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Chemical Supply Chain
 

Chemical Supply Chain

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Improving Your Supply Ability Through the Eyes of Your Customers...

Improving Your Supply Ability Through the Eyes of Your Customers

By Theo Zwygers


LogiChem 2011 will be the event's tenth anniversary and an opportunity for the most senior chemical supply chain & global logistics directors from the European chemicals community to come together once again share experiences, make new contacts and benchmark the latest chemical supply chain initiatives.

Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.

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    Chemical Supply Chain Chemical Supply Chain Presentation Transcript

    • Improving Your Supply Ability Throughthe Eyes of Your CustomersTheo ZwygersVice President, EAI Supply ChainLyondellbasell Industries B.V.LogiChem 2010Dusseldorf, Germany
    • Industry-wide Reduction in Stocks creating Pressureon Supply Chain Performance Polymers Industry Stock Development Index View (Jan. 2008 = 100%) 120% 100% 80% 60% 40% 20% 0% 08 08 08 08 08 08 08 08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 2
    • The New Environment• Approximately 25-30% lower inventories held by polymer producers – Lower working capital targets, further rationalized product portfolio – Faster cycling on the plant, more demanding operational management – Balancing long supply chain imports with local production efficiencies – A changed business model• Converters and end-users hold reduced inventories – End-use markets in disarray, future demands reduced and unclear – Financial strain, planning and product demands passed down the chain – Economic recovery very likely slow, but in many cases erratic It is becoming harder to differentiate. | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 3
    • Differentiation From Competitors in Commodity Markets • Our concerns: – Customer loyalty during downturn – Consolidation of price position • Broad goals – Improved image of LyondellBasell with customers – Volume loyalty and/or better price – Minimizing loss of sales opportunities – Cost leadership - including WC – Market position Success will be determined by how well we operate our supply chain. | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 4
    • Strong Deviation Between our Self-assessment and Voice of the Customer• Own monitoring of delivery • Delivery of performance through performance the eyes of our customers – Own metrics confirm excellent – Deteriorating performance since delivery performance 2003 based on PTAI survey – Close to 100% reliability based – Average or sub-standard on ECTA-coding performance in delivery reliability | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 5
    • Driving Supply Chain Performance ThroughCustomer-centric Approach to Logistics Quantify customer supply reliability requirements Identify internal causes and root causes of the failure to deliver to key customers in quantities and time Reduce gap between Requested Delivery Date (RDD) and initially Confirmed Delivery Date (CDD) Identify improvements in planning, stock and production management Reduce delays between initial Confirmed Delivery Date and Actual Delivery Date (ADD) Root-cause analysis Establish a control dashboard and drive improvements Structured improvements are possible with measurement.| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 6
    • Analysis of All Parts of Supply Chain Process Working Working Process Customer Customer Process Customer Capital & Capital & efficiency excellence excellence efficiency excellence Sales Sales Order Organize Delivery Forecast MRP- Sales Order Confir- Transport to System Plan Intake mation & Shipping Customer Ensure product is available Ensure on-time delivery| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 7
    • Teams Nominated Along Entire Supply Chain Unavailability and Rush Orders Root Causes Order Organize Delivery MRP- Sales Order Forecast Confir- Transport to System Plan Intake mation & Shipping CustomerImprove Process ClarificationForecast Review of MRP-tool Lead Time and Transit Time Transport CapacityGroups were nominated to address specific Measurement and KPI areas Information to Customer Customer Priority Distribution platforms | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 8
