Supply Chain Technology Taps into Efficiencies
Access to technology is an important driver for logistics and transportation outsourcing in the chemical market. The industry has lagged behind some other verticals in adopting logistics and supply chain technologies, partly because of the business' unique nature.
Many small, specialized transportation providers serving the industry haven't had the resources to offer electronic transaction services, Web status updates, or e-bills—meaning chemical shippers have operated in more of a manual environment than is common in other industries.
As a result, logistics partners that can offer the technological missing link provide a great benefit to chemical manufacturers. In many cases, transportation management systems (TMS) are the crucial first step in bringing chemical shippers the visibility, granular data, efficient execution, and actionable business intelligence they need to thrive.
Chemical shippers working with third-party logistics provider C.H. Robinson, for instance, can access the company's proprietary TMS, called Navisphere, which provides end-to-end visibility, consistent business processes, and strategy-driven business intelligence around the world. C.H. Robinson employees, customers, and service providers use the Navisphere platform to manage transportation and sourcing activities on a global scale.
Navisphere also helps C.H. Robinson assist its chemical shippers in the all-important search for capacity. Its business intelligence tools give chemical customers a better understanding of their shipping patterns and the seasonal variations within their portfolio mix.
"Then, they can communicate that demand information more effectively, through us, to their transportation providers to ensure they have capacity when and where they will need it," says C.H. Robinson's Taylor Nicks.
Chemical companies also benefit from the fact that Navisphere allows them access to a centralized network of more than 100,000 supply chain partners, without the need to integrate with each provider individually.
That partner integration is also a key factor of the IBM TMS that transportation management and technology provider ChemLogix offers its chemical customers. "We maintain relationships with many carriers, and we help even the smaller ones interface with us via a Web portal or other simple approach," explains Mike Challman, vice president, North American operations for ChemLogix. "This way, chemical shippers don't have to invest IT capital in connecting with carriers. They connect with us, and we bring along all those other connections."
Having access to a TMS also brings chemical companies a granular level of data they likely weren't achieving on their own. "We like to get down to the SKU level in the data we capture and maintain for our customers," Challman says. "If they need SKU- or batch-level data—such as where a shipment went or how many deliveries were made from a certain location—we can access that easily."
Reducing the number of manual processes within the supply chain is another important benefit technology reaps for chemical producers. At Danbury, Conn.-based Odyssey Logistics & Technology (OL&T), cutting out manual steps is one of its main technology goals.
"To move the bar on the supply chain in the chemical industry, producers must try to achieve as much automation as they can," says Glenn Riggs, senior vice president of North American logistics for OL&T. "That's where we come in."
Organizations that don't have access to technology tend to "throw bodies" at their problems, which ultimately increases costs.
OL&T's patent-pending proprietary technology solution provides deep integration for its chemical customers, linking directly to their ERP systems, and automating decision-making, planning, and execution processes for shipments all across the globe. The solution also offers track-and-trace capabilities, and provides management of back-end tasks such as freight payment.
"All this data can be integrated into our customers' ERP systems, so at the time of shipment, we can provide instantaneous accruals back into their general ledger," Riggs says.
The technology also helps chemical companies manage costs. Many chemical companies simply track freight costs as one lump sum—they may know how many pounds they ship and their dollars-per-pound costs, but if those numbers move up or down, they don't know why.
"Our system captures granular freight data, so we can see whether higher costs are due to a base freight charge increase, diesel fuel surcharge change, transport mode switch, or new lane use," Riggs explains.
Having access to that type of data allows chemical companies to know why their costs are changing, and to make shifts accordingly.
Using a deeply integrated technology solution also allows chemical companies to perform higher-level optimization functions that are hard to replicate in a manual environment. If one employee at a specific plant is a whiz at load building, it may help that one location, but that skill can't be duplicated across a global or even regional network.
"Our technology uses sophisticated algorithms that look at order streams, and present aggregation and order consolidation opportunities to be more sophisticated with transportation across the entire network," Riggs says.
Warehouse management solutions (WMS) are another key technology chemical companies expect from their providers. The benefits include increased automation, product and service efficiency gains, cost management prowess, and safety/compliance boosts.
"Our WMS offers all the warehouse floor functionality a chemical manufacturer needs," explains Jim Emmerling, vice president of operations for Weber Logistics, a West Coast-based provider of warehousing, freight, and logistics services. "We can select product according to first-in/first out, last-in/first-out specifications, or even a specific code date. And, if a customer wants to ensure all of a particular lot number goes to a specific consignee, we can place the order with that kind of methodology."
Weber also uses technology to zone its warehouse facilities to achieve maximum labor efficiency. Its system directs warehouse workers to slot products in spots that require the least amount of travel to the areas where trailers are pulling in and out to load and unload product. The result is labor savings for Weber, and greater efficiency for its chemical customers.
The 3PL also uses technology to give chemical manufacturers access to key data about the products they have stored in Weber's facilities. Customers can go online to view status information on inbound and outbound orders, inventory levels, and, soon, even get product temperature readings from Weber's temperature-controlled storage rooms.
"Access to this type of real-time data is a real benefit for chemical firms," Emmerling says.
You're the ONE
For its chemical warehouse customers, third-party logistics provider WSI runs the Enterprise ONE solution from JD Edwards/Oracle. The solution gives WSI the ability to track lots and product history for its chemical producers.
Combining the solution with the RF technology WSI uses to scan products as they move throughout its facilities allows the 3PL to "know exactly where product is from the moment it hits our dock," says Rob Kriewaldt, director of marketing for WSI. "And we can ensure it gets to the right customer every time.
"In addition, many of our customers require specialized packing lists or bills of lading," he notes. "Our WMS allows us to customize those by customer and product type to ensure we meet all the regulations."
Business intelligence tools are another important part of today's technologically driven chemical supply chain.
"Business intelligence is a key component of removing waste from the supply chain," says Mike Forbes, vice president of logistics solutions and engineering, KAG Logistics. "It's also crucial for driving superior levels of efficiency and continuous improvement."
KAG Logistics is a division of the Kenan Advantage Group, North America's largest bulk transporter and logistics provider for the petroleum, chemical, food, and merchant gas industries. The Canton, Ohio-based company offers a variety of asset-based trucking services, rail transloading, and value-added logistics capabilities such as transportation management, carrier management, inventory management and forecasting, and special projects logistics.
KAG offers a suite of technology tools and business processes that help drive that business intelligence component for its chemical customers, which include companies in the silicons, resins, construction adhesives, energy, and fuels additives markets.
"We use a combination of solutions related to specific business processes, including inventory management and scheduling tools, dispatch, real-time information transfer, on-board computers in our trucks, and a 24/7 logistics control center," Forbes notes.
Technology that Delivers
KAG's customers also benefit from the way the company applies its technology from a safety and regulations perspective. Monitoring driver behavior and the way drivers handle equipment ensures that customers' loads are delivered safely, securely, and efficiently.
Its technology offering also contributes to transportation efficiency by ensuring trucks follow optimal routes throughout their entire trip—even down to where drivers should refuel and which wash bays they should visit.
"This helps eliminate the delays and demurrage that can occur in the chemical supply chain," says Forbes.
But technology alone cannot optimize the chemical supply chain. Logistics providers must be able to offer top-notch talent, resources, and assets. KAG Logistics' approach gives customers an execution advantage.
"By combining our asset and non-asset capabilities under one roof, we offer a diversified range of transportation and logistics services that result in a more reliable, secure, and efficient solution that is aligned with each customer's business objectives," Forbes explains.