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A Deeper Look Into the Chemical Industry’s Supply Chain Challenges

Intensifying globalization is opening new markets for manufacturing companies in the chemical industry. US-based chemical manufacturing companies are now distributing their products and chemicals to emerging markets. In fact, half of the $5 trillion total global demand for chemicals now originate from emerging markets.
However, with new opportunities come new – and different – challenges for the chemical industry especially across its value chain.

Challenge #1: Fluctuating raw materials and commodity prices

Chemical manufacturing companies are highly susceptible to sudden changes in the price of raw materials, energy, and other commodities. For example, the fluctuating prices of crude oil or natural gas, which accounts for 50% of a chemical company’s production costs, have a significant effect on their bottom line. Carrying large amounts of varied chemicals in their inventory also makes it difficult to keep track of costs and changes in prices.
To stay on top of rising costs and sustain a healthy bottom line, chemical companies need to have an overall view of their supply chain. They need visibility into the fluctuating prices of raw materials and commodities so they can be integrated into their resource planning systems. This allows them to make adjustments in their supply chain, find efficiencies in the market, and make better procurement decisions.

Challenge #2: Higher stakes in quality control

The chemical industry is a highly regulated industry with strict compliance requirements from governments and regulatory bodies such as the Globally Harmonized System of Classification and Labelling of Chemicals (GHS), which aims to ensure the protection of the environment and human health during chemical handling, including use and transport. Chemical companies need to address and comply with these requirements at the procurement stage of the supply chain.

Furthermore, with the rise of social media and stricter consumer protection programs, the stakes of failing quality controls and of initiating product recalls have never been higher. Negative news and public scrutiny can significantly diminish brand image which leads to loss of goodwill and long-term negative effects. Chemical companies also need to have visibility across their entire production processes to quickly identify batches of subpar quality and trace issues to their root causes.

Challenge #3: Managing massive amounts of data

Data management has been becoming increasingly difficult and complex for chemical companies. Information on the pricing and quality of raw materials and commodities from suppliers, regulations and compliance requirements from governments and regulatory bodies, agreements and contracts with clients and customers, and data on manufacturing and operations – all of these produce massive amounts of data that must be cataloged, processed, and leveraged to produce business insights.

However, many chemical companies and manufacturers still lack the systems and IT infrastructure to capture critical information. For example, some chemical companies do not have complete information to accurately determine the end-to-end costs, from procurement to delivery, of each of their products. Thus, they are unable to correctly determine which products are positively contributing to the bottom line and which are low or non-performers.

Big Data Solutions to the Rescue

Big Data solutions enable chemical companies to overcome these challenges and develop and advanced approach to supply chain management.  The consolidation capabilities of Big Data solutions allow chemical companies to integrate disparate sources of pricing and quality information into their systems. This enables them to efficiently keep track of fluctuating prices and variations in quality of raw materials and commodities from their suppliers.
The data mining capabilities of Big Data solutions enable chemical companies to quickly identify problems and potential issues in the entire value chain and quickly trace them to their root causes. This also allows chemical companies to more easily comply with regulatory requirements.

The analytics and visualization features of Big Data solutions simplify massive amounts of information so that chemical companies can turn their data into actionable insights. In addition, the predictive capabilities of Big Data solutions can help them anticipate possible outcomes and make better, data-based decisions.
OpenText’s ALLOYTM Platform is a Big Data solution that helps companies drive business insights. It is a cloud-based platform that enables businesses to solve their biggest data management and integration problems. The ALLOYTM Platform allows businesses to consolidate information coming from multiple disparate sources and increase their visibility into their data environment.

Want to know more? Contact us and learn how OpenText’s integration and data experts can help you meet your supply chain challenges.


OpenText is the leader in Enterprise Information Management (EIM). Our EIM products enable businesses to grow faster, lower operational costs, and reduce information governance and security risks by improving business insight, impact and process speed.

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