Chemical Supply Chain
Global Asset Base and Complex Demand Requires More Flexible Inventory Planning
Chemical manufacturers face a challenging mix of supply chain issues including long, global supply chains often with infrequent and capacity constrained production cycles; significant variability in production as well as dependent and independent demand; and complex packaging/ labeling and regulatory requirements in distribution.
Often, excess inventory is created as a strategic buffer against these uncertainties in your supply chain. Unfortunately, naïve spreadsheets and ERP calculators force both too much inventory sometimes while not enough during other times. The resulting unnecessary costs — higher working capital when overstocked, higher operational expenses when firefighting stock-outs — undermine not only the performance of but also the organization’s confidence in a supply chain.
How should you develop inventory plans that meet global customer demand while balancing financial and operational constraints?
A Powerful New Chemistry for Your Supply Chain
You need a more comprehensive, analytical view of your global supply chain. You need a tool that determines the optimal plan for each item in your inventory, over time — automatically. You need SmartOps.
SmartOps Enterprise Inventory Optimization (EIO) lets you calculate and understand how much inventory you should carry, why, where and when. With SmartOps EIO you will:
- Reliably Manage Complex, Global Supply Chains. With multiple, interlinked supply chains — each with a mix of raw materials, production, packaging, and distribution stages — it is difficult to keep even the simplest calculations up to date. Changes in the plan at one stage have a ripple effect on performance at other stages.
SmartOps EIO addresses this, using a multistage modeling approach that considers and calculates relationships among inventories, service levels, capacities, and costs — across all of your stocking locations and stages. - Address Capacity Constraints in Your Inventory Plans. Capacity is expensive, which means excess inventory has often been the buffer against supply chain uncertainties and periods of high demand.
Because SmartOps looks at all the purposes of inventory in the supply chain –— safety stock, cycle stock, pre-build stock, and in-transit inventories — companies can more accurately determine optimal inventory targets given capacity limitations in any planning period. When to start building inventory, when, and by how much are all planning decisions SmartOps supports with great accuracy.
- Tackle Uncertainty in Your Inventory Planning. When it comes to demand planning, chemical manufacturing businesses face uncertainty. Error, bias, seasonality, and intermittency make it difficult to confidently decide how much weight to give a demand forecast. Process yields, production yields, and supplier reliability all conspire to throw wrenches into your carefully developed plans. Other solutions use “average” or “worst-case” approaches to account for variability. Without SmartOps, you react by increasing inventory across the board because you don’t know where it’s really needed.
You need a solution to measure and account for the uncertainty of demand, production, and supply. That’s why SmartOps’ optimization algorithms were designed to detect, calculate and manage data uncertainties.
SmartOps Enterprise Inventory Optimization (EIO) fills a persistent gap in the supply chain planning landscape for chemical manufacturers. It generates improved inventory targets into existing business processes:
- Across all products and SKUs
- For all locations in the global supply chain
- For each planning period
- With consideration for all types of inventory (safety stock, cycle stock, in- transit/ pipeline stock, merchandising/ dealer stock)