Stabilizing the Chemical Supply Chain

Stabilizing the Chemical Supply Chain

The chemicals industry may be stable, but the risks companies frequently face are volatile. Multi-stage shipping routes for hazardous or delicate materials incur risk at every step. Shifting to just-in-time inventories, with more frequent, smaller shipments, is a catalyst for procurement and logistics problems.

Today it’s possible to map an entire supply network—supplier, production, distribution, customer sites—with near real-time status updates on material moving via ports, airports, roads, or rail.

Predictive analytics allows companies to visualize and rate multiple types of risk before they materialize, estimate potential damage costs, and solidify alternate plans before problems explode. These tools also help companies comply with the latest regulations and laws.

Tracking transportation mile by mile helps reveal potential route disruptions. As cargo moves from supplier to warehouse to customers, issues like impassable flooded roads or high winds shutting down ports can occur. A major sporting event can reroute or even shut down shipping lanes for high-risk materials. Airport security events can hold up shipments for hours.

By leveraging risk assessment platforms, companies can go beyond simple location monitoring to show weather or traffic forecasts for an entire shipping route. Additional data can reveal other potential route disruptions. Artificial intelligence can then generate detailed heat maps for different transportation lanes or regions, highlighting segments that present the greatest risk.

For shipments in the planning or transit phase, machine learning modeling can make risk-adjusted ETA predictions to provide accurate and updated arrival estimates.

Houston, We Have a Problem

Risk assessment platforms can forecast supply catastrophes. Critical compounds or raw materials are often placed together in specific geographic locations to be close to processing expertise. These geographic clusters are prone to area-wide problems that can lead to catastrophes.

For example, Houston is home to 39% of the waterborne chemicals industry and is at increased risk for disruptions from hurricanes. A category 4 hurricane making landfall in Southeast Texas provides a significant risk for widespread chemical supply chain disruptions.

With risk analysis platforms, companies can customize alerts to monitor specific regions, facilities, or materials. Early warnings can guide a company to declare force majeure, for example, and avoid late delivery penalties or look for additional mitigation strategies or alternative suppliers.

Companies can stay ahead of compliance with risk analysis tools. Utilizing predictive analytics technology, chemical companies can rate the likelihood of emerging regulations and plan for the necessary process changes.

Legislation changes can trigger supply slowdowns as suppliers respond. For example, an explosion at a chemical company can set off a wave of industrial safety inspection campaigns. These campaigns usually trigger nationwide production halts, plant closures, and industrial zone shutdowns.

Risk is an inherent part of chemicals procurement, production, and transportation, but predictive analytics enables companies to visualize and rate multiple types of risk before they materialize. Once a company fully integrates a risk assessment system, it can predict, monitor, and minimize dangerous threats and conditions. This helps establish new levels of safety and security, mitigation strategies, and recommended alternatives, thus lowering supply chain risk.