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3 Challenges of the Chemical Industry Supply Chain and How to Beat Them!

3 Challenges of the Chemical Industry Supply Chain and How to Beat Them!

March 11, 2021 - Edwin Winder

Read Time 6 Mins.

Chemical supply chains stand at the crossroads of another upgrade; on one end there are traditional methods that pose challenges and on the other you have compelling technology solutions. Discover the significant challenges that lack of real-time visibility brings and how your organization can cope with them better.

The global chemical industry clocks over $5 trillion in revenue and employs about 20 million people, which is more than the population of Romania. Research suggests that the revenue can double by 2030 at its current growth rate. However, the rising industry expectations are putting a constant strain on the chemical supply chain. With the current state of the chemical industry supply chain, meeting these expectations is difficult.

Despite the revenue that the industry generates, enterprises are continually grappling with several chemical supply chain challenges. These challenges impact both product delivery and the supply chain expenses of your company. They can keep your chemical company from realizing its true financial potential.

But this is just the beginning! This article examines three significant challenges in the chemical industry supply chain and how you can manage them better.


inventory management in chemical industry supply chain

Challenge #1You CANNOT find inventory.

A billion-dollar chemical company typically has hundreds of warehouses spread around the world. If you work for such a company, you most likely have thousands of returnable assets such as ISO tanks, intermediate bulk containers (IBCs), cages, and other types of tanks in your warehouses, which you use to deliver your chemical products.

But inventory tracking is still primarily a combination of some conventional tracking systems (such as RFID tags) and human dependency. If you need to deliver a rush order, your ground teams will have to search for the right set of containers in your facilities.

This labor-intensive approach is time-consuming and increases the operational cost of your chemical industry supply chain. And the costs apply to buying new returnable assets or holding them in your warehouses.

If your team cannot find the required container in time, you either buy new containers or rent a new fleet, incurring additional costs. The worst-case scenario — you turn down/postpone an order because you do not know your containers' location.

In such a case, a sound inventory management system can make the process of inventory tracking much easier for you within your facilities.

In the context of inventory management in a chemical supply chain, you will have the following issues to grapple with:   

  • Lack of control over your inventory.
  • Your operation is labor-intensive.
  • There's inefficient orchestration of dispatches and asset retrievals.
  • You are not able to utilize your inventory list to optimum levels.
  • Lack of warehouse visibility.

There is a good chance you might be using some mechanism to track inventory. But most solutions available today may not be ideal for business operations. Many companies use outdated infrastructure-heavy technologies like RFID, which has several limitations.

RFID technology is equipment-intensive. It requires LAN setup, Wi-Fi connectivity, RFID readers, tags, etc. Readers and antennas are often purchased as CapEx, which requires you to make an upfront investment. Then there would be a waiting period until you have the infrastructure in place. Once the setup is complete, there will be periodic maintenance costs, along with additional training for your team.

Solution:
Get an INFRASTRUCTURE-LESS asset tracking system that works on OpEx

The first thing you need to realize is the value that an OpEx model brings toward operational simplicity and management costs when compared to the CapEx approach. It allows you to pay as you go, which means you only spend on inventory that you are using actively or need on standby.

The ideal approach is to look for an inventory monitoring partner that brings you::   

  • Real-time sensor data
  • Long-lasting asset monitoring IoT (Internet of Things) devices without infrastructure requirement
  • Real-time status of your inventory — including location in the warehouse, ETA (Estimated Time of Arrival) of delivery, empty or full status, etc.
  • Asset monitoring and analytics dashboards

demand supply fluctuations in chemical industry supply chain

Challenge #2: You are dealing with DEMAND-SUPPLY fluctuations.

The sheer size of the chemical industry makes it a complex entity; there is a lot to manage. The chemical industry often deals with large demand-supply fluctuations. These fluctuations can be due to volatility in the market, unavailability of raw materials, or varying customer needs. To aptly deal with these, free functioning your delivery lines is essential.

For instance, when you send a consignment to the customer location, there are many obscure visibility areas in between. Its delivery is often confirmed only when the customer unloads it and sends back a confirmation. Thus, your returnable assets are often waiting at customer locations.

