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The year 2020 has shown us that advancement in science, especially the field of chemicals (and related fields such as biotechnology that deal with the vast majority of chemicals), cannot come fast enough!According to research, companies that have implemented Industrial AI in the chemical sector are exhibiting significant benefits as follows:72%report a minimum 2x improvement in some process KPIs37%report a 5x improvement in KPIs4 Ways of Applying AI and Machine Learning in the Chemical IndustryWhile every enterprise has its blueprint to follow when it comes to the application of tools and techniques on AI and Machine Learning, certain broader areas can be common for the chemical industry.However, these days, faster results that can mitigate manual errors and minimize efforts are required.Today, major players in this sector are looking for focused R and innovation that can yield faster and more accurate results following the use of artificial intelligence in the chemical industry.It can also help in recognizing the right molecules, generate formulas, and aid in knowing the precise quantities of different chemicals required.However, digital transformation and the introduction of layers and layers of machine-generated intelligence can make this combination even more successful than ever before.
AT A GLANCEFailure to meet customer demand at Chemical Distribution companiesOverview of End-to-End supply chain processes including solutions to increase operational efficienciesOverview of planning and inventory management for bulk chemicals and packaged chemicalsBest practice depictions of typical Chemical distribution processes including the need to track hazardous chemicals, product labels, shipping labels, safety data sheets, certificate of analysis and shipping documentationQuick glimpse of a chemical distribution company in Microsoft Dynamics 365If you are a chemical distribution company, it is all about optimized supply chain, warehouse and floor operations.Ability to conduct inventory operations seamlessly with the desired visibility.Break Bulk Operations: Applicable if you receive in bulk totes, drums or tankers and do pack-downs into smaller pack-sizes.From 2012 through 2017, specialty chemical distribution increased by a compound annual growth rate (CAGR) of 5.6% each year, to a global market size of about €97 billion.There is also an anticipated growth in specialty chemical distribution, which will ease slightly, to 5%, through 2022-BOSTON CONSULTING GROUPThe Pain Point – Warehouse Chaos & Lack of a Trace on Inventory MovementIf this connects with you, then you are one of the many companies that suffer with lack of inventory optimization and procedures to move inventory from cradle-to-grave in a methodical manner.This article provides insights on key processes within Chemical Distribution companies and the value delivered by Microsoft Dynamics 365 for Finance and Operations to this industry.User StoryOne of our chemical customers has 3 big warehouses with bulk as well as packaged chemicals stocked in row, rack and bins spread across multiple aisles.Their focus was just the basic must-haves and not necessarily a well-organized warehouse.At best, inventory numbers were manually written on a tag attached to the drum and not within the system.This process created many inefficiencies downstream:The physical space within “Staging” was limited.However, the drums and totes for most break-bulk orders were still left at staging.For other temporary workers, it was extreme inefficiency.Lack of a method to properly track inventory movement.Inventory counts were completely inaccurate as they would constantly adjust inventory for missing / untraceable inventory.With inaccurate counts, planners ordered more supply to fulfill customer demand.The inaccurately stated inventory caused over-supply and more bulk material than needed / could be handled.Due to the chaos, conducting a physical inventory count was a Herculean task.
AT A GLANCEDespite macro factors such as rising interest rates and impact of tariffs, Chemical industry in the US is expected to increase production in 2019.Per estimates by the American Chemistry Council (ACC), chemical output in the US is expected to rise from 3.1% in 2018 to 3.6% in 2019.Higher production translates to higher capacity, and production managers need to equip themselves well to brace the changing environment.Technology is one such critical area that modern-day production managers see as a key enabler to ease their growing challenges.In chemical industry, raw materials weigh in close to 50% of the cost of production.With the US government proposal of hiking tariff by 25%, the cost of raw material from China to US could go over $3B.A sophisticated business application (ERP) will help Plant/Production Managers keep up with the challenges and track key metrics such as inventory turnover and manufacturing throughput to optimize cost of production.Noncompliance to GHS Labeling standards could lead to penalties of up to $127,000.Off late, the tariff imposed by the government adds additional stress on the margins and supply chain.Tariffs require you to leverage your resources more efficiently to achieve better margins while promoting trade.Due to the changing market dynamics, Plant Managers are now forced to engage in technology alternatives that will help realize sustained efficiencies in people, process and technology.Fluctuating Demand for ProductsPer Institute of Supply Management (ISI), the industrial sectors in the US are expected to increase capital spending from 8.7% in 2017 to 11.4% in 2018.Per estimates by the American Chemistry Council, chemical output in the US is expected to rise from 3.1% in 2018 to 3.6% in 2019.3.7%Unemployment RateWith business confidence growing and unemployment dropping, the US economy is set to hum, if not roar, through the rest of 2018.– Bureau of Labor Statistics | 20182.7%Capital ExpenditureThe capital spending in the industrial sectors is expected to rise by 2.7% in 2018.– Institute of Supply Management (ISI)With the economy picking up, below are the estimated earnings from some leading chemical manufacturers in the US.CompaniesHeadquartersExpected Earnings growth in 2018Top productKronos WorldwideDallas, TX41.1%Titanium DioxideWestlake ChemicalHouston, TX25.7%Vinyls and OlefinsKraton CorporationHouston, TX30.6%PolymersAlbemarleCharlotte, NC16.9%LithiumCelaneseIrving, TX20-25%Acetyl intermediatesWhile these developments position chemical companies in a bright spot, not all is bullish.
