The American Chemical Council (ACC) recently announced that the Chemical Activity Barometer (CAB) has reached its highest level in six years. This leading economic indicator suggests that the chemical industry, as well as the economy overall, is growing. This news presents all chemical manufacturing companies with the positive impact of additional revenue and the challenges that come with an expanding business.
Over the last decade, many companies have been “making do” with what they had to in order to run their businesses. The stories of companies delaying capital investment and squeezing more years out of equipment than they were designed for have been told over and over again. More importantly, they have also continued to utilize outdated IT systems to support their business, rather than adopting new tools specifically tailored to meet the needs of the industry. Whether they are producing bulk chemical components or specialty chemical products, chemical manufacturing companies require continuous efforts to drive down costs and remain competitive. With high capital costs and ever-increasing energy expenditures, companies often implement short-sighted cost cutting measures that ultimately adversely affect productivity, decreasing their responsiveness to the market.
With a large number of SKUs and raw materials – as well as complex manufacturing processes and bottlenecks, ranging from tank farms to a wide range of packing lines – many specialty chemical companies have a huge scheduling challenge on their hands. Add to this the need for rapid rescheduling based on changes in order patterns and demand forecast and standard scheduling solutions simply aren’t enough. Decreasing waste and minimizing incomplete orders requires an advanced scheduling solution that is more robust than the solution inherent in your ERP.
The fact remains that many companies have old ERP systems, which were likely designed for discrete manufacturing and aren’t ideal for the process or mix-mode manufacturing environment that most chemical manufacturers operate in today. They fail to support many of our unique industry needs and are unable to truly measure cost by product. It is virtually impossible to take your business to the next level if you don’t believe in your cost data.
Innovation is a requirement in the chemical industry; new market demands, as well as new raw materials, drive the need for formulating and re-formulating. Additionally, expanding regulations and customer reporting requirements put added pressure on label and datasheet accuracy. This is not something a modern chemical company can manage with a traditional spreadsheet or manufacturing system.
Now is the time to decide which IT investments can both grow your business and improve your profitability. So, where to begin?
You need to look closely at your key pain points. Are you lagging behind the competition in new products? Are you constantly rescheduling production and experiencing excess downtime? Is your profitability decreasing, but you aren’t sure why? All of these are issues your IT solutions should be able to resolve, and if they are not, it’s probably time for an upgrade.
Still interested in how you can use IT to improve profitability and grow your chemical business? Tune in to the Chem.Info webinar presentation: A Calculated Approach to Lowering Cost and Gaining Efficiency