Such a situation keeps you from using your returnable assets to their full capacity in your chemical supply chain. You cannot fulfill several orders because your team has zero knowledge about when your returnable assets will make it back to your warehouses, or you could be overstocking on returnable packaging.

It restricts you from delivering your chemical products promptly, causing disruptions. You depend heavily on your customers or fleet managers to confirm the status of containers. If you have a clear idea of the whereabouts of your returnable assets, you can optimize deliveries.

If your truck drivers know that empty containers are lying at customer locations, they can pick them up if the site is on their route. It will speed up the reverse movement of your assets.

Solution:
You can solve demand-supply fluctuation by using an advanced FOURTH GENERATION SUPPLY CHAIN CONTROL TOWER.

It will act as a hub for all the information about your returnable assets, ongoing deliveries, and even the ones that are planned.

Instead of being reactive, a fourth-generation supply chain control tower predicts disruptions in advance.

It offers excellent real-time visibility along with actionable data and insights relating to your chemical supply chain. The control tower analyzes data and makes patterns for reference. When the AI (Artificial Intelligence) finds deviation in typical patterns, it gives you warnings and informs what you can do to correct it. Such an AI is trained on years of data from the multi-modal shipment industry.

For example, if your warehouses are falling short of returnable containers, the control tower can warn you of an imminent supply bottleneck. You can get the following insights from such a system:

  • Shipment delivery uncertainty
  • Dwell-time for every asset, every asset type, and for individual locations
  • Delivery of raw materials
  • Velocity of your delivery
  • Delivery time based on live location data and other conditions
  • System throughput  it considers factors like manufacturing, distribution, and delivery
  • Insights on the outcome of disruptions
  • Automated exception flagging

unpredictable delivery in chemical industry supply chain

Challenge #3: You are dealing with UNCONFIRMED or UNPREDICTABLE DELIVERY.

As a chemical producer and supplier, you must deal with your assets' ambiguous location status.

You sent a consignment on time, but there was a delay in unloading the containers at the customer location. You have no way of knowing this until you get a confirmation of the same from the customer itself.

Until you get the confirmation, your inventory could be lying at a location that you have no clue about.

After the delivery is complete, the reverse movement of your assets is also subject to customer confirmation. All of this takes a lot of time and capital to track.

You are thus highly reliant on customers or third-party fleet owners to give you updates on your returnable assets. As a result of this, chemical supply chain assets are witnessing high dwell times at customer sites.

The lack of visibility causes unpredictable deliveries. Once the asset carrying the product leaves your warehouse, there is no way to know what is happening to it until it reaches a site where there is manual entry or a tracking terminal available.

Solution:
A real-time visibility solution can help you track your chemical consignment in transit, when it is waiting at a customer location, and when it has off-loaded the product.

Such a solution brings you end-to-end visibility. In the context of unconfirmed and unpredictable deliveries, getting a visibility solution helps you:

  • Iauditing the unpredictable using clean data and AI  
  • With actionable insights and not just flood you with data 
  • In reducing your loss of assets 
  • Iincreasing the velocity of your shipments

The Road to End-to-End Visibility and Predictability

In the chemical supply chain domain, enterprises feel friction while optimizing, which can be solved with real-time visibility solutions. Apart from the challenges listed here, chemical producers must continuously adapt to changing government regulations, carbon-neutrality commitments, and other international compliances.

It is better to look for a visibility partner who can bring you a solution that:

  • Is lean in terms of application: Little or no infrastructure costs are involved.  
  • Allows you to pay as you go: It will save you a lot of capital as you can pay according to your needs.  
  • Offers reusable real-time sensors: The visibility solution provider is also responsible for the reverse logistics of your assets.  
  • Provides a scalable solution: It should be able to serve companies of all kinds of sizes.

The chemical industry supply chain needs to evolve at the pace of the industry itself. Technology can enable this evolution, but coping with swift change is also equally important. To make sure that your supply chain needs are met, look for a visibility partner that makes things easier for you.

chemical industry supply chain management solution

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