requires deeper visibility and agility. 24% are deploying cloud platforms. This number is expected to double in five years. The industry clearly sees advantages to a network approach, opposed to current data silos stemming from point to point connectivity or TMS. It’s clear that companies are calling for linkage to the broader order fulfilment process. The cloud / network approach is a major move in the right direction towards end-to-end visibility, whether its visibility to a 3rd party location or your own warehouse.


y Transportation Management Software (Licensed)

y Cloud-based platform (on-demand)

y Visibility provided by 3PL/4PL

y Point-to-point EDI Connections

48%

24%

16%12%


Use of cloud-based platforms expected to double in the next five yearsWhat technology do you expect to rely more on for supply chain visibility during the next five years?

Chemical executives clearly recognise the shortcomings of the status quo. We’re seeing a general trend towards taking over and directly managing partner integration. Point-to-point solutions appear to fall short in terms of agility and flexibility. This could be the driving force behind the movement to take control and move towards a network approach that ties in 3PLs and 4PLs to foster a collaborative and fluid supply chain. All industries are recognising the power of the network information model. Empowering all of the nodes of the network with data, visibility, BI, analytics and executional capabilities is essential. A cloud platform strategy is the only way to achieve this.



y Point-to-Point EDI connections

y Transportation Management Software (licensed)

y Visibility provided by 3PL/4PL

45%

38%

15%

2%


Multimodal visibility is important to 86% of companies

It appears that inventory data presented today isn’t dynamic enough. ERP solutions don’t provide sufficient visibility into in-flows and out-flows across internal and external partners. Doing so requires more depth. It’s difficult to sort through data from multiple sources like rail feeds, ocean or road carrier status, and inventory availability and then combine it with shipment planning for the next mode. There’s clearly room for improvement in terms of a control layer that combines all of this data for shipment planning.


y Somewhat important

y Very important

y Not very important

y No opinion / I don’t know

46%

40%

10%

4%


Fewer than one in ten respondents is fully satisfied with their ability to fulfil demand How do you rate your organization’s current ability to fulfil customer demand?

Variability is often determined by what portion of the value chain you are in. Regardless, there is always variability around fulfilment. Alignment between in-transit and transportation management can help. Today, lack of orchestration exists. Companies need to double down on multiple mode capabilities linking to inventory and buffers.

The short term move is to improve demand accuracy and re-engineer your process. Doing this requires tying together multi-mode visibility.


65%

9%

23%

3%

We need some improvement

Excellent. We don't need any improvement

No opinion/ I don't know

We need a lot of improvement


Respondents report a mixed approach to customer demand fulfilment What technology do you rely on most to manage your customer demand fulfilment process?

Companies are relying on EDI, ERP and demand planning for order visibility and execution. This is a fragmented approach. But 36% are deploying cloud. This is encouraging. An opportunity exists here to re-engineer order to delivery processes. This starts with tight integration of logistics and transportation fulfilment.

We expect cloud networks to increase in the coming years as more chemicals companies shed the limitations of traditional solutions and begin operating as global networks.



y Demand Planning Software (licensed)

y ERP System

y Point-to-Point EDI connections

36%

26%

22%

16%


About WBR Digital

At WBR Digital we design and

execute bespoke content marketing

campaigns, delivering insightful

content to our high-level audience all

year round.

We are a team of marketers,

researchers and writers with a

passion for content with a creative

twist. From research-based

whitepapers focused on your

priorities, to benchmarking reports,

infographics and webinars, we can

help you to inform and educate your

readers and reach your marketing

goals at the same time.

Contact us to find out how your business could benefit from:v Year-round access to the wider

WBR event database

v Lead generation campaigns that fit

your priorities

v In-depth research on current fast-

moving issues and future trends

v Promoting your expertise a

thought leader in your field

Contact: Chamatkar SandhuDigital Sales Director

+44 (0)20 7368 9383

[email protected]

About LogiChem

LogiChem is the must attend event

for heads of supply chain and logistics

from the world’s leading chemicals

manufacturers as they look to

achieve commercial and supply chain

excellence. LogiChem is the only

dedicated “supply chain as a business

enabler” conference in Europe and

the only place to meet 200+ chemical

supply chain leaders in one place at

one time.

About GT Nexus

At GT Nexus, we built a company

around a simple but very powerful

idea: put a single cloud-based

collaboration platform at the center

of a huge but enormously inefficient

industry — global trade and logistics

— and give companies a rapid, low-

cost way to enable hundreds of inter-

company supply chain processes on

a global scale, across entire trading

communities, to drive new levels of

operational efficiency and business

agility.

We provide the industry-wide

collaboration platform that leaders

from nearly every sector rely on

to automate trade and logistics

operations across their global partner

networks. For these companies and

their trading partners, GT Nexus is

where global trade happens.

Today, GT Nexus is the developer and

operator of the largest cloud supply

chain platform of its kind.


logichem.wbresearch · 2020-03-09 · logistics and category leaders from some of the world's...

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