Individual consumers are accustomed to having many personalized choices in the materials and services they buy. Options abound for everything from color, size and quantity to payment method and delivery channel.
We see the chemical industry heading in this same direction. However, chemical companies face a major challenge with global supply chain complexity.
For the last three decades, we have seen a steady expansion of the global chemicals supply chain. Spurred by a number of factors—e-commerce, liberalization of trade agreements, investments in transportation infrastructure, improved methods of international communication, and advances in transportation technology, among others—supply chain globalization has opened new market opportunities and broader avenues for partnership and collaboration. But this growth has also brought increased complications.
To address complexity while delivering on customer demands more effectively and efficiently, chemical companies are now looking to enhance their supply chain capabilities. This means going well beyond achieving functional excellence in traditional models—plan, source, make, deliver and return—to adopting advanced data-driven and cloud-based capabilities that enable faster, more flexible and personalized customer experiences.
With the industry undergoing significant change, chemical companies should make investments today to prepare for the supply chain of tomorrow. We’ve identified three prime areas where chemical companies are innovating:
- Living segmentation – adapting the supply chain dynamically to changing customer needs
- Asset-light network – building a more agile business model leveraging an ecosystem of partners
- Data and applied intelligence – gaining deeper supply chain visibility for real-time decision-making
By enhancing capabilities in these key areas, companies could be in a stronger position to adapt to an ever-changing, complex landscape. Let’s explore each of these areas in more detail.
Living segmentation
Chemical companies can better serve customers and meet their expectations by using living segmentation to individualize crucial supply chain capabilities. This means connecting more precisely to each customer’s unique requirements and tailoring supply chain capabilities to those desired needs. In pursuing this strategy, a key question can be addressed: Is living segmentation on the front end flowing through sales and operations planning to ensure the supply chain is keeping up with customer expectations?
As end products become more advanced and differentiated, so will the required chemical inputs. Incorporating living segmentation into the chemical supply chain will help companies adopt a “batch size of 1” production mentality. For example, a global coatings company may have one base product that can balloon into thousands of SKUs for its customers based on attributes such as color, viscosity and finish. Through living segmentation, coatings companies can create micro-segments to better align their offerings to the diverse market segments with which they interact—automotive, aeronautics, marine, transportation infrastructure, interior and exterior building applications, etc.—and provide more value.
Moreover, chemical companies will need to enable service-oriented operating models that address customers’ specific priorities (i.e., availability vs. flexibility vs. cost). Once these priorities are accounted for, customer experiences could be significantly improved.
