Globalization opens up a number of degrees of freedom in the supply chain—there are more places that products can be made; customers are spread across the globe; and demand is shifting to Asia, with rapidly growing consumption especially in China. And for the chemicals sector—one of the largest and most diversified industries in the world—the trend toward more global supply chains creates complexity and competition that did not exist five years ago.
Made up of several smaller industries including bulk, specialty and polymers, the chemicals sector covers hundreds of segments—to which supply chain and logistics are vital to chemicals companies’ success because they represent a high share of cost and are critical for service level and top-line results. They are a means for chemicals companies to fight back against the pressure imposed by fuel price increases. To alleviate such pressures and overcome challenges such as accurate asset management across its various segments, chemical companies must deploy a fully scalable and interoperable solution to gain an accurate view into their supply chain issues.
Forecasted to reach $4,297.7 billion in overall value by 2014 (an increase of 46.4 percent since 2009) according to the “Chemicals: Global Industry Almanac” from the Datamonitor Group, the chemicals sector in Western Europe alone provides employment to about 1.26 million people.
Further exacerbating its supply chain issues is the fact that many chemicals companies rely on a complex mix of spreadsheets, enterprise resource planning (ERP) systems and supply chain management applications to manage their assets. While ERP is typically the system of record, supply chain technology solutions often require data that is in a different form than the ERP contains or even falls outside of the ERP system entirely. One example of this includes set-ups and transitions in the polymers industry, which are typically not captured in the proper level of detail, if at all, in the ERP system. Polymers producers are looking to minimize time spent in transition from one grade to another, which takes up valuable capacity on assets and produces off-spec material that must be sold at a discount or on the scrap market.
Unfortunately, this complicated blend of solutions is not well-suited for tracking assets throughout the enterprise and into the wider supplier and customer supply chains if a framework is not in place for both business process and technology integration. When information is stored in many different places and systems, it limits visibility and creates ground for silos of information to develop. As a result, planners, schedulers, operations and business leaders may be looking at different information. Integrated systems and business processes are necessary for everyone to be working from ‘one version of the truth.’
To achieve actionable insight into key chemicals supply chain issues requires a fully comprehensive, tightly integrated solution, capable of melding together collaborative demand management, planning and scheduling that in turn integrates with manufacturing execution systems (MES) and ERP.
This type of integration is critical if manufacturers are to manage their assets as effectively as possible and truly optimize their production processes. Any application that sits in isolation—whether it is scheduling, advanced process control or MES-related—will only result in a small proportion of the requisite value. The success of an individual plant or of the wider supply chain is not about isolated technological capability. Implementing integrated software solutions will deliver more effective business value and help to avoid a technological ‘disconnect.’
Supply chain best practices
Certain best practices and capabilities are key components in achieving the necessary visibility and integration of software systems to best manage process industry supply chains. These include:
- An easy to use, interactive interface for viewing the schedule and providing forward visibility of inventory positions
- Modeling of detailed operational constraints at the level of detail required to accurately represent the real-world capabilities with enough fidelity to accurately evaluate alternatives
- Fast optimization and robust what-if analysis to holistically simulate the impact and trade-offs of business decisions
- Advanced visual exception reporting that supports the Sales & Operations Planning (S&OP) process by highlighting the most urgent problems along with guided analysis to resolve them
- Dynamic scheduling with real-time response, allowing the scheduler to quickly make feasible changes to the schedule, respecting equipment constraints, raw material availability and batch dependencies
There is also a drive to standardize and simplify supply chain solutions. Chemical companies are moving away from the highly customized applications that they had a decade ago and want solutions that are easier to use and easier to support. For example, AspenTech customers use Aspen Plant Scheduler as their global scheduling solution for all of their plants worldwide. Plant-specific customizations are limited, resulting in a scalable application with a common look and feel and similar capabilities, regardless of location.
Track and trace
Chemical manufacturers typically need to have sufficient insight into the entire process to trace or assess materials and identify any discrepancies in the production process. Obtaining this kind of feedback is vital for plant planners and schedulers if they want to improve performance. It is a continuous cycle, which improves planning continually over time.
In batch process industries such as specialty chemicals, traceability typically takes on two forms. The first, known as product tracking, is the capability to follow the path of a specified unit of a product (or asset) through the supply chain as it moves between organizations. The second, product tracing, is the capability to identify the origin of a particular unit and/or batch of product located within the supply chain by reference to records held upstream in the supply chain. Products are traced for purposes such as quality problems, product recall and investigating complaints. AspenTech helps companies address these issues.
The aspenONE product suite contains traceability solutions which are able to collect and capture data and ‘interrogate’ it to find the source of problems across the manufacturing process. The additional benefit of these tools is that they successfully integrate with such systems as distributed control systems (DCS); laboratory information management systems (LIMS); and ERP.
One of the key objectives of traceability is to provide visibility across the supply chain, where all key stakeholders have a common view of activity across the chain. In a typical chemicals supply chain, visibility of plan versus actual information is an essential metric for detecting potential problems in time to make necessary adjustments going forward.
A main requirement of chemical facilities is to comply with existing and impending regulatory, business, and operational requirements. Accurate representation of these requirements through models and constraints benefit chemicals producers in both the short and long term. In the short term, it enables quick decision-making when a planner or scheduler is faced with an unexpected production upset—such as an equipment failure or raw material shortage. In the long run, detailed planning and scheduling models give chemical companies the ability to manage long lead-time raw materials; avoid delivery date violations; optimally position inventory; and plan for scheduled maintenance activities.
Timeliness is also a key issue here. Chemicals companies need to ensure that they receive information quickly enough to be a useful aid to decision-making. Technology investment—including process optimization software solutions—allows them to see and use real-time information from operations. These solutions facilitate excellent manufacturing performance and enterprise-wide process synchronization.
The chemicals industry today is in a dynamic growth phase and the prospects for future development look positive. However, if the sector’s potential is to be fulfilled, clear visibility and high-quality integrated supply chain management are essential ingredients for success. The use of process software optimization tools need to be an integral part of monitoring and measuring plant performance and should be seen as mission-critical to achieve high levels of efficiency across the entire chain.
Laura Rokohl is the Chemicals Supply Chain Manager for Aspen Technology Inc., a provider of specialized supply chain solutions for the process industries. With AspenTech for 12 years, she conducts ongoing supply chain market research and helps many chemicals, polymers and process CPG clients define and improve their supply chain business processes.