Supply chain teams in the chemical industry have experienced tremendous pressure in recent years, coping with changes in prices, suppliers, transportation, regulations, and, in 2021 alone, a 28% increase across the globe in mergers and acquisitions.
Looking at today’s challenges for the industry, the team at SGS-Maine Pointe summarizes the essential problem in this volatile environment: to help CEOs drive performance, ensure customer commitments are met, and find a different playbook for strategic procurement.
That playbook demands constant adjustments. As a result, the supply chain team and the company as a whole may begin to suffer from change fatigue, becoming roadblocks to the very solutions that would help them.
Change fatigue is characterized by apathy, finger pointing, confusion, and energy depletion, all of which lead to resistance in implementing changes or even communicating problems and concerns. The team slides back into easy, familiar patterns. Those patterns might not work but they also don’t require overwhelming mental and physical effort.
A company that is fighting change fatigue must find the root cause for any underperformance, fill capability and capacity gaps, and manage internal and external relationships.
Find root causes for supply chain bottlenecks
Today, chemical companies are looking for ways to create value despite inflation and supply chain shortages. The path to value begins with a capability and capacity analysis which allows a chemical company to better understand its current situation, evaluate its goals, and search for the root causes on why those goals are not currently being met. Among other root causes are:
Lacking a capability and capacity analysis, the executive team struggles to implement changes that speak to root causes. When band-aid after band-aid is thrown onto a problem, change fatigue results.
Fill capability and capacity gaps
The last sustained period of global inflation occurred in 1973-82, with the 2007/8 financial crisis also having lasting effects on supply chains. Yet, given those dates, many teams include individuals who have never experienced the effect of inflation on the supply chain. They have never dealt with suppliers who can pick and choose their clients, let alone coped with rising costs and transportation upheavals.
That knowledge gap is compounded by staff turnover. For example, when long-time employees retire, they take with them years of experience and knowledge plus the relationships they built with suppliers over the years. If their knowledge is not written down, if they are unable or unwilling to train a replacement, or if Human Resources underestimates the resource gap created by their retirement, the supply chain team feels the effects quickly.
Supply chain teams need guidance on digitizing the supply chain, optimizing remote communications, and increasing collaboration internally and with suppliers and customers. Training, coaching, and onboarding programs ensure that a chemical company has the skills and the personnel to fill capacity and capability gaps. With support experienced in up-to-the-minute supply chain management, a team learns to turn risks into opportunities and avoid the feeling of insurmountable obstacles to change.
Manage relationships to take advantage of opportunities
Two sets of relationships affect the supply chain. First is the relationship of the supply team to the rest of the company, including sales and operations planning (S&OP). Second is the relationship of the team to suppliers. Managing both relationships is critical to avoiding change fatigue.
For one chemical company, the disconnect between the supply chain, sales, and operations left them with 2,600 metric tons of legacy inventory, high operating costs, and confusion over roles and responsibilities. Countering problems like those begins with redesigning the S&OP processes, with clear functional responsibilities, goals, and KPIs across siloes.
Optimizing supplier relationships often requires introducing new go-to-market techniques, holding conversations with suppliers well before any request for proposal, and increasing supplier optionality through in-shoring and on-shoring and by considering suppliers in new areas of the globe. These changes must be made in collaboration with sales and operations to ensure that the changes they entail are sustainable and create value.
Total Value Optimization addresses change fatigue before it takes hold
Through Total Value Optimization, SGS-Maine Pointe attacks the leading causes of change fatigue with insight into procurement, logistics, and operations challenges; pragmatic improvement plans; and measurable, collaborative change that bolsters rather than taxes your supply chain team.
If change fatigue is already threatening your supply chain, we can help. For more information, submit the form below.