Digitalization of supply chains

Digital supply chains in chemical logistics

Modern IT systems help to master the complexity of supply chains in the chemical industry. They manage the flow of information, which accompanies the physical flows of goods. And they deliver the infrastructure for the digitalization of processes in the new world of Logistics 4.0.

But in order for processes to be able to be automated continuously from delivery call-off at the supplier up to delivery to the customer, it takes one basic requirement: Full integration of the logistics partners involved. Integration is the prerequisite for collaboration in complex supply chains. It creates networks in which information flows and can be shared. The cost saving potential in global supply chains is massive due to such networked logistics.

“Integration is the prerequisite for collaboration in complex supply chains”

In the age of digitalization cloud technology delivers an essential contribution to the more efficient organisation of logistical processes. Especially sensitive distribution logistics in the chemical industry can benefit from the advantages of IT-based supply chains as

a) It is about integrating many different parties with the logistical process. While on the procurement side there are often complete transports for large volumes delivered by a rather small number of suppliers, distribution is characterised by smaller volumes and a large number of different consignees.

b) The supply chains in distribution are often global. Long transport routes across country borders require a high degree of transparency.

c) In distribution, it is often that different carriers and significantly more forwarders are employed than in procurement. While in procurement logistics rail freight transport plays a big role, distribution is done in multimodal transports via road, sea and partly by airfreight.

“Through AX4 we can present our processes in an even more transparent way and deliver important information in a timely manner so that if necessary our customer can adapt his production in time and without downtimes,” said Harald Gort, CIO, Lexzau Scharbau.

The goal is to be able to quickly, easily and flexibly manage cross-company logistical processes in a global network of a large number of forwarders and locations and to ensure smooth cooperation between the various participants along the transport chain. This kind of interaction between shipper and forwarder requires a high degree of transparency and a continuous supply of required information.

In order to improve communication between the involved parties and to optimise delivery processes, it is required to standardise the processes. Modern cloud-based IT solutions can support here as they allow for central access to transport-relevant data for all participants and thus create a consistent level of information. By mapping, a cross-company process in the cloud, which is valid for everyone, individual and local isolated solutions can be avoided or removed. In addition cloud solutions ensure that logistical processes run in automated ways: They are documented in detail and the system alarms when processes or pre-alerted delivery times run out of hand.

“We wanted to standardise communication with our forwarders instead of using multiple communication forms,” said Holger Eiffert, Head of SCM & Sales Services, Kuraray Europe.

Requirements to IT-based supply chain management in the chemical industry.

The typical logistical distribution process in the chemical industry mostly looks as follows: The chemical producer distributes goods from various locations to a large number of customers. Depending on the company’s diverse transport requirements different forwarders are being used. Shipments consist of general cargo, partial or full loads or - in a case of samples - of small parcel shipments. In addition, there are dangerous goods for which special service providers are being used. At the same time - especially in international distribution - various ways of transport are used such as air, sea, rail and road. The processes for cooperation and for the exchange of information can be organised in different ways depending on location and forwarded. Many departments in the company are affected by logistical processes; therefore the requirements for an IT system are comprehensive:

The company’s central logistics needs central overviews, continuous transparency of all locations and clear measurability of performance as well as meaningful reports. In addition, processes which are standardised across locations are desirable instead of many individual solutions, also integration with the own data warehouse system. In addition to that, central availability of validated shipment count would be helpful, e.g. for tenders.

The purchasing department needs solutions which can quickly and easily be rolled out to new forwarders and an updated database which deliver all the required information on shipment structures for tenders at the push of a button.

The individual locations require easy and automated communication with forwarders, i.e. quick and cost-effective integration of new forwarders, automated exchange of all required data, quick ability to provide information in case of problems and on the shipment’s progress. They also need a system which can flexibly map the locations’ special requirements.

The customer service centre requires easily accessible and timely information on the shipment status and proactive notifications in case of problems. The IT needs a system which can be implemented at a reasonable cost, which can be easily integrated with the existing system landscape and is easy to maintain.

Besides that, also external partners make requirements to companies: The company’s customers expect transparency and an easy way to access their shipment information. They want a modern and innovative set of features. The forwarders require early information on planned transports and an easy way for the driver to report status information.

“We transmit all shipment data centrally from our SAP system to AX4, from where it is being forwarded to the various forwarders. These, in turn, report tracking data which is returned to SAP in a harmonised structure,” said Michael Kuschnerus, Logistics Manager, Brunsbuttel factory, Sasol.

Benefits of digitalization

The digitalization of management and information processes in logistics opens up groundbreaking opportunities for companies of the chemical industry. Even complex tasks in delivery networks can be flexibly realised. Cloud-based IT solutions make complex logistical processes easier to manage. They allow for the integration of all participants along the supply chain at the push of a button.

Processes are automated, availability of data increases and the quality of information grows. Due to a central availability of transport-relevant information for all participants, it is easier to make decisions, to avoid costly wrong decisions and to reduce a cost for research and information procurement.

In practice this leads to the following results:

Reduced logistics cost:

The early recognition of synergies, e.g. in a utilization of transport vehicles due to improved planning capability and transparency leads to reduced transport cost and even the number of special transports reduces significantly.

Savings in freight cost can also be achieved by way of tenders as detailed and reliable data on shipment structures and volumes is available for the tender documentation.

Administration cost is reduced as fewer research is required and duplicate entry of data is eliminated. In a central cloud solution, data which is gathered due to common processes and the use of a common IT is collected. Based on this new key figures or key figures with more valid values can be created.

Quicker and more reliable supply chain:

Smooth interacting processes replace breaking points between the companies and harmonise heterogeneous IT landscapes in a common process for the participants. A central logistics platform allows for more efficient planning of transports as well as of resources in the chemical park. Reliability in distribution increases due to more stable processes, transparency and meaningful KPIs, timely information in case of irregularities.

Complexity is reduced, which also reduces risks along the supply chain. Also, the error rate caused by in transparent processes or lack of access to information is significantly reduced. Due to the integration with the flow of information also satisfaction among the company’s customers increases.

Efficiency by collaboration:

Cloud solutions allow for close cross-company cooperation in the sense of collaboration – a key factor for increasing margins: More efficient management and the reduction of various cost factors lead to higher margins for all participants. Internally many companies are already highly optimised. However, the area of cross-company cooperation still leaves a lot of leeway for innovative ideas. Collaboration intensifies cooperation between companies.

The close and partner-like cooperation results in an innovation-friendly climate and new ideas can be looked at in a more holistic way. In addition, those new ideas have fewer obstacles to overcome as the various parties already cooperate closely. Thereby the conditions are perfect for driving and implementing innovations.

Savings through modern IT:

Connecting the cloud solution to the ERP system allows for reduced efforts of 50 per cent when integrating new forwarders that used to have a direct and dedicated connection to the ERP system. Compared to a locally implemented software time savings in rolling out a cloud solution to a new location amounts to 70 per cent since the solution can simply be copied. Internal maintenance efforts for the system are eliminated and the internal IT is further relieved by outsourcing forwarder integration.

The logistics platform AX4 also offers customers another advantage: By using the administration environment AX4 Open solutions can be adapted independently. This leaves companies with a high degree of agility and freedom of design. Like this innovative idea can be realised independently from the software manufacturer with the available tools. And that is probably the biggest benefit for many: Future reliability.

Source: AXIT GmbH

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