Seven Strategic Components for a Proactive Process Chemical Supply Chain


Process chemical manufacturers face complex supply chain challenges including dealing with hazardous and perishable ingredients whose characteristics (potency, color, composition, etc.) Add to these factors razor-thin margins, SKU-proliferation, globalization, long lead times to increase capacity, and products that tend to be heavy and expensive to move and you start to understand the complexities involved with running an efficient process chemical supply chain.

Provoking the Industry to Move Past Incrementalism

Supply Chain Shaman

To make the argument, let’s look at industry orbit charts in aggregate for the period of 2006-2017 for the apparel and chemical companies. An orbit chart is a plotting of data at the intersection of two metrics. In this case, the metrics are operating margin and inventory turns. In the chemical industry, the boon was the falling price of oil. Chemical margins are following oil prices. Similarly, in the chemical industry, margins have gone from 7.5

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Supplier Quality Management: What it is, 5 Key Metrics to Know & a 4 Step Supplier Evaluation Process


The next posts in the series will break down metrics and issues to consider in SQM by industry and conclude with a case study on the application of SQM. 5 Key Metrics to Use for Scoring Supplier Quality Management (From LNS Research ). The definition of this metric is similar to the way it sounds. Quality affects many different parts of the business, so it is critical to establish a comprehensive metric that provides visibility into the most important areas of operations.

Don’t Perpetuate the Hoax of the Gartner Top 25

Supply Chain Shaman

As a result, when the spreadsheet is sorted, a chemical company is stack-ranked against a retail player, and a high-tech company against a food distributor. Supply chain leaders manage a complex system of non-linear, but very inter-connected metrics. Leaders need to balance a portfolio of metrics. Year-over-year Improvement at the Intersections of the Metrics. It is a study of performance patterns at the intersection of the metrics.

Rating Sustainability Performance: An Essential Business Metric


Read on for more details about EcoVadis ratings in this interview (first published on the ING Wholesale Banking site): Rating Sustainability Performance: An Essential Business Metric. Our ratings have also been adopted by six industry initiatives, including chemicals, consumer goods, rail and beauty/cosmetics, as a standard for assessing their collective supply chains.

Key Ingredients to Formulating a Winning Supply Chain Strategy in the Process Chemical Industry


Chemical manufacturers are faced with shrinking margins and cannot afford to put the wrong product in the wrong location at the wrong time. Aligning and integrating key performance metrics across the extended supply chain can be difficult. For additional information, download the white paper: Process Chemical Supply Chain Planning: Finding the Perfect Formula Process manufacturers face a highly complex supply chain challenge.

Announcing the Supply Chains to Admire for 2019

Supply Chain Shaman

We selected these metrics based on correlation work with Arizona State University in 2012. The winners drove long-term value (measured by market capitalization) while outperforming on the portfolio of metrics shown in Figure 1 and driving improvement faster than their peer groups. The companies I work with struggle to set metrics targets. I watch the news channels on mute. The reason? I hate political pundit debates.

Measuring Up?

Supply Chain Shaman

The supply chain is a complex system with finite, and non-linear relationships between supply chain metrics that drive balance sheet results. We find that companies can improve one, but not two of the metrics. Teams struggle to drive improvement in both metrics at the same time. We term these the Supply Chain Metrics That Matter because they have a higher correlation to market capitalization.). C2C is a compound metric of receivables plus inventory minus payables.

Announcing the Supply Chains to Admire 2015

Supply Chain Shaman

It is for this reason, that we analyze the patterns of the Metrics That Matter using orbit charts over the period of 2006-2014. The analysis is designed to analyze supply chain leader success on a portfolio of metrics. Nine out of ten are stuck unable to make improvements in these Supply Chain Metrics That Matter. Tomorrow, we will celebrate this accomplishment with three of them: General Mills, Intel, and Eastman Chemical.

Will the Downturn Signal an Upturn?

Supply Chain Shaman

They wanted to know, “ How was the market affecting the chemical supply chain?” DuPont as a chemical supplier to the market sits four-to-five levels back in the supply chain with extreme demand latency (about six months) and high volatility of the true market demand signal due to the bullwhip effect. Lora wrote the books Supply Chain Metrics That Matter and Bricks Matter , and is currently working on her third book, Leadership Matters. Volatility.

Wanted: Supply Chain Architects!

Supply Chain Shaman

Forty years ago as a chemical engineering student, I learned the tedious craft of chemical plant design. Getting good at factory design is a merit badge of sorts for the chemical engineer. I then pack my bags and scoot out the door to sign books and discuss the research completed for the S upply Chain Metrics That Matter book at the ISM event on Thursday, May 14th in Atlanta.

