Improving Supply Chain Performance in the Chemicals Sector

Supply Chain Performance - Supply chain performance in the chemicals sector, being able to respond to the accelerating pace of change and the shifting dynamic in the supply chain is highly dependent on the fitness of the organisation itself.

Supply Chain Agility

Some describe achieving agility as the result of a balancing act between the people and the technology; fundamentally logisticians regard technology as an enabler - sometimes even a hindrance - in achieving true agility and being able to add value. The key to real success is about knowing what your core assets are, in finding and keeping the right people to support that; people that know how to use technology appropriately and take it forward . Agility is about: Internally and externally defined responsiveness

"From a given event you have got to be able to analyse it enough to know what to put in place and to go and do it. That planning cycle has got to be really short as well as the actual physical reaction. It is not necessarily a lot of forward planning and contingency plans. A lot of it is about where the planning doesn't work. It is reacting very fast to changing circumstances."

Flexibility - and coping with rising unpredictability of the market and time based issues

"You can't be agile vis a vis every conceivable unknown eventuality. You can be agile within a certain bandwidth but outside of that it won't work properly."

The need to support a more diverse range of channels or routes to market or operations

Having to understand the market and where it is going

This impacts how you plan, how you may react and needing the right intelligence and ability to apply that intelligence

Being proactive

Having the right management in place, with the appropriate powers of decision

It also has different scales. Agility can be:

• Executional - "Getting the stuff in"
• Tactical - "Responding to promotions"
• Strategic - "Responding to a step change in the market"

At a macro level it is more intellectual and conceptual agility that is required. We might use the Internet for sources of information to confirm or convey some of the items doing the rounds but fundamentally it is about people taking decisions and changing the organisation.

Having found the right people, and engendered the right culture within the organisation, it must be continually moved forward.

Have a well trained and motivated workforce to encompass appropriate technology

Work out how to move forward more rapidly or keep up, depending on where you are positioned in the market

"At certain times in my business we have done a lot of fire fighting and the fire fighting has been based on what has happened in the past as opposed to having time to look forward to the future. Whether that is agility to be able to bounce forward instead of to keep trudging backwards… you get caught out by the same surprises year on year."

Create the right infrastructure (people and technology) to enable flexible response

Build a team culture

Ensure that you build in adaptability and flexibility

Build in cross functional teams to break down barriers, and move from function to process - also simply to learn from one another

Bring in external facilitators or change agents if barriers are tough

Outsource if appropriate

Listen to the market and to your customers; get feedback

Keep talking to your staff and to other people in the organisation, informally and formally

As managers, ensure you communicate the goal or goals, and that your team know how to deliver that goal

Identifying some quick wins will help. Generating ideas that cannot be acted on will have a negative impact. A challenge here is that "thinking small" and harnessing the team, and still working in the "big picture" can sometimes generate new problems - the "big picture" must be there all the time or a different sort of inefficiency can emerge. Collaborative planning is another aspect of how relationships are changing, and how value is moving around in the supply chain.

Delegates of various Supply Chain Management Forums succinctly review the reasons for implementation of collaborative planning, and the potential benefits easily identified. They are:

Managing Phase In/Out

Collaborative planning is the way forward to balance supply and demand. This will have the primary benefit of improving, or increasing the level of customer service and intelligently matching supply with demand. This intelligence is sometimes not as straightforward as it may appear - one delegate gave an example of forecasting for entertainment locations, and the problems the impact of a combination of seasonality and promotions outside their, or the suppliers, control. However, the key objective for all remains; "In stock in store"

Reduce Inventory

By taking "noise" out of the system, collaborative planning will also help organisations reduce the costs in the supply chain. This is a key objective of all logisticians today.

Improve Efficiency of the Operation

Collaborative planning contributes to improved knowledge of the market among all parties sharing information in the supply chain. This should lead directly to improved category management and to efficiencies all through the cycle.

It reduces the "missed opportunity"

By helping improve intelligence in the system, and by making planning slicker, it should reduce the level of markdowns.

A particular issue is how to get buy-in among smaller players and getting potential partners to understand how they will benefit. The barriers include:

• Lack of desire/understanding among potential partners
• Number of potential partners is both unsophisticated & small
• Collaborative planning has to represent significant demand for it to work properly
• Fear of the downside
• Cost involved in collecting and interpreting data
• Organisational changes required to actually implement collaborative planning
• Technology including the Internet
• Competitive tension/trader activity

Summarised best practice in collaborative planning is seen as encompassing the following:

Above all it has to be EASY - otherwise it won't work! The two key aspects of being easy are that collaborative planning must be: Structured & Simple

• Visibility of competitor information (this in itself also represents major risks)
• Communicate upwards
• Visibility and speed
• It must convert data to information
• It must incorporate agreed service standards
• A common goal must be agreed between the players
• Win/win is critical
• Commitment from all players

Nigel Richardson, February 2002. Nigel is CEO of Accepta.