The chemical manufacturing industry generates more than $5 trillion annually. Chemicals are required for 96% of all manufactured goods and can include frequently-used materials such as:
- Petrochemicals such as gas, coil, and palm oil
- Agrochemicals such as fertilizers and pesticides
- Commodity chemicals such as rubber, plastics, and detergents
- Specialty chemicals such as paint, pigments, and fragrances
- Pharmaceuticals
The chemical supply chain is one of the most lucrative sectors in the world. However, like any lucrative sector, it does not come without challenges. Learn about the issues facing the chemical supply chain today and how to overcome these problems to help your enterprise thrive.
Six Key Chemical Supply Chain Challenges
- Highly Commoditized
- Lots of Regulations
- Large Amounts of Data
- Uncertain Demand
- Emerging Technologies
- Growing Competition
The Chemical Supply Chain Is Highly Commoditized
The chemical supply chain is a highly commoditized, extremely competitive industry. Customers of chemical manufacturers rely on the ready availability of materials. A customer simply turns to another manufacturer if a particular supplier cannot fulfill an order. The same applies if one manufacturer offers lower prices for the same goods or services.
Why Is High Commodification an Issue?
Commodification occurs when an influx of similar products makes prices the only differentiating factor between suppliers. Commodification makes it so that suppliers continue to lower their costs to compete with a competitive market. Competition and commodification can make it challenging for suppliers to stand out to customers without sacrificing profit margins.
How To Overcome High Commodification
Enlisting the help of a digital visibility platform is an excellent way to combat commodification and competition within the chemical supply chain. Digital visibility platforms allow you to monitor the demand and supply for specific chemicals and materials. Digital visibility helps to ensure that suppliers can meet the needs of their customers, preventing them from turning to other suppliers to get their
The Chemical Supply Chain Has Many Regulations
It can be challenging to keep up with swiftly-changing laws and regulations for chemicals in the supply chain, especially regarding hazardous materials. The Environmental Protection Agency (EPA), the federal U.S. government, and the Toxic Substances Control Act (TSCA) of 1976 affect the current laws and regulations surrounding the manufacturing and distribution of chemicals nationally.
What Makes Lots of Regulations an Issue?
New and updated protocol standards are released regularly, and chemical companies must follow them or risk facing fines. Failure to comply with updated laws can also impact business. Due to the competitive nature of the chemical supply chain industry, customers will quickly move on to other suppliers if an enterprise is not up-to-date on required regulations.
How To Navigate All the Regulations
It is necessary to stay up-to-date with the latest chemical regulations in the locations where chemicals will be transported to and from. If proper visibility is not maintained, ensuring that you comply with current laws and regulations can be challenging. Cloud-based technology can confirm chemical sterilization, monitor sustainability, track and manage emissions, maintain necessary temperatures, and ensure that rules are followed throughout every supply chain process. While regulations are an essential concern, they only become a problem when you cease to comply.
The Chemical Supply Chain Has Large Amounts of Data
The chemical supply chain is responsible for large amounts of data, typically 5,000-10,000 equipment parts per plant, 50-50,000 data points per raw material, and approximately 50-150 points for each buyer.
What Makes Large Amounts of Data an Issue?
Large quantities of data can make it challenging to keep track of many moving parts and ensure that proper precautions occur at every step. Assets such as ISO tanks, intermediate bulk containers (IBCs), specialized chemical equipment, and hazardous materials must be managed to maintain safety and efficiency.
How To Deal with Large Amounts of Data
A supply chain management platform with AI/ML, LoT technology, digital twin, and a cloud system can help enterprises:
- Monitor the manufacturing and production processes
- Manage inventory
- Maintain excellent customer service
- Comply with current regulations
- Discover new assets
- Ensure quality control
- Calculate costs and overall profit
- Combat supply shortages
The Chemical Supply Chain Has Uncertain Demand
Constant fluctuations in chemical supply and demand can frequently occur due to a quickly-changing market, variations in chemical availability, difficulties tracking inventory, and shifting customer demand.
Why Is Uncertain Demand an Issue?
