What is in this article?:
As the world has gotten flatter and supply chains have gotten longer, the need for companies to follow best practices in global supply chain management has intensified.
A Formula for Success
Earlier this year, a factory explosion at an Evonik Industries plant in Germany dramatically reduced the amount of nylon supply available to its customers, one of those customers being A. Schulman. This could have led to a supply chain disaster, had it not been for a risk-management best practice Schulman and other plastics manufacturers follow: shifting to alternate materials and in some cases, alternate formulations.
“In some cases, we are single sourced with a raw material,” Miller says, “but we look very specifically at those products and determine how we can develop other formulations or find other materials, which can be utilized in place of that. This nylon situation is a good example. The industry was going to be extremely short of nylon based on what happened to Evonik. Fortunately, we have an active program underway with another nylon producer of a substitute material, and it gave us the ability to help the industry find an alternative that was suitable for use.”
As Miller sees it, procurement is a particularly fertile area for synergy because of the opportunities to arbitrage currency, import duties or export duties. One of the key elements of managing the procurement process, he says, is having a global communication system so that they understand what they’re buying in every region. “In regions like Asia, for instance, it helps us to identify, develop, evaluate and commercialize new sources of supply for materials that will give us a performance advantage, a cost advantage or a security of supply advantage. Those are the types of things that we’re looking for as we look at trying to find new sources of supply.”