Leading players in the chemical industry could significantly increase their competitive advantage if they started leveraging logistics as well as other global industries do, according to new research commissioned by DHL, the world's leading logistics company. DHL's whitepaper "Supply chain in the boardroom - 5 levers to boost a chemical company's bottom line" highlights opportunities to boost performance and overcome challenges such as commoditization by getting logistics onto boardroom agendas in the chemical industry.
According to the report, the five levers that can help chemical companies increase performance and competitiveness are: optimizing logistics costs, freeing up capital for better inventory management, smart investment in logistics assets, increased focus on end-to-end safety and security processes and differentiated logistics services.
"Logistics in the chemical industry is expected to run smoothly and reliably with senior executives usually only paying attention when something goes wrong and rarely regarding logistics as an opportunity," explains Michael O'Hara, Global Head of Chemicals Sector, DHL Global Forwarding. "Logistics and supply chain management should be key elements in a formula for success for global chemical companies in today's complex interconnected marketplace where products are fast being commoditized. The research has identified five levers that applied strategically at board level can restore competitive advantage, increase liquidity, and turn a standardized approach to safety and security from a cost into a benefit that adds value and attracts new customers."
With a worldwide sales value of Euro 3,000 billion, the chemical industry is one of the world's largest and most important sectors, generating international trade volumes above 700 million tons of freight annually. The industry is exceptionally diverse with complex supply chains challenged by the variety of products, highly specialized transportation and storage requirements and growing safety issues. With the ongoing globalization of the supplier and customer base, chemicals are fast becoming commodities and as a result competitive advantages are getting harder to find.
To meet these challenges, the report urges senior management to change its perception and see logistics as a strategic asset rather than a transport and delivery service. Authors of the report - Prof. Dr.Thomas Krupp (Cologne University of Applied Sciences), Prof. Dr.Carsten Suntrop, (CMC² GmbH / European University of Applied Sciences) and Uwe Veres-Homm (Fraunhofer Center for Applied Research on Supply Chain Services SCS) - found that a holistic end-to-end approach to logistics can achieve: greater logistics value through cost optimization, increased supply chain liquidity, smart investments in logistics assets, standardized safety across the supply chain, and differentiated logistics services.
Professor Dr. Thomas Krupp said: "Management boards of chemical companies usually do not perceive supply chains and logistics as opportunities for their business. The five levers we outlined provide executives with insights and recommendations how to improve their company's capability for better performance and increased competitiveness."
Source: Deutsche Post DHL
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