Moving Up the Supply Chain Maturity Curve: The Process Industry Executive Agenda for 2016 and Beyond

March 24, 2016 Katie McGinn

The comedian Rodney Dangerfield was famous for saying, “I get no respect!” In many ways, the same can be said of companies in the process industry when it comes to supply chain management. The amount of attention other industries receive from analysts, consultants, and the press -- especially Retail, High Tech, and Consumer Packaged Goods -- greatly outweighs the attention given to Chemicals, Petrochemicals, Energy, and other process industries. Yet, companies in the process industry have their fair share of supply chain risks, complexities, and challenges to deal with, and their objective is no different than the objective of virtually all companies today, across all industries: to leverage their supply chains to drive profitable growth.

There is a reason, however, why the process industry has traditionally failed to capture the attention of the supply chain community: relative to other industries, the process industry has, generally speaking, been a laggard in developing and adopting innovations in supply chain processes, and in implementing the technologies to enable them. Simply put, the process industry has, for many years, been on the lower end of the supply chain maturity curve.

The root cause of this problem is that the end-to-end supply chain has historically taken a back seat to a single node: manufacturing. With its expensive manufacturing plants and equipment, most companies in the process industry have primarily focused on optimizing asset utilization, productivity, and Return on Assets (ROA). In short, manufacturing beat the drum that every other supply chain process danced to.

What if, however, instead of having manufacturing at the center of the supply chain universe, you align your supply chain around the customer?

That is the question leading companies in the process industry have started to ask, and just like their peers in Retail and other industries, they are migrating toward an “Outside-In” approach to supply chain management, where the customer -- not manufacturing or any other internal function -- sets the tempo for the end-to-end supply chain.

To succeed, companies in the process industry will have to make their supply chains more flexible and responsive. But what are the critical building blocks and capabilities to get there?

This paper addresses that important question, with a focus on the following topics:

  • Breaking down internal functional silos and enabling greater visibility, communication, and collaboration across trading partners

  • Eliminating waste and complexity from supply chain processes

  • Strengthening supply chain risk management capabilities

  • Hiring, training, and retaining the best talent

  • Thinking beyond ERP: the role of supply chain software, B2B connectivity, and social networking 

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