The chemical industry, also known as the supply chain behind any other supply chain, is under rapid evolution to strike the balance between becoming lean and cost efficient while fulfilling increasing customer demands. The supply chains supporting these companies are becoming more agile in their production while pursuing new levels of sustainability. At the same time, the COVID-19 pandemic has tested the resilience of the whole industry and created digitization patterns that are likely to remain permanent.
We recently chatted with two experts about the current situation and future trends for the chemical industry in our TradeLens podcast Chemical Supply Chain Trends. Henrik Wretensjo, Global Vertical Head of Chemicals for Maersk, and David M. Womack, Global Chemicals & Petroleum Strategy for IBM, bring their years of experience in several areas of the industry to this entertaining conversation about challenges and opportunities for the industry. Digitization, visibility, compliance and climate change are key topics we discussed.
During our chat we spoke extensively on the increasingly commoditized and automated nature of this industry. Up front and accurate decisions are key to program “the machine” to run at the right speed and in the right direction. Precision on decision making is a very important aspect for profitability. Across the supply chain, from production to delivery, customer demand data and visibility are critical components for these decisions, as highlighted by Henrik Wretensjo (11:38).
Henrik says, “the utmost importance is to have solid visibility on the performance of your supply chain. You can only make the right decisions if you have the right level of information ahead of you in order to predict, sense and act with agility.”
The value chain for chemicals involves a high level of regulatory compliance. Errors and misplacements across the chain have a strong impact on the entire distribution and can create public safety concerns. In addition, the sustainability dimension for the chemical industry is not only connected to a production that is becoming greener, but also to the ability to look across the entire chain and properly track, trace and follow products from the source to consumer as mentioned by David M Womack (21:38).
"The efficient execution of delivery, of the supply chain, of moving products from one location to another, and doing not only the right thing for the buy side and the sell side but also for the planet ... is absolutely front and center on how chemical companies and industries think about their manufacturing but also their supply chain distribution processes."
The pandemic has created challenges for us all. It has also spurred on digital innovation. David and Henrik (24:56) draw on their experience pre-pandemic to highlight trends that are impacting the industry now and those that will stay in the mindsets of supply chain managers into the future.
“I would like to line out four trends. The first one is digitization, it would be strange to talk about key trends in the world without mentioning this one. The development here is really fast, the focus is on creating transparency, reducing manual processes, integrating with suppliers and customers for achieving efficiencies and leveraging data to make better decisions.” — Henrik Wretensjo
“As companies become more agile to be able to respond to the volatility, areas such as materials development will see their processes that normally take 8 to 10 years radically changing. We are having conversations with customers that are talking about 2 to 3 years for new material development.” — David M Womack
Listen to the full interview below or in our podcast on Chemical Supply Chain Trends to hear predictions for the industry over the coming 5 to 10 years. Be sure to also learn more about TradeLens and the Maersk Chemicals Contest to discover new ways to simplify the chemical supply chain.