Experts discuss the profit potential of a streamlined chemical supply chain
Supply Chain

Experts discuss the profit potential of a streamlined chemical supply chain

The latest E-Conference by ICN delved into improving operational efficiency; inventory management and optimization; sustainability readiness; technology integration; and real time monitoring

  • By Rahul Koul | June 12, 2024

Leading chemical industry experts discussed the latest digital solutions to address challenges within the supply chain and inventory management at the E-Conference, ‘Maximizing Profitability through Chemical Supply Chain Optimization’ organized by the Indian Chemical News on June 06, 2024 . The session was moderated by Pravin Prashant, Executive Editor, Indian Chemical News.   

“We are currently offering solutions to streamline the inventory and supply chain management for players across various industries including chemicals, petrochemicals, energy among others, helping them to achieve supply chain efficiency and agility. We have solutions for short term, medium term as well as long term supply chain and integrated business planning,” said Dr Warren R. Becraft, Senior Principal Solutions Consultant, AspenTech while explaining the solutions offered by his company. 

“With our aspenONE Supply Chain Management, companies can achieve supply chain resiliency while meeting sustainability targets with a comprehensive planning and scheduling solution. Our product range includes Aspen Collaborative Demand Manager, Aspen Supply Chain Planner, Aspen Supply Chain Management Insights, Aspen Plant Scheduler, and Aspen Schedule Explorer.  In terms of Sales & Operations Planning or Integrated Business Planning (S&OP/IBP), we offer a monthly 4 step decision making process that drives alignment to capture opportunities and mitigate risks. First is the Demand Planning Process where a consensus is arrived on what is to be sold and what revenue will be produced. Second is the Supply Planning Process to create a supply plan that includes a rough-cut manufacturing plan, procurement plan, distribution plan, and costs. Third is S&OP/IBP Meeting to discuss and resolve any imbalances between supply and demand. Fourth is the Executive S&OP/IBP Meeting to present a recommended plan to management for approval,” added Dr Becraft. 

“There are three key challenges before chemical companies. First is sales and marketing, second is manufacturing, and third is the supply chain. Integrated business plan is one solution that is followed by the most of the companies but the question is whether it is full proof in case of sudden disruptions? It might not always work as per expectations. Therefore, i believe the collaborations with our vendors are very important and if we convert them into business partners, their support could come handy in such situations,” said Dr Prasanta Gupta, Chief Procurement Officer & EVP, Aarti Industries Limited. 

“We are identifying the low risk partners and entering into long-term contracts with commitments. It helps to schedule the supply chain as per Networked Trade Platform (NTP). This becomes a win-win situation. More important is to identify the risks in the supply chain in terms of complexities. Once we identify them and equip ourselves to be future ready. The use of AIML to find the lagging indicators in mid-term and long-term through analysis. The capability development of the team that handles it is important. We have started a negotiation factory based on compiled case studies from procurement. We do brain-storming to generate new ideas. It helps in creating innovation within the supply chain and also makes the people's future ready. It builds resilience among the workforce,” added Dr Gupta. 

“Most of the companies have some sort of protocol to define the minimum inventory and maximum inventory and they try to follow it, but there are unprecedented changes happening on a daily basis. Fundamentally, there are different categories of products that the companies are dealing with. We are dealing with intermediate and basic chemicals on the product side and on the feedstock side, we have salt, caustic soda, solvents and specialty chemicals. We classify our inventory management and optimization approach on the basis of the product we are dealing with. In some cases, inventory minimizing is not the objective but inventory securitization. If the logistics cost of salt is much higher than raw material cost then we try to optimize the cost of ownership rather than only inventory carrying cost. It is a comprehensive solution as one size fits all kinds of solutions is not possible," said Munish Rathi, CMO, Chlor Alkali (India) Business, Aditya Birla Group.

"In certain cases the inventory design is controlled by the government regulations. For example, in the case of one of our products, Chlorine, it is the regulations that determine how much of such chemicals can be kept at one particular site. While there are many tools that are available, we have our in-house tools that are SAP kind of ERP, helping us in inventory optimization including customer forecast and rolling forecast. This encompasses the whole chain from supply to customer service, nature of product, availability at local or international level," added Rathi. 

Sharing his perspective on tackling disruptions in the supply chain, Arun R. Salvi, Head- Supply Chain, Petchem, Reliance Industries Limited says, "Few of the key challenges that inventory optimization faces include unplanned shutdowns at manufacturing sites. These have to be either included in the planning cycles from the very beginning or the decisions have to be taken in the middle of planning cycles for better optimization during such shutdowns. When your competition is supplying the products to the similar market during your shutdown then it becomes necessary to capitalize the inventory both in terms of raw materials and finished goods point of view. Apart from this, the geopolitical situation is also impacting inventory optimization rules, therefore, increasing the need for bringing necessary agility." 

"When you look at the domestic consumption in terms of last mile primary and secondary especially when you have a large warehouse network across the country to service your demand. And also when you need to decide which level of inventory you want to keep, it also plays a role in our inventory optimization.  In terms of transition grades, these need not necessarily be high volumes but it could be specific in high contribution and, therefore, may require specialized handling, specialized production or your efficiency could be consumed higher or lower. Thus they need to be planned in advance otherwise the overall optimization schedule will be left out. Similar grades, transition grades, downtime also affect the inventory optimization. In terms of tools, different levels, right from manufacturing site to production to warehouses, at least the routes could be different, and therefore something like ageing of stocks, managing this through Integrated Business Planning (IBP) process becomes important. That is where the retro analysis for better decision, now being incorporated through various tools, helps in better inventory planning,” added Salvi. 

Most of the experts agreed upon the need for incorporating the latest technologies such as digital twins, AIML, and blockchain for data analytics, predictive analysis for cost benefit analysis and efficient inventory scheduling and planning. They also emphasized on the awareness on the part of companies and the timely decisions on account of collaborative models by the respective managements. 

The event supported by AspenTech was attended by delegates across the chemical, petrochemical industry and energy sectors.




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