Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Chemical Supply Chain


Published on

Working closely with your logistics providers to ensure the provision of optimum capacity ( in the short, medium and long term)

By Roger Moore

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.

Published in: Education
  • Be the first to comment

  • Be the first to like this

Chemical Supply Chain

  1. 1. Working closely with your logistics providers to ensure theprovision of optimum capacity( in the short, medium and long term)Logichem 2010 Roger MooreDusseldorf Supply Chain & Customer Services Manager
  2. 2. Leading questionsWho is Ineos Nova ?Am I clear about my service and capacity requirements ?Sourcing strategy –what are my options to secure capacity?Do I have the right portfolio of LSPs ?What is the right type of relationship for me?What might we expect ? – the Ineos Nova experience 2
  3. 3. INEOS NOVABusiness: Global manufacturer of styrene and styrenic polymersHistory: Formed in October 2005 through merger of BP and Nova European styrenic polymer businesses, Expanded in October 2007 to include North American assets – 50/50 JV between Nova (IPIC) and IneosHeadquarters: Joliet, Illinois; Fribourg, Switzerland for Europe Shared service centre in Breda NLRevenue: Approximately €2.7 billion ($3.8 billion )Employees: Approximately 1150Sites: 11 manufacturing plants in 6 countriesVolume: Styrene monomer– 1,675 KT Polystyrene – 1262 KT Expandable Polystyrene – 410 KT (all in Europe) 3
  4. 4. Working Together What do service partners say about our industry?Heavily regulated by external / internal controls ADR / IMO etc SQAS / CDI / EN norms/ site rulesInflexible in general : slow to change and risk averse Low levels of outsourcing / lack of trust How do weRelatively low levels of vendor loyalty become the Tendering processes customer of choice?Cost driven despite insistence on quality / safety standards Unwilling to support (re) investment in new equipmentUse volume as a lever to reduce costs Horizontal collaboration not widely adoptedOperational constraints limit asset utilization Plant loading hours Customer unloading windows 4
  5. 5. Some impacts of recession- What we see in the market ion! t! osService providers downsized / restructured e er a rkOnce gone drivers are lost to y the industry s m a cit lerAggressive and non sustainable pricing el c ap s policies ul t-Significant imbalance and changes a oin traffic flows e s n gtMarginal rintermodal services iwithdrawn ( rail & ferry) ov N et emSignificant unavoidable cost increases not fully recovered ar we •Maut increases ow •Fuel price volatility dn 5
  6. 6. How do we secure capacity for the future in a sellers market ?More carriers / fewer carriers: portfolio managementCross regional vs local / niche playersTime and mileage agreements / dedicated fleetLook for productivity / efficiency gains: maximize utilizationMaximise inter-modal volumes = increase driver outputStand by commercial agreements - esp. payment termsLook for more flexibility on transit times / delivery datesManage the order profile – demand smoothing 6
  7. 7. Developing a logistic sourcing strategy –3 step approach to securing capacityUnderstand own capabilities / attributes Own marketing / selling strategies Organizational capabilities / resourcesDistribution cost or supply chain management ?Achieve internal / external alignment….. Critical performance criteria – what do we need from our carriers ‘Rules of engagement’ – customers and LSPs Establish clear SLA terms and conditions Measure performance 7
  8. 8. Logistics Landscape -important in defining requirementA mature commodity business - mainly repeat FTL businessSimple mode / product mix Dry Bulk / 1000kg IBC (octabins) / 25 kg bags ADR adds complexityCompact logistical footprintEurope wide markets Av. Delivery -1000kmSmall / medium size buyer 800kt / € 32m spendSmall central procurement and planning team 8
  9. 9. Business characteristics- what is the service need ? Niche purchases Speciality services Sector/product/customer one-off discrete itemsCost / service level needs high cost / low support Critical service element Commodity Purchase Leveraged volume high volume / repetitive Combining service needs transactions Service level / SRM support 9
  10. 10. Service providers…… choose your partner with care !‘I want to speak with the man who pays the driver’ = asset owningSub contracting is OK …. to a certain levelChemicals require a particular mind – set Look for ‘bestCustomer segmentation is a fact of life fit’ synergiesIs my service provider a true partner ?Does the LSP REALLY understand my business ?How much can I afford to invest in this relationship ? 10
  11. 11. Commercial relationships – what are the options? Spot purchase Value added logisticshigh Higher risk of failure High level of integration between parties Sub-contracted? Sustainable relationship Lack of customer loyalty Investments / binding contracts High cost of ownership for shipper Win – Win M Performance incentives /benefit sharing a Open book / cost plus structure r Periodic tendering Long term partnerships g Typical procurement strategy Lower cost of maintenance i Relatively high implementation effort Low risk / high quality n Start up risk – change management Often based on ‘ cultural alignment’ Used when capacity exceeds demand Value proposition is acknowledged s May not be sustainable Flexible to respond to market changeslow limited extended Business continuity 11
  12. 12. The Ineos Nova experienceTime spent in strategy definition is time saved in execution !(but we still made mistakes )Be prepared to make changes – ethically.Mix of pan European – regional – local carriersBulk and packaged goods freight markets very different - demand different approachesAdded value is for all – if it isn’t it isn’t added valuePut energy into strengthening relationships……….not building new ones 12