Why I No Longer Believe in the Gartner Supply Chain Top 25

Supply Chain Shaman

The AMR Top 25 was the first methodology that tried to connect financial metrics with supply chain excellence. It elevated the discussion on supply chain excellence and drove more discipline and rigor in the use of financial metrics. As a result, asset-intensive companies like chemical or semiconductor will never win this beauty pageant. See how different the progress is on this metric by industry? Capital Markets reward balance in a Portfolio of Metrics.

Writing: Working on My Book

Supply Chain Shaman

Interview for Metrics That Matter. My kitchen table is piled high with interviews for the upcoming book, Metrics That Matter. Prior to joining Starbucks, he worked at the executive leadership level in Europe, Latin America and North America at ICI, a global chemical company. I recently interviewed him for my upcoming book, Metrics that Matter, that publishes in August 2014. Which metrics do you think matter to supply chain excellence?

Insights from Elemica reveal 2014 Frankfurt

Talking Logistics

Herman Woltjes, Shell Chemicals – “Logistics Execution”. Shell Chemicals (“Shell”) uses several of Elemica’s logistics solutions, including Road Transport Execution , which enables Shell to connect and collaborate with its land-based transportation providers for shipment booking, execution, and visibility, and Time Slot Booking/Optimization , which enables the company to schedule and manage carrier appointments to optimize site and carrier resources.

Corporate Risk and the Growing Case for Sustainable Chemical Management

UL EHS- Sustainability

With more than 70,000 chemicals currently in common use – and 1,000 new chemicals coming into use every year – maintaining and managing their effective, appropriate and responsible use is a challenging task. Cost, process, regulatory and safety issues converge to making chemical management a critical, complex and cumbersome activity. But by implementing a range of measures on site and across businesses, the risks associated with chemical use can be eliminated.

Good Safety is Good Business at the LogiChem 2015 Conference

CH Robinson Transportfolio

I always come back from these conferences inspired and fascinated at how diligent chemical supply chain managers must be to mitigate risk and adverse events. At LogiChem, attendees interacted through roundtables and panel discussions on topics that identified best practices around inventory and supply chain metrics, third party logistics provider (3PL) management, rail logistics strategy to combat the driver shortage dilemma, and a host of other topics.

How America's Clean Coal Dream Unravelled

Supply Chain Brain

Chemicals & Energy North America Home Page Latest News Home Page Slider News Quality & MetricsThe $7.5bn Kemper power plant once drew officials from as far as Saudi Arabia, Japan and Norway to marvel at a 21st-century power project so technologically complex its builder compared it to the moonshot of the 1960s. It’s promise? Energy from “clean coal.” “I’m

Who Should Be In The Winner’s Circle?

Supply Chain Shaman

The methodology did not include a peer group analysis, and I strongly felt that chemical, retail, and telecommunications companies should not be compared in the same analysis. The first step was to charter a research project with the Arizona State University statistics department to analyze which combination of metrics drives the highest market capitalization. The research project analyzed 1200 combinations of 180 metrics for four hundred companies for the period of 2010-2012.

BASF: A Story of a Supply Chain Leader

Supply Chain Shaman

Over the period of 2009-2015 only 88% of companies made improvement on the “Supply Chain Metrics That Matter.” (The The Supply Chain Metrics That Matter are a portfolio of metrics which correlate to higher market capitalization. The composite of metrics includes growth, operating margin, inventory turns and Return on Invested Capital.) While most companies make improvements in single metrics, pushing the whole portfolio forward is tougher.

Control Towers: If Only There Was A Clear Definition

Supply Chain Shaman

The focus is on functional metrics, but are unable to get to overall supply chain metrics. I was luck enough to get to take this class twice, and it was one of the most profound courses that I took in chemical engineering school. We finished dinner. I pressed my neatly folded napkin to my lips. As we waited for coffee, silence hung heavy in the air. My client writhed in her seat and hung her head as she asked, “I read your article on control towers, but I am confused.

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Supply Chain Shaman

Take the chemical industry. The reason is that as a chemical company, they must run assets, and the methodology penalizes companies with deep asset strategies. As a result, the metrics have to be viewed together as a pattern over time. In the journey, the supply chain leader needs to improve the potential of a portfolio of metrics. I find value in looking at these metrics together. These metrics are inter-related and the relationships are not linear.

L’Oréal: A Case Study in Supply Chain Excellence

Supply Chain Shaman

The award, based on beating the industry peer group on rate of improvement on the key metrics of growth, operating margin, inventory turns, and Return on Invested Capital (ROIC) while outperforming their peer group, is tough to achieve.

Power B2B Networks

Supply Chain Shaman

In figure 1, it is clear in process networks (industries of chemical, pharmaceutical, and food) that there is a significant different in capabilities when companies use B2B Networks versus EDI, Fax, email or spreadsheets. If you miss reading the Shaman in the next few weeks and you want some new reading in the area of supply chain excellence, consider tucking my new book Metrics that Matter into your suitcase.