    • Example: Mismatch Between Customer View andOwn Perceptions• Different internal KPIs and some inconsistencies discovered: – Ability to confirm Requested Date to the customer – Ability to deliver on time • Based on Haulier Feedback and ECTA Codes • This monitors haulier performance, not our performance vs. the customer• Contrary to expectations, the link between both KPIs was actually not as strong as required. Some inconsistencies include: – A significant number of delivery dates are changed upon customer request during the process, which is not reflected in the system – Orders which were not confirmed upon customer requested date were organized by shipping office for the requested delivery date| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 9
    • Define Relevant Data for KPI Measurements Delivery Performance vs Customer Requested Delivery Date Ability to confirm Requested Date PO 100%Requested Confirmed 95% DD DD 90% Gap to 100% - Availability 85% - Allocation 80% - Credit 75% - SAP Lead and Transit Times 70% During planning process: 65%Initial Planning: - Customer Request 60% 01 07 02 07 03 07 04 07 05 07 06 07 07 07 08 07 09 07 10 07 11 07 12 07 01 08 02 08 03 08 04 08 05 08- Meet Customer RDD - Haulier Request - LyondellBasell Issue Haulier Performance Delivery Reliability vs. Confirmed Delivery Date 100% 98% - Haulier Issue Close to - Force Majeure 100% 96% Transport Planning Actual 94% Delivery 92% - Haulier Issues - Customer Not - Force Majeure 90% - internal covered - Customer Requests/Issues 88% - LyondellBasell Requests/Issues 86% 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 06 06 06 06 06 06 06 06 06 06 06 07 07 07 07 07 07 07 07 07 07 07 07 08 08 08 08 08 | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 10
    • New Measure: Supply Chain Performance From thePerspective of Our Customers Haulier and Force Majeure LyondellBasell Reason Customer Reason On time according to Transport Order Haulier & FM LBI Delivered as promised Customer Non-ability to confirm the RDD, but delivered on Confirmed Delivery Date. According to Transport Order Delivered as promised Second Chance 2nd Chance Delivery Perfect Delivery Non-ability to confirm the Requested Delivery Date, but delivered on RDD. Perfect Delivery Ability to confirm and deliver to the Customer on Requested Delivery Date (RDD) 2008/1 2008/2 2008/3 2008/4 2008/5 2008/6 2008/7 2008/8 2008/9 2008/10 2008/11 2008/12 2008| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 11
    • Customer Excellence Improvements• Customer view and LyondellBasell KPIs aligned• Improved communication of delivery date to customers• More orders confirmed up front on requested date• Increased level of product availability• Updated lead time table| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 12
    • Process Efficiency Improvements• Ensured more orders confirmed on customer requested date at order entry – No rework of the confirmed date by shipping office• Increased opportunity to select the optimal (lowest cost) transportation (intermodal or best haulier)• Improved transparency of planned delivery date for CSR (less communication issues)• Reduced rush orders| www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 13
    • Working Capital and New Sales Opportunities Improvements• Reduced lead time means less product frozen - reduction of Working Capital (Initial impact: several KT)• Reduced lead time means increased potential to grasp a sales opportunity for customers short in material | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 14
    • Sustaining Customer Service Levels Despite Reduced Inventory and Production Capacity 100,0% 45 + 3,5%-points 90,0% 40 80,0% - 30% 35 + 2,0%-points 70,0% 30 and (D ) oH eliability 60,0% 25 elivery R ays on H 50,0% 20 40,0%D D 15 30,0% 10 20,0% 5 10,0% 0,0% 0 2008 Jan 09 Feb 09 Mrz 09 Apr 09 Mai 09 Jun 09 Jul 09 Aug 09 Sep 09 Okt 09 Nov 09 Dez 09 2009 Stocks/DOH Perfect delivery Delivery as planned | www.lyondellbasell.com | Improving Your Supply Ability Through the Eyes of Your Customers 15
    • Thank you for your attention
    • DisclaimerAll information (“Information”) contained herein is provided without compensation and is intended to be general innature. You should not rely on it in making any decision. LyondellBasell accepts no responsibility for results obtained bythe application of this Information, and disclaims liability for all damages, including without limitation, direct, indirect,incidental, consequential, special, exemplary or punitive damages, alleged to have been caused by or in connection withthe use of this Information. LyondellBasell disclaims all warranties, including, but not limited to, the implied warranties ofmerchantability and fitness for a particular purpose, that might arise in connection with this information.