A rapid transformation of the Chemical manufacturing value chain is required to improve efficiency, productivity, quality, precision, pricing, and more.While “Complexity” serves no good for business, it has been part and parcel of the chemical industry for decades.Many companies suffer from siloed department structures, disparate systems, inefficient data management, and a lack of streamlined processes due to lack of an agile ERP solution.Chemical companies invest in transformation projects such as integrating a cloud-based ERP solution with operations to streamline processes, drive collaboration and efficiency, and offer much more informed decision-making.FIGURE 1Agile ERP Solutions in Various Phases of Chemical ManufacturingUnforeseen Circumstances: COVID-19The COVID-19 pandemic caused havoc, severely impacting every industry.On top of that, transportation costs have gone up, and priority has shifted to essentials.This sort of financial pressure has forced companies to downsize the workforce, yet having to continue the business, which now is enforcing rapid technology transformations at an optimal cost.An Agile ERP in ManufacturingUnlike many other sectors, businesses in the chemical industry may not be able to stop production and send workers home.On the flip side, many chemical companies are pivoting operations to meet the demand of the market.Add to this, a unique share of challenges that already exist for the chemical industry, including issues likeFluctuating prices of raw materials and their impact on marginsThe need for constant product innovationIncreasing risks in supply chain & manufacturingTightening regulationsMarket uncertainty, budget & controlling costsDifficulty in resource managementTo overcome these complexities, companies need to possess a detailed overview of the market to identify the shifting customer dynamics and plan appropriately.
The year 2020 has shown us that advancement in science, especially the field of chemicals (and related fields such as biotechnology that deal with the vast majority of chemicals), cannot come fast enough!According to research, companies that have implemented Industrial AI in the chemical sector are exhibiting significant benefits as follows:72%report a minimum 2x improvement in some process KPIs37%report a 5x improvement in KPIs4 Ways of Applying AI and Machine Learning in the Chemical IndustryWhile every enterprise has its blueprint to follow when it comes to the application of tools and techniques on AI and Machine Learning, certain broader areas can be common for the chemical industry.However, these days, faster results that can mitigate manual errors and minimize efforts are required.Today, major players in this sector are looking for focused R and innovation that can yield faster and more accurate results following the use of artificial intelligence in the chemical industry.It can also help in recognizing the right molecules, generate formulas, and aid in knowing the precise quantities of different chemicals required.However, digital transformation and the introduction of layers and layers of machine-generated intelligence can make this combination even more successful than ever before.
AT A GLANCE The need for integrated Material Requirements Planning (MRP) in growing companies Gain perspective on MRP and Supply Chain Planning as essential drivers for growth Managing customer expectations & reality behind the scenes Real-life pain points A planner’s day-in-the-life and what matters while planning production campaigns Workforce resistance and solutions in adapting to newer efficient ways of planning What can an integrated materials requirement planning and forecasting system do for you? Key Takeaways Are good supply chain planning methods only for larger corporations? While the concept of Material Requirements Planning (MRP) was originally only intended for manufacturing companies, it now extends itself into all industries, including Service. Your planners and buyers need clear and precise signals that allow them to make informed decisions on when to buy, and when to produce. Even with a forecast in place, it could be quite hard to schedule production if you are constantly facing capacity issues – be it machine or labor. Now add to it the lack of proper resource capacity during a week.
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