How Supply Chain Will be Affected by Hurricane Harvey

Material Handling & Logistics

The Institute for Supply Management conducted a special survey that asked members to assess how Harvey might impact six key business metrics and whether they may be impacted by shortages of input materials due to Harvey. "Our The manufacturing PMI and non-manufacturing NMI summarize supply managers’ reports as to how their organizations fared in the past month with regard to a set of key business metrics. Employment was the only metric in the third group of least impacted metrics.

Supply Chain Diagnostic: A Four-Step Process

Supply Chain Shaman

In Figure 1, we show the aggregate trend of the chemical industry in an orbit chart format showing year-over-year results at the intersection of two metrics operating margin and inventory turns. In the period of 2010-2018, within the chemical industry, margins fluctuated, largely driven by the price of crude, but inventory turns plummeted. Orbit Chart for the Chemical Industry for the Period of 2010-2017 at the Intersection of Inventory Turns and Operating Margin.

Are You Feeding the Beast? Or Driving Progress in Your Business?

Supply Chain Shaman

Then it is off to Dallas to speak on Supply Chain Metrics That Matter at the Dallas CSCMP roundtable and complete some more client work. We know from our correlations to supply chain financial metrics that when companies have balance between the “S” and the “OP” have organizational alignment, that progress is faster on the Supply Chain Effective Frontier balancing growth, costs, cycles and complexity. As a mom, I loved to read to my daughter.

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Taking the Hill

Supply Chain Shaman

This week, at Supply Chain Insights LLC, we published our 11th report in the series titled Supply Chain Metrics That Matter. We do not believe that there is much value in putting all companies into a spreadsheet and shaking them up… or looking at singular metrics without analyzing the intricate trade-offs of the supply chain when viewed as a complex system. When companies look at singular metrics (labor costs or inventory), they have moved backwards.

Make Your Supply Chains Less Complex – and Less Wasteful!

Talking Logistics

Mariotti states that you first have to measure it, and he outlines several metrics and techniques in the book, including ranking customers by annual sales, profit, and gross margin percentage. Adam Russell, former group leader and Six Sigma master black belt for Eastman Chemical Company, highlights this problem in a March 2012 article in Chemical Processing : The chemical industry boasts plenty of people with good analytical and problem-solving skills.

How to make S&OP meetings a highlight in your team’s calendar


Common causes for this include poor change and process management, misalignment in terms of business strategy, mismatched metrics across the business, dysfunctional technology and lack of expertise to operate and implement technology. We recently offered a workshop at LogiChem, a chemical industry conference. Sales and Operations Plan ning has become a standard process to improve business performance, collaboration and predictability.

Advanced Analytics Are Everywhere!


Swimming pool control systems that automatically adjust chemical levels based on your desired water chemistry and immediately alert you to potential issues or equipment failures.

Advanced Analytics Are Everywhere!


Swimming pool control systems that automatically adjust chemical levels based on your desired water chemistry and immediately alert you to potential issues or equipment failures.

What About the Supply Chain Index?

Supply Chain Shaman

It is a quest and the subject of my next book, Metrics That Matter , that will publish in September, 2014. A chemical company just should not be compared to a high-tech company using this methodology. Overall, supply chain leaders deliver results that have strength (year-over-year performance improvements), balance (a set of balanced metrics within a portfolio) and resilience (predictable and reliable results with few swings). I have traveled 12,000 miles this week.

Stories of Supply Chain Leadership: An Interview with Joan Motsinger of Seagate

Supply Chain Shaman

We then rated companies on their ability to manage and improve a portfolio of metrics: operating margin, inventory turns and Return on Invested Capital (ROIC). To make the Supply Chains to Admire list, a company had to score above average of their peer group for supply chain improvement as measured by the Index, and drive performance above average in the portfolio of metrics for operating margin, inventory turns and Return on Invested Capital (ROIC).

S&OP: Five Steps to Get Started

Supply Chain Shaman

Apple’s requirements are slightly different from BASF and Logitech dissimilar than Eastman Chemical. We discussed the Supply Chain Metrics That Matter research and the fact that a balanced portfolio of metrics drives a higher market capitalization than a focus on functional metrics or single metrics. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter , and is writing her third book, Leadership Matters. It is Sunday.

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What is MRO and Why is it Important?

Supply Chain Game Changer

” Examples of items included in MRO are: Chemicals, lubricants, gaskets, cleaners Office supplies Repair tools, hand tools Safety equipment Gloves, cloaks and workwear Batteries Furniture, fixtures Compressors, valves, pumps, belts, motors Computer equipment, computerized tools Etc. If you run out of a vital chemical, tool, or element used in the equipment that is a part of the production process you can stop your production line immediately. Subscribe Here! Email Address.