BrazilBuilding supply chain resilience a key objective for leaders in chemicals
With risks and disruptions of all shapes and sizes looming around the corner, supply chain resilience is becoming increasingly important for the petrochemicals and chemicals industries, according to a report from TransformationX and GPCA, which includes a survey of leaders in the industry.
The survey shows that 74% of leaders in the GCC’s petrochemicals and chemicals landscape prioritize supply chain resilience. The biggest risks cited include geopolitical conflicts, blockage of trade routes, and fluctuating commodities prices.
With increasing geo-political volatility world over, companies in the sector are investing in preparedness. 60% of leaders have focussed on building deeper supplier partnerships to help in times of volatility. 55% have invested in risk monitoring and assessment tools. Other popular levers include training and capability building within the team (44% of leaders) and digitalizing and integrating the supply chain (40% of leaders).
“The resilience of supply chains is no longer just about surviving disruptions – it’s about thriving through them and building a competitive edge,” says Arun Bruce, CEO of TransformationX and co-author of the report.
In their report, TransformationX and the Gulf Petrochemicals and Chemicals Association (GPCA) lay out five levers for a holistic approach to supply chain resilience. This strategic framework gives organizations the power to better identify, prepare, and become resilient in the face of crisis.
Supply chain visibility
Better visibility in the entirety of the supply chain entails real-time monitoring, beginning from the moment of procurement. At its most advanced, a more centralized ‘control tower’ arrangement can help organizations with early detection and taking actions on potential disruptions.
Predictive analysis tools, which allow quicker decision-making and collaboration, can also help with forecasting potential risks. These are typically powered by large amounts of data, statistical algorithms, and machine learning.
Flexibility
Another very important part of a successful supply chain strategy is flexibility – creating a supply chain that is able to adapt to changing situations. If an organization is not able to bend with the stress from a disruptive event, it can break under the pressure.
This can mean diversifying product lines, creating a more decentralized factory network, or ensuring critical materials are available from multiple sources. That way, if one product, factory, or sourcing option goes offline, the organization can quickly course-correct.
Risk processes
In the event of a crisis, having processes in place that can quickly identify and address risks is essential for a smooth and rapid recovery. A robust business continuity plan (BCP), for example, can help organizations to quickly identify and assess potential risks, and develop plans to mitigate their impact.
Besides that, a well-functioning risk committee can provide valuable insights and guidance on how to best manage and mitigate risks. A risk committee is an independent panel that deals with potential risks before they can negatively impact an organization.
Collaboration
Better collaboration in relation to supply chains should include strong, mutually beneficial relationships across various stakeholders, including suppliers, peers, and internal customers. This might entail closer coordination with vendors and cooperative information sharing with industry peers (within antitrust guidelines) to mitigate risks and foster collective resilience.
Organization and people capability
An organization’s resilience hinges on its people and a collaborative culture that empowers employees to make swift, informed decisions during moments of crisis. In order to foster confidence throughout these challenging periods, organizations need strong leadership support.
A truly resilient supply chain requires a highly skilled workforce and a robust organizational culture that fosters adaptability, collaboration, and proactive risk management. If a company does not have ‘all hands on deck’, it will likely not be able to properly handle complex disruptions.
Put simply, the importance of greater supply chain resilience in the petrochemicals and chemicals sectors in the GCC cannot be understated. A long list of volatilities can bring any organization to its knees, so the best-prepared companies will ultimately be the most successful.