Volatile and uncertain demand can result in delays in receiving returnable assets, resulting in slower chemical processes and delayed transportation. Suppose you cannot determine where a returnable asset is and when it will be back in use. In that case, it can cause an overstock of returnable packaging and lead to a slower, less-efficient supply chain with lower profit margins.
How To Overcome Uncertain Demand
Maintaining delivery lines and optimizing delivery processes to overcome uncertain demand is crucial. This will ultimately speed up the transportation of valuable assets and result in higher levels of production and manufacturing. An advanced fourth-generation supply chain control tower will implement Artificial Intelligence (AI) technology to track and predict potential delays.
A control tower will alert you of:
- The delivery of raw materials
- Delivery issues
- The amount of time until delivery, accounting for location
- Insights on potential travel disruptions
- Delays for any assets in any location
- Exception flagging
- Consolidation opportunities
- System throughput with considerations such as delivery, distribution, and manufacturing
- Increases in lead times
The Chemical Supply Chain Uses Emerging Tech
With technological advances, more chemical manufacturers, automotive distributors, retailers, and consumers are turning towards AI to manage inventory control, chemical production, evaluate risk, and manage vehicle transportation services.
Why Is Emerging Tech an Issue?
Digitalization and automation are changing the chemical supply chain by instating new methodologies and processes. This can create challenges and competition for businesses that do not implement the latest technology and adapt their operating models.
How To Accommodate Emerging Tech
To compete with other enterprises, chemical companies must evaluate how they can increase visibility, implement innovative methods, enhance decision-making, and provide variation for their customer base. Implementing and keeping up-to-date with new technology can aid in competing with other enterprises and optimize profit margins. By 2030, it is predicted that 47% of manual labor along the chemical supply chain will be automated and that $550 billion will be added to the chemical supply chain in the next decade solely due to the addition of new technology.
There’s Growing Competition in the Chemical Supply Chain
Amidst technological advances, changes in the supply and demand of goods and services, shifts in inventory availability, and complexities within the chemical supply chain, high levels of competition can leave some businesses behind.
Why Is Growing Competition an Issue?
Suppose an enterprise fails to maintain a competitive advantage by increasing profit margins, enhancing customer service, and maintaining availability. That company will likely be unable to compete with other businesses that can keep up with a quickly-adapting industry, whichever industry it is.
While competition increases are not unique to the chemical supply chain (or the shipping industry in general), the strain placed on businesses and employees in a constant-growth environment is worth addressing as an issue.
How To Overcome Growing Competition
Implementing a real-time visibility solution can help to ensure that your business can keep up with the competition in the industry. A visibility solution can:
- Limit potential asset loss
- Increase shipment velocity
- Provide valuable insights to increase profit margins
- Help you to identify supply chain issues
- Create predictability with clean data and AI technology
- Help you to keep up with competitive practices by illuminating blind spots in the manufacturing and distribution processes
- Promote optimization
- Provide forecasting
- Assist in fulfilling customer needs
Bottom Line
A digital viability platform initiative can help your enterprise grow and change with a swiftly-evolving industry. Technology can help your organization track hard and soft assets and discover areas that can be improved. Transportation can be finetuned and simplified with tracking technology, allowing for real-time viability, decreased risk, and advanced planning and management along every supply chain step.
RPM is a freight transportation provider specializing in transportation brokerage and supply chain solutions. When it comes to the chemical supply chain, our clients turn to us for transparent, authentic customer support and customer and carrier visibility in times and industries of rapid and constant change. We leverage our network of more than 30,000 carriers to fulfill your transportation needs with advanced technology and tracking services to provide support at every step of the transportation process.
Are you interested in the chemical supply chain? Visit our website to learn more.
Sources:
Chemical Supply Chain: Challenges and Opportunities in the Era of AI | Nexocode
3 Challenges of The Chemical Industry Supply Chain and How To Beat Them | RoamBee
The Top 5 Supply Chain Challenges of Chemical Manufacturers | Parkour SC
How Top Chemical Supply Chains are Going Digital to Increase Supply Chain Visibility | LogiChem
Summary of the Toxic Substances Control Act | United States Environmental Protection Agency
