Building Resilience in Chemical Supply Chain

Chemicals can be found in almost everything around us. In fact, 96% of all manufactured goods contain a chemical - from medicines, to our cars to even the device you are reading this from.

The chemical industry has been a major contributor to businesses and global trade growth for decades, and will remain so for many more to come. However, the industry has been hit hard recently by trade barriers, increased levels of protectionism and not to mention, the global COVID-19 pandemic.

Evidently, the need for a resilient supply chain in the chemical industry has never been greater. In our webinar "Building Resilience into Chemical Supply Chain" we draw invaluable insights from industry leaders to discuss the 6 pillars in building supply chain resilience, 4 mega trends in chemical logistics, as well as the best practices in driving supply chain efficiency and visibility.

Chemical Logistics: Fostering resilience

A resilient supply chain means having the necessary visibility as a foundation to make the right decisions, the agility to shift sourcing, manufacturing or distribution with speed once a disruptive event calls for it and the right level of buffers to dampen unforeseen shocks.

To start with, Henrik Wretensjoe, Global Chemical Vertical Head at A.P. Moller – Maersk suggests companies build a more resilient supply chain using these 6 pillars:

• Review your manufacturing and sourcing network
• Single sourcing vs multi sourcing
• Inventory management and general buffers in the supply chain
• Nearshoring for increased control and reduced risks
• Visibility of your end to end logistics       
• Review your partners and stakeholders in the network from a service level agreement perspective 

To build a resilient supply chain, there are also 4 mega trends which impact the chemical industry and should be considered when reviewing your company's strategic direction.

• Supply Chain Digitization
• Sustainable Supply Chains
• Circular Supply Chains
• Agile Supply Chains

Satoshi Akasaka, Chemical Vertical Head for Maersk Thailand, Malaysia and Singapore categorises them into 3 main buckets then takes us through several solutions Maersk can offer to the chemical industry:

1. Select a dependable logistics partner

The first key is to work with resilient logistics partners who possess:

• In-depth understanding of your business
• Expertise in international/local regulations
• Global coverage
• Financial stability
• Flexible business implementation skill
• Robust Business Continuity Plans 

The closest frameworks that businesses can utilise to address these needs would be the 4PL or Control Tower models. By integrating them as part of your business process outsourcing, your supply chain can be backed by a resilient logistics partner and a dedicated logistics team.

2. Set up a hub closer to your customers

Being near your customers has been increasingly important due to highly volatile markets and demand surges for specific groups caused by lockdowns. This has also caused the bullwhip effect to fluctuate even more. For chemical companies, it has become tremendously challenging as they are one of the most upstream players for raw material which leads them to end up overstocking in one location and stock outing in another.

In order to mitigate such impact, we believe it is vital to set up a hub near your customers to improve service level with shorter lead time and optimize safety stock level by aggregating the demand.

The suitable solutions would be the Hub-In-Transit and Regional Distribution Centre. Maersk Hub-In-Transit offers carrier-neutral 4PL solutions working closely with those hub operators providing E2E visibility, documentation and 2nd leg booking service.

If the dwell time in the storage location is longer and the business requires value added service on the cargo itself, the solution is to set up Regional DC in Bonded Warehouses. Maersk offers such the solutions in Tanjung Pelepas, Malaysia and many other APAC locations as well.

3. Become a resilient partner of your customers

Although the bullwhip curve for companies in retail, technology, automotive and FMCG industries might not be as steep as those in the chemical field, visibility remains critical for their production planning.

Maersk's TradeLens - a block chain solution and a joint venture with IBM - offers real time cargo and document visibility by partnering with ecosystem players such as shipping lines, terminals, truckers, customs and even banks.

The Maersk 4PL also offers HIT visibility dashboard which is E2E visibility on SKU/grade level, and Sourcing APP.

Best Practice: The Evolution of Syngenta's Supply Chain

In this webinar, we also speak with Peter Crowe, the Head of Logistics for Syngenta Asia Pacific on how the global agricultural technology company managed to bring its complex supply chain to greater heights with digitization, efficiency and resilience.

Being a global leader in the agriculture, Syngenta's aim is to help feed the world while taking care of the planet. To digitize their logistics and gain full visibility on their shipments, they utilized a new platform. Syngenta also appointed Maersk as their 4PL providers, to handle all global sea- and airfreight shipments.

Our committed service paired with the new robust system now provides Syngenta the visibility they never had before. From the confirmation of pick up to the arrival at the customer's door, their new system also provides a multitude of milestones throughout the journey. Any deviations from plans are attached to these milestones which allows Syngenta to react accordingly.

Utilizing the data was essential throughout the crisis as it gave them full visibility of upcoming and pending orders as well as the ability to communicate directions clearly with us on their priorities. Despite the adversities brought by COVID-19, Syngenta came out with no lost sales attributed to logistics. Mr. Crowe credits this success to the strong visibility that the setup has been providing for years helping Syngenta to continue bringing plant potential to life.

Case Study: Driving supply chain efficiency and visibility

Associate Director for Chemical Vertical, Ian Kaw, shares how Maersk has also worked with a top-tiered global petrochemical company to enable supply chain resilience as well as the ability to gain control and optimize costs across the entire system. The company manufactures polymer, a chemical that is produced across multiple cracker plants mainly located in the Middle East and Asia, with its total tonnage exceeding in millions.

In this case study, we learn how Maersk built multiple 4PL Teams and Control Towers across different geographies that span from Bahrain, Dubai, Saudi, South Korea, Malaysia and a large back office team in India. As seen from the on-going COVID-19 pandemic, different countries face varied levels of lockdowns and restrictions, but the setup we built allows teams in multiple countries to cover each other when needed.

Our 4PL's Scope-of-Service Cover the Following Functions:

Sourcing of empty containers from multiple Ocean carriers

• Transport empty containers and load at the plants
• With a Hub-in-Transit inventory optimisation plan, we transport the laden containers to one of the six HIT Hubs or Warehouses, which are set up across UAE and Asia
• Upon receiving the final leg shipment order, based on RETA, the 4PL / Booking Services Team will proceed with carrier bookings, SI submissions and documentations including CHB
• Perform freight invoice audit before payment

As all activities are executed via our Lead Logistics platform, it offers a full E2E visibility from PO Creations, inventory at each HUB, booking status, track-and-trace to final leg delivery at destination ports.

To achieve supply resilience, finished goods are stored mainly in FCL across multiple HUBs in different regions. When a sales order arrives, our Sourcing App functions as the "digital brain" allowing the shipper and 4PL Team to view important information such as:

• Location of stock being held in each hub
• Transit time and cost per ton to ship

In summary, collaboration and operating on a single digital platform are key to building a resilient supply chain. But most importantly, data is king in driving every decision.
While supply chains, circumstances, target markets and 3PLs are prone to change over time, control towers, supporting platforms and existing processes must be flexible to accommodate such developments. With an adaptable architecture we can achieve:

• Improved service level
• Minimised COGS
• Reduced expediting Costs
• Minimised lost sales
• Achieved Revenue and Profit Growth