Development of a global Supply Chain Network Strategy
By Roger Bloemen
LogiChem 2011 will be the event's tenth anniversary and an opportunity for the most senior chemical supply chain & global logistics directors from the European chemicals community to come together once again share experiences, make new contacts and benchmark the latest chemical supply chain initiatives.
Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.
Choosing the Right CBSE School A Comprehensive Guide for Parents
Chemical Supply Chain
1. Logichem April 21, 2010
Development of a global
Supply Chain Network
Strategy
Roger Bloemen
V.P. Global Supply Chain
1
2. Agenda
Solutia Introduction
Business Strategy
Supply Chain Strategy
Implementation of Global Supply
Chain Network Strategy
2
3. Solutia history
Pre 1997
Today
Monsanto as a
chemical
conglomerate Spin off of
chemical
activities in
Plastic and 1997
Agricultural (Solutia)
chemical
division
division
Pharmaceutica
NutraSweet
l division
3
4. Solutia’s situation in 2003
The leadership team
inherited an unfocused Portfolio analysis - 2003
High
portfolio of businesses Saflex
tilted toward
Structural attractiveness
commodity fibers &
Specialty
Nylon Intermediate Chemicals Fluids
CPFilms
Nylon Plastics
chemicals… Industrial Astaris
Fiber Phosphorous JV
Basic chemicals
At spin-off, Solutia was Axio Research Nylon Fibers Dequest Phