Chemical Supply Chain


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Approaching Supply Chain Performance From the Market Side In 20 April 2010 - LogiChem

Dramatic Improvement by extending supply chain,
process improvement & management practices to
the demand side of the business

By Peter Murray

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

  1. 1. Approaching Supply Chain Performance From the Market Side In 20 April 2010 - Logichem Dramatic Improvement by extending supply chain, process improvement & management practices to the demand side of the businessPeter Murray, CIRMEI DuPont and Nemours CompanySupply Chain Development & Innovation Leader
  2. 2. IntroductionDuPont – Market Driven Science Company – Creating sustainable solutions essential to a better, safer and healthier life for people everywhere. – Evolving for our 3rd Century • Gunpowder Petrochemicals Sustainable Solutions for a better life Peter Murray – Supply Chain Development and Innovation Leader –Supply Chain Center of Competency –10 years with DuPont – Supply Chain Transformation –11 years in defense, industrial equipment, software, consumer products –Supply Chain, Operations, S&OP, Demand, Product, Business Management - Sustainability –APICS Board of Directors, Supply Chain Council, Institute of Business Forecasting 1
  3. 3. Of Supply Chain’s and VolcanoesLosses – Euro 2B and climbing – chaos with travel, good not moving time marches on … European Flights Resume, London Remains Closed Applause, cheers and whoops of joy rang out from Asia to New York to Paris on Tuesday as airplanes gradually took to the skies after five days of being grounded by the drifting volcanic ash that has crippled European air travel. With Flights Grounded, Kenya’s Produce WiltsVolcanic Ash Cloud Map - Europe 2
  4. 4. Supply Chain Saves The World Lessons learned and applied to emerge stronger at DuPont – and their foundation in the APICS body of knowledge and AMR’s forward thinking and experience – all this you can apply as well Why businesses exist and what we take how with us – there is more when it comes to the company you choose and APICS 3
  5. 5. Steps to success – lessons from our 8 year and continuing journey1. Educate to build the foundation – do it widely and deeply start with the most interested2. Develop a standard process approach to identify and place issues and opportunities3. Create a vision and strategy that incorporates supply chain strategy with the rest of your business strategy4. Learn from others, learn, ask, check, compare, share, build - repeat5. Apply standard solutions and methods that focus on reality vs perception or aspiration alone6. Execute, Execute, Execute, improve execution and Repeat7. Don’t ever give up 4
  6. 6. Evolution – Long Term Path Market Driven Science Company • Our goal Demand Driven Enterprise • Near future Effective and Efficient Advanced S&OP Integrated Business Management • 4 years Competitive Imperative Strategic Supply Chain Capability • 8 years Optimizing The Safe Production Of The Molecule • 197 years 5
  7. 7. How to go from greatconcept nt e Marketing Effectiveness To Reality em ag an M and em D Supply Chain Capability 6
  8. 8. The Challenges of the last two years and for a least the next few Yes! Was and will not return for awhile Somewhere in the futureDemand Trouble! Sep-Jan How Do I deal with this? Today Time into the future Emerge stronger, use the new reality as an opportunity…. Ellen Kuhlman CEO DuPont 7
  9. 9. The essential defect …. Market or demand side realities collide with asset or supply side / supply chain designs … if you don’t address the root causes Excess / Wrong Inventory Lost Margin Supply Side Out Stock-outs Market Side In Mix Issues 8
  10. 10. How fast can you change ? Sustainably Change? EMERGENCY TRADING AREA ADDING & CHANGES CHANGING Supply STABILIZE CAPACITY FIRM FUTURE PRODUCTION MATERIAL ORDERED PLANNING CUSTOMER CUSTOMER Demand COMMITMENTS REQUESTS/PROMISES MADE COST AGILITY TIME TODAY 1 Dont change your inventory or service strategy faster than your total supply chain can effectively respond You can either change your lead-times to customers, your supply 2 chain responsiveness or agility, or significantly improve your demand sensing or accept lower fill rates for customers EAME 0324-02 ~ 9
  11. 11. Numbers•$3.4 Billion in free cash flow•$1.5 Billion of cash from inventory•$1.9 Billion in cost and capital•$1.5 Billion in revenue gained or defended•Margin improved by 2% - reversing a 12 year slide•3 people 50 200 5000 55000•One business, one project, one team, one person at a time, it multiplies, you can leverage it, itgrows and sometimes slips back•20 APICS Certified People 50 200 250 Back in the Fortune 50 after 53 years, APICS Article, DD has stabilized and is improving – Supply Chain is strategic! 10
  12. 12. Competitively advantaged supply chains are shifting much more demanddriven models From To Long and slow Fast and flexible Forecast-based Demand-based Product forward Customer back Cost-reduction Pressures Function-driven Supply Chain Value and growth Company Strategy-driven Pressures Networked Sustainable Does this come in Action GREEN? MFG distrib- supplier MFG customer supplier utor Capability Customers distrib- utor 11
  13. 13. What is a Supply-Chain its evolving to cover the“value chain”. The picture form the Supply Chain Council represents processes not functions or departments Product Management Customer processes Supplier processes Product Design Sales & Support DCOR™ CCOR™ Supply Chain SCOR™ SCOR Benchmarking Workshop 12 12
  14. 14. The Future Of Supply Chain Management Is Now1. View your supply chain as a strategic asset2. Develop an end to end process architecture3. Design your organization for performance4. Build the right collaborative model5. Use metrics to drive business success Practical Application – Read the Book 13
  15. 15. 14
  16. 16. Breaking Down ComplexityTwo Types of Demand and address with two basic approaches Predictable < Unpredictable Statistical Analysis Demand Predictability Strategy and Marketing Business Plans Input Demand Plan Sales 1-18/24 Months Input Product/Brand ($ and Volume) Management Input Customer Input Customer Collaboration Business Value/Return Consensus Planning Supply Chain Optimization Adv S&OP & Demand Chain 15
  17. 17. Targeting Demand Improvement – Read On Your Own Target Significant Variability Aim For What Makes Sense •Fix the aggregate •Match demand plan purpose plans first and detail to minimize time •Apply the 80/20 rule spent on analysis •Learn from existing •Don’t fool yourself with practices – don’t unrealistic aspirations reinvent the wheel •Control the inputs – don’t y •Speed matters – De teg chase the outputs minimize data ma ra •Adapt the demand plan St nd gathering time rhythm to the rhythm of nd P ma roc your markets De es Demand Team s Organization Enabling The Team •Build the competency and expertise in your organization •Make the process transparent, realistic, honest and disciplined– enabling a continuous improvement mindset 16
  18. 18. Supply Chain Performance + Demand Performance = Business Performance Demand Driven Supply ChainsReactive Reactive Business• Expedite and Firefight• Change only when necessary DMD• / unavoidableResponsive Business Responsive• Built on Anticipation• Acts with Speed DMD• Agile when change is needed BusinessDemand Driven• Starts with Market and Sell Demand Driven DMD• Demand Sensing• Demand Shaping• Products That Drive Demand 17
  19. 19. Competing“The ability to learn faster than you competitors may be the onlysustainable competitive advantage” – Arie De Geus 18
  20. 20. How you can get the benefit all the knowledge and experienceAll that we have accomplished in DuPont is available to you via APICS, the Supply Chain,Council, Institute of Business Forecasting, ISM and fine research groups like AMR and thesharing amongst colleagues at functions like Logichem 1 Joined up decision making or Integrated Management “Coming together is a beginning. Keeping together is progress. Working together is success.” – Henry Ford 2 The knowledge is out there – take advantage of it – combine it with you will to succeed “We shall neither fail nor falter; we shall not weaken or tire … give us the tools and we will finish the job.” – Winston Churchill 3 You have to effectively apply the knowledge with good timing to succeed over time “Take time to deliberate; but when the time for action arrives, stop thinking and go in.” – Napoleon Bonaparte 19
  21. 21. Final Message 20
  22. 22. The task of integrated management is to make the strengths of peopleeffective and their weaknesses irrelevant. paraphase of wisdom from Peter F. Drucker Questions or comments Thank You or 21