Stop Crying Over Feedstock Supplies – Take a Tissue

Posted on March 7th, 2016 by Ken Klapproth in Chemical Manufacturing Excellence

With all the recent issues issues in the oil markets from foreign exchange factors to uncertain demand growth and the return of Iran to the global market, are there lessons learned from manufacturers of other products – such as facial tissues – that chemicals companies can apply to improve certainty in their feedstock supply chain?

All industries today rely on an ever connected supply chain increasingly spread geographically. This not only puts downward pressure on gross margins, but increases risk as measured by metrics such as dropping Days of Inventory and Days of Working Capital. News such as China cutting steel production and Tata announcing job cuts published recently on IndustryWeek, have wide reaching impact on supply chains even outside the steel industry. Shifts to specialty chemicals within the industry and innovations in cheap catalysts likewise impact supply chains.

Being an engineer, my mind quickly shifted to problem solving mode while reading these stories. Assessing “root cause”, the question struck me on whether there were any cross industry lessons learned or best practices that could be applied? As luck would have it, the oracle of our time – the Internet – once again delivered with an IndustryWeek article on the “Top 25 Supply Chains of 2015” detailing the annual survey compiled by analyst firm Gartner Inc. While some of the companies made the list due to practices involving retail supply chains, some practices certainly warrant consideration:

• Toyota’s cloud based customer service model. Could the “logistics control tower” concept be used to reduce disruptions in feedstock supply chains?
• Cummin’s Six Sigma process. Would their inventory quality ratio prove effective at managing coverage across feedstock production portfolios?
• L’Oréal’s collaborative supplier platform. Would sharing weekly demand forecasts and consumption requirements work for feedstock supplies as well as lipstick?
• Kimberly-Clark’s sustainability efforts. Would sharing value back to your suppliers encourage adoption of efficiency standards improve customer standing?

Inspiration sometimes comes from unusual places – you just have to be open to reception. While it is true that keeping retail products on the shelf is not the same as managing throughput of a manufacturing process, thinking about your challenges in a new way could be enlightening and entertaining. For example, spend the next 4 minutes of your life with the folks from the ASU W. P. Carey School of Business manufacturing a hamburger:

How has your supply chain been impacted by recent changes in the global economy? Tell us about your quest for unconventional knowledge and what it could mean for the future. Share your thoughts in the comments section below and don’t forget to follow us on your favorite social media channel.

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Ken Klapproth
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