A growing market and steep competition are changing one of the most important industry sectors, the chemical industry, and not for the better. Along with the pandemic and constant digitization disrupting the chemical industry, there have been rising supply chain challenges.
Supply chain management involves every aspect of the chemical industry, from manufacturing to the distribution of chemicals. Therefore, it is a substantial part of the industry.
Yet, many challenges have disrupted the maintenance of supply chain management. Here’s how the industry can identify and solve the issues without putting a halt to the processes.
Top 4 Challenges of the Chemical Supply Chain Management Today
The chemical supply chain and logistics have always remained a sensitive sector since various factors can influence it at any time. That also makes the industry vulnerable to many fluctuations, causing instability. One cannot ignore the impact the COVID-19 pandemic had in disrupting all types of the manufacturing industry.
However, there have been other challenges to the chemical supply chain. Here are some of the biggest issues that threaten the chemical industry supply chain.
1. Fluctuating Prices of Raw Materials
As the manufacturing process in the chemical industry highly depends on raw materials, any sudden change in the price can disrupt the flow. That is perhaps the biggest challenge for the chemical industry supply chain today.
Constantly fluctuating raw materials prices, like crude oil, natural gas, energy, and other commodities, make things difficult. Now there are various chemicals in large quantities involved. So, companies face the challenge of maintaining a better track record of the changing costs.
2. Complexity of the Supply Chain
There are complexities in the chemical manufacturing production process as well. Since the industry needs to run the manufacturing consistently or in a batch, the process has many variables.
For example, various products can be produced in bulk, or the streams and processes can merge or demerge. The fact remains that the different assets of the industry can have various starting points and purposes.
All these variables make the task of planning, costing, and quality management difficult. Also, let’s not forget the constant pressure of reducing downtime while maximizing utilization. As a result, it diminishes productivity since workers continue working with dated software.
3. Massive Amounts of Data Handling
The chemical industry has to deal with a huge amount of data, which is gradually becoming a challenge for supply chain management. Along with constantly changing quality and pricing for commodities and raw materials, there are government regulations to comply with.
Also, there are tons of agreements and contracts with regulatory bodies, suppliers, and customers. All manufacturing and operational data needs to be recorded, categorized, and processed at the end of the day. However, even those systems are not updated, nor is there any robust IT infrastructure to handle this task.
4. Pressure of Quality Control Standards and Environmental Regulations
There are many complex laws applicable to the chemical industry. That includes protecting the environment and human health during the handling, use, and transportation of chemicals.
Now, these regulations also need to be updated from time to time. Also, social media and stringent consumer protection programs focus on maintaining high-quality control. Any negative public review or news can damage the brand image in seconds.
It puts pressure on chemical companies already struggling to comply with the global data and labeling standards.
The Solution to the Supply Chain Management in the Chemical Industry
All these challenges raise concerns for the retailers, distributors, and consumers and not just the manufacturers. However, not all is bad news as the industry has adapted to new digital technologies over the past decade. Therefore, identifying the challenges and addressing them with the right solution is the key.
1. Singular Centralized System-Big Data Solutions
Integrating aspects like pricing in the resource planning system is definitely one way to solve the challenges. It also provides scope for making adjustments within the supply chain and finding an efficient market. In the end, it can help manufacturers make better procurement decisions.
Implementing big data analytics into supply chain management can enable the chemical industry to consolidate capabilities. This way, industries can centralize all the information into one big repository. The data mining capability of the system enables companies to detect issues in the value chain much earlier and trace the primary reasons.
With cloud-based platforms being introduced every day, it can definitely solve the issue of data management and integration for the industry.
2. Introducing Artificial Intelligence
Artificial intelligence also can help anticipate any potential threat to the supply chain. It will let the management make the necessary alterations and prevent any future disruptions. In addition, AI technologies can also help reduce the negative impact of the chemical industries on the environment.
AI can also help the chemical industry identify future opportunities like recycling chemicals.
Let’s not forget that AI is highly beneficial for analyzing customer buying patterns. It is applicable for the chemical industry, and they can develop the best possible pricing.
The Bottom Line
As the world keeps changing into a digital entity, the chemical industry also needs to adapt to new methods. Many issues, like lack of visibility, process complexity, and demand and supply unpredictability affect the supply chain. Also, the pressure of managing a huge database is a real challenge.
Therefore, the chemical industry should focus on upgrading itself with time. Incorporating big data solutions into its supply chain management systems can help in handling all data.
In addition, implementing AI technology in the processes can help gather customer insight, buying patterns, and make the processes more environmentally friendly.