Paul Valéry, a French poet and philosopher, is credited for first saying that “the future isn’t what it used to be” in 1931. It’s a saying that resonates with me as I reflect on the effects the pandemic has had on global supply chains. According to Bloomberg, executives at S&OP 500 companies have mentioned the term “supply chain” about 3,000 times (so far) on earnings/investor calls in 2021. This record-breaking event is the result of organizations experiencing amplified levels of volatility, uncertainty, complexity and ambiguity (VUCA) affecting their supply chain. The past year has been a perfect storm: pent-up demand from people confined at home, epic levels of port congestion, a shortage of shipping containers, lack of truck drivers, border control issues, imbalance in trade flows, etc. The consequences have included a shortage of key manufacturing materials, delivery delays, order backlogs and increased consumer prices.
On October 26, I moderated an AspenTech virtual customer roundtable panel discussion featuring European chemical manufacturing companies that use our aspenONE® Supply Chain Management (SCM) solution. The goal of this event was to allow customers to share perspectives on the VUCA supply chain challenges they have been facing and how AspenTech SCM has been helping them respond to this unprecedented challenging environment.
We also talked about supply chain sustainability trends that AspenTech is seeing – especially in Europe – and shared some insights on how sustainability factors can be incorporated into customers’ AspenTech SCM planning and scheduling models. This topic will be covered in one of my upcoming blogs.
Top left to bottom right: Roch Gauthier (AspenTech), Jack Hitchens (AspenTech), Giacomo Biardi (Bakelite Synthetics), Alfonso Galan Rodrigues (Repsol Chemicals), Fernando Barragán Gómez (ILBOC).
Supply Chain Visibility – Looking Beyond (into the Future)
Giacomo Biardi, supply chain manager at Bakelite Synthetics (a manufacturer of specialty chemicals), began the VUCA portion of the customer panel discussion by saying what is different from the past is that things evolved much more rapidly during the pandemic. It became more difficult to balance inventory, capacity and customer service.
Giacomo stated that what he likes the most about AspenTech SCM is that it provides his organization with an incredible ability to “look beyond.” His organization is not limited to seeing just today or tomorrow; they can see 90 days into the future. This means they can see inventory, capacity utilization and demand developments and trends at the required level of accuracy and granularity.
He referred to the AspenTech SCM scheduling capabilities as a control tower; a place in their organization where all this information can be retrieved, gathered, put together, processed and finally, transformed into something that is actionable. Similar to an airport where there is a control tower that is managing the queue of airplanes needing to use the same runways, the supply chain organization plays an analogous vital role for a manufacturing enterprise. The AspenTech SCM solution enables his organization to understand the implications of options and impacts of decisions at an appropriate level of granularity into the future. This gives them expanded supply chain agility and control.
Supply Chain Decision Making Agility and Responsiveness
Fernando Barragán Gómez, planning manager at Iberian Lube Base Oils Company (ILBOC), shared that before the pandemic, they were already seeing some uncertainty in the market. They started seeing their key customers reduce their inventories, which meant that ILBOC needed to be ready and hold inventories to buffer against variations in the market.
AspenTech SCM helps them handle both medium-term tactical planning (18-months forward-looking visibility for capacity resource planning purposes) as well as short-term finite capacity scheduling (60-days forward-looking visibility for executional purposes). Fernando pointed out that the AspenTech solution is integrated with their SAP system, which is the core of their master data, and that the integration was quite practical and easy to accomplish.
He also stated that AspenTech SCM’s mathematical optimizer understands their numerous supply chain and operational constraints that must be respected when they are modifying plans and schedules in a volatile situation to avoid overstocks and demand shortfalls. He specified that the solution allows his organization to manage supply and demand variations with a fast response and achieve perfect control spanning the shorter-term execution time horizon into the longer-term planning time horizon.
Value Chain Optimization: Integrated End-to-End Decision Making and Coordination
Optimization Principal Senior Consultant and product owner of Repsol Chemicals’ Value Chain Control Tower Digitalization Project, Alfonso Galan Rodrigues, started by summarizing some of the key complexities faced by his organization. Repsol Chemicals produces and sells hundreds of petrochemical products including base chemicals (olefins, benzene), intermediate chemicals (polyols and glycols) and polyolefins (polyethylene and polypropylene). There are many interactions amongst production units and value chains, which gives them a lot of flexibility, but also considerable complexity to manage.
Prior to implementing the AspenTech end-to-end value chain solution, planning and scheduling was done more in silos and isolated, without end-to-end visibility of the integrated decisions along their entire extended olefins to polymers value chain. Some decisions used to be based principally on gut feel or experience. They are now moving from a “push” to “pull” value chain strategy and becoming more agile. Value chain agility means having decision making agility, reducing the response times, and the ability to analyze different “what if” scenarios quickly. It is the only way to capture market opportunities and reduce the uncertainties that a client can feel in the market.
According to Alfonso, even if the chemical business has a big commercial component, not all decisions are taken just from an economical point of view – client segmentation is also a primary goal. He explained the necessity of ensuring that in almost any situation, his organization must be able to fulfil the client’s needs, with a focus on the customer service levels. The AspenTech solution enables his organization in achieving its customer service objectives and being more agile to respond to market and operational changes, while doing so with full visibility into the end-to-end integrated margin optimization across the olefins-to-polymers extended value chain with the required levels of accuracy and granularity.
Supply Chain Agility for a Future That Isn’t What it Used to Be
A key takeaway from the VUCA environment related discussions during this customer panel event is that the AspenTech supply chain solution helps customers get ready every day, for a future that isn’t what it used to be. The uncertain future keeps unfolding and changing, but AspenTech SCM enables customers to continuously “see beyond,” be more agile in their decision making, and leverage optimization for integrated decision making and coordination.
Learn more about and how AspenTech can help your organization increase supply chain agility.