COMMENT: Optimising customer service
By Ossama Tawfick, VP Sales, MENA, AspenTech
Outstanding customer service sets the standard for specialty chemical companies to differentiate their value proposition around the world. As oil prices remain low, a chain reaction has opened up opportunities to improve margins and strengthen market position.
Middle East chemical companies are likely to become truly global players; continuing to have access to favourably priced raw materials and potentially lower logistics costs due to greater proximity of the Middle East to growing Asian markets. The Middle East is in a prime location to tap into the emerging specialty chemicals market in China and the commodities market in Africa. (1)
Therefore, chemical companies are optimising assets through cost reduction logistics, segmenting demand versus supply strategies and tackling complexity. Managing the unknown more effectively and being more flexible across the organisation will reap greater rewards. With increasing pressure to respond to demand and provide quality products on time, Middle East businesses are optimising six key supply chain areas and embracing cutting-edge software to achieve competitive advantage.
Six key links in the chain
Despite volatility and uncertainty, the chemicals market in the Middle East is projected to grow significantly in the near future. As competition increases, best practices and innovative technology adoption remains key to competitive advantage.
Specialty chemicals are mainly manufactured in chemical plants using batch processing techniques. Products are typically high value with many specification variations and differentiators. The major product segments in this sector include paints and coatings, adhesive sealants, dyes and pigments, industrial gases, resins and plastic additives - all manufactured at predetermined and scheduled intervals.
By being more demand-driven, business can maximise market potential while mitigating risk. To do this effectively, organisations must address six key links in the supply chain to achieve best practices:
1. Improve customer service
Customer service levels are measured by on-time shipments of the right quality product in the appropriate quantity.
2. Decrease inventory
Demand-driven chemical companies are able to optimise their inventory and reduce inventory buffers, which are typically kept at higher levels than necessary in order to maintain good customer service levels.
3. Optimise production
Production lines need to perform smoothly to ensure batch product quality is maintained within specifications. Having an effective supply chain management system that can optimise batch sequencing means production is more likely to run efficiently, less time is spent in setups and clean-outs, and delays or disruptions can be addressed proactively, before they can impact customer orders or incur unnecessary expedited transportation costs.
4. Be agile
The ability to respond quickly to planned and unplanned supply chain shocks (i.e. equipment failures, raw material availability, labour shortage, stock-outs, unexpected demands, new orders, etc.) is essential to remaining profitable. By being equipped to analyse different responses to the unexpected, companies can choose the most appropriate response to issues and take corrective action that secures plant profits and meets customer contracts.
5. Reduce costs
Procurement, working capital, inventory storage, distribution and labour are key areas to potentially reduce supply chain costs.
6. Manage materials
Managing fluctuating raw material costs is especially important to specialty chemical manufacturers in order to set the right price expectations to customers. Robust planning and effective communications will protect customer relationships, which can have a significant impact on margins.
Completing the chain
Cutting-edge, end-to-end supply chain software improves forecasting, enables greater collaboration and assists with customer prioritisation. Empowering operations with easy to use planning and scheduling tools facilitates better decision-making to respond quickly to disruptions in plant operations.
Many companies have adopted AspenTech’s supply chain software solutions as the link to optimise end-to-end supply chain capabilities. Supply chain planning software can navigate supply chain complexity and identify problems in the plan that needs urgent attention.