Chemical's Next Big Thing: Collaboration

Oct. 15, 2003
Industry FocusChemical's next big thing: Collaboration As close observers of the chemical industry, Accentures Andy Dvorocsik and Doug Houseman share
Industry Focus
Chemical's next big thing: Collaboration

As close observers of the chemical industry, Accenture’s Andy Dvorocsik and Doug Houseman share their thoughts on major logistics trends shaping the industry’s future:

Cross-company collaboration Companies are starting to talk about sharing assets in the supply chain outside of manufacturing. For example, look at railcar fleets. The average utilization of hopper cars and tanker cars in the chemical industry is fairly poor. With the excess capacity in such areas, companies are starting to work with competitors to create shared solutions. The collaborative management of capacity in this area, according to the Accenture consultants, will be the Next Big Thing.

Outsourcing A better way to describe it might be leveraging external capabilities. Companies are learning to use 3PLs and 4PLs where it makes sense to manage the complexity and to gain capabilities and assets. The key is deciding on which things you couldn’t or shouldn’t do internally, which requires companies to conduct an aggressive self-examination. In the past everyone looked at the back office as the place to outsource, but in the future companies will look at their bread-and-butter supply chain operations to determine where outsourcing makes good business sense.

Time-value-money speed-to-benefits Companies are no longer patient with projects that seem to drag out interminably. Financial considerations play a big part here — Wall Street performance expectations are causing companies to bring all necessary assets together to bring projects to successful completion in a timely manner. There are debt covenants and other things in play. The issue today is what can be done to bring dollars to the bottom line as fast as possible.

Thinking outside of the chemical industry Chemical companies have tended to be introverted, benchmarking themselves only against other chemical companies. Now these companies are taking a look at top performers in other industries to see if there are knowledge, experience and forecasts that can be transferred back to chemicals.

October, 2003

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