INSIGHT: Delivering flexible supply chain solutions

LONDON (ICIS)–The Covid-19 pandemic has raised important questions about globalisation as supply chain disruption has become more widespread.

But probably of more immediate concern is the increase in supply chain costs that all companies are having to bear.

When will those costs come down? And will they reduce to a level that is manageable and, indeed, acceptable, without the need for serious, possibly company-wide, cost-containment measures?

Chemicals industry players still operate in a world where consumers want low prices, even though manufacturers struggle under higher-cost constraints. The pandemic has not changed that.

In a keynote presentation to the Gulf Petrochemical Association (GPCA) online supply chain conference on Wednesday, the chairman of Kuwait’s PIC offered senior executives some sound advice.

“It is easy to sell, but hard to deliver,” said Hamad Alterkait.

And that has definitely been the case through the pandemic, with companies finding that they can, in most instances, continue to run production plants but not always acquire adequate feedstock or get product to market in the way they would want.

Senior management needs to review and evaluate its supply chain functions, Alterkait suggested, giving them the same attention as manufacturing.

Evaluation should really be seamless as the one does not function optimally without the other.

That point has been hammered home through the pandemic and the disconnect highlighted by the number of force majeure declarations that have had to be made, predominantly because of supply chain failures.

Review your supply chain teams – surprise them with a review, even – and evaluate your customers, Alterkait suggested.

The cost to supply certain accounts has been put under the spotlight over the past year and more.

So, it makes good sense to better understand how things are done now – and how they might be done possibly differently in future.

Supply chain resilience has been impressive given the severe strains put on deliveries. However, there can always be different ways of doing things, and, maybe, alternatives might be needed in future.

The shocks to the system delivered by the pandemic may have been unprecedented but this does not mean that severe disruptions might not occur again in future.

Companies possibly need more flexibility in their supply chain solutions: regional hubs, or strategically-located warehouses, for example.

Assessing different supply chain scenarios could prove to be a valuable exercise. A company never knows when it might need a different supply chain solution, even one that is considerably more costly than the normal.

Supply chain infrastructure is always a subject for review by senior management, said Alterkait.

Companies have exercised great flexibility through the pandemic, but they might be expected to deliver more.

Insight by Nigel Davis