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The Top 5 Supply Chain Challenges of Chemical Manufacturers

1/7/2021

refinery - chemical factory at night with buildings, pipelines and lighting - industrial plant

by Rick Kelly

There’s no question that managing chemical manufacturing supply chains is a challenge, especially in light of a global pandemic. The chemical industry faces numerous challenges, from shifts in feedstock costs to changing customer preferences. Given the many chemical manufacturing/supplier vulnerabilities, it’s more important than ever to have a keen understanding of your entire supply chain.

If chemical companies want to remain competitive in an ever-changing world, they must rapidly adopt innovative technologies. Obviously, speed and agility are the keys to staying resilient and competitive. But in order to react quickly, it’s paramount to have complete, intelligent visibility into your chemical supply chain, and that includes visibility into numerous “black holes” such as tank supplies, regulatory compliance, flow rates, availability of specialized crews, distributor lead times, delivery truck data, changing customer preferences, inventory shortages and many other factors.

Here are a few of the top supply chain challenges facing chemical manufacturers today:

  • Complex chemical manufacturing supply chain 

The chemical manufacturing industry is quite different from other manufacturers in that chemical manufacturing can run as batch productions, or various kinds of chemical processes can merge and end up as either intermediate or finished goods. Because of this, any inventory planning, cost calculations, and managing quality control are highly complicated.  It’s also difficult to determine how chemical products are ultimately used, as often their products are only an intermediate step in the process of developing a final product. 

  • Highly commoditized

Chemical manufacturers have customers that rely on several different companies to get the materials they need. If one manufacturer can’t supply a customer with the right product in the right quantity at the right price, the customer can simply turn to other competitive suppliers. A digital visibility platform can be used to improve demand visibility and supply capability to ensure that the chemical manufacturer can meet customer needs.

  • Highly Regulated

The chemical industry is subject to complex and ever-evolving laws and regulations. With changing global data and labeling standards, chemical companies are turning to a “single source of truth” in a centralized labeling system. When government regulators mandate new procedures, chemical companies must comply or face costly fines. Failure to comply with regulations can affect sales as customers seek alternative sources, and competitors jump on the opportunity to attract new customers.

  • Large Amounts of Data

The chemical industry generates huge amounts of data every year, including 50-50,000 data points per raw material, 10-100 samples per test, 5,000-10,000 pieces of equipment per plant, and 50-150 data points per customer. A digital visibility platform, powered by hyper-scale cloud, digital twin, AI/ML and IoT technologies, can analyze this data in real time to aid in production scheduling, asset location, inventory management, customer service, and regulatory compliance.

  • Asset Tracking is Critical 

Maintaining tight control of critical assets such as specialized chemical equipment and ISO tanks is essential. An ISO tank is a container that is built to the ISO standard (International Organization for Standardization). ISO tanks are designed to carry hazardous and non-hazardous liquids in bulk and are a reliable, cost-effective and safe way to transport bulk liquids. A digital visibility platform can be used to securely monitor the condition and location of specialized chemical equipment and ISO containers, allowing users to see their entire inventory in real time.

Digitalization of the supply chain will be a driver of transformation change in the chemical industry. To accomplish the objectives of asset tracking and serialization for chemical products, supply chain visibility is key. Without intelligent supply chain visibility, companies will not be able to see all the activity among their suppliers, vendors, partners and shippers, as well as see real-time conditional information of the products during transit on railcars, for example.

Modern solutions such as a digital visibility platform can enable chemical manufacturers to identify blind spots, improve operational productivity across all regions, meet consumer demand and increase profitability. To identify blind spots, the visibility platform can track both hard and soft attributes within a chemical manufacturer’s supply chain. Hard attributes include location, temperature, vibration, humidity, etc., while soft attributes are things such as purchase orders, payment terms, weather, and traffic conditions. By tracking these changes in hard and soft attributes, chemical companies can make more accurate predictions, plan better, make decisions faster, reduce risk and increase revenue. 

A digital visibility platform can provide conditional information at every stage of the chemical development process, so engineers can see what’s happening at all times, allowing them to spot problems or notice areas for improvement. Once organizations can track both hard and soft attributes in real time, they can create a digital twin, which enables real-time analysis. This is where the real value of end-to-end visibility comes into play: this data can then be used to take timely action, mitigate risk and improve chemical operations and planning. Cloudleaf’s Digital Visibility Platform also enables end-to-end continuous visibility of inventory, which helps optimize work-in-process (WIP) and production scheduling, leading to improved inventory accuracy and a reduction in production downtime.