Chemicals and Process industry findings: Global Supply Chain Survey 2013

Supply chain performance

Supply chain performance

Supply chain performance:

The leading Chemicals and Process industry companies achieve average EBIT margins (13.5%) with a high number of inventory turns (17.3) and a better delivery performance than does any other industry except Retail and Consumer goods (97.5%). The supply chain performance gap between the Leaders and Laggards is also the smallest.

Organisational set-up:

Chemicals and Process industry companies typically manage their planning, manufacturing, operational procurement and delivery functions regionally, and their enabling and strategic procurement functions globally. They outsource about 5% of their planning, sourcing and enabling activities; only 13% of their manufacturing and assembly activities; and 7%-45% of their delivery activities.

The key attributes of Chemicals and Process Industry companies

Organisational set-up

Leading practices

Leading practices

Leading practices:

The most important value drivers for Chemicals and Process industry companies are minimised costs (87%), maximum delivery performance (87%), maximum volume flexibility and responsiveness (77%) and complexity management (72%). The Leaders focus on continuous improvements in production efficiency and inventory management — coupled with process simplification — to drive down costs and on end-to-end supply chain planning and visibility.

Top differentiating practices

  • Inventory reduction
  • Decreased manufacturing costs through reduction of wastes
  • Reduction in process flow complexity
  • End-to-end supply chain planning and visibility
  • Collaboration with key customers on planning (e.g., effective forecasting)
  • Order fulfilment cycle-time reduction to improve information flow
  • Internal capacity flexibility 80%-120%
  • End-to-end supply chain planning and visibility
  • Involvement of partners for capacity reservation
  • Development of multiskilled employees in order to cope with complexity
  • Making to order
  • Assortment/inventory policies distinguished by product family and storing location
  • Multiplication of sources and sole-sourcing avoidance
  • Visibility over short-term supply through order traceability, vendor-managed inventory and so on
  • Visibility and regular monitoring of main suppliers’ operational indicators
  • Responsible supply chain partner footprint and procurement framework
  • Integrated risk management
  • Agreement of supply chain partners to adhere to highest ethical standards
  • Transfer pricing
  • Localisation of procurement organisation in taxefficient countries
  • Manufacturing and assembly optimisation (toll manufacturing)
Antoine Westerman
Global Chemicals Leader
Tel: +31 (0)88 792 39 46
Volker Fitzner
Global & Advisory Chemicals Leader
Tel: +49 (69) 9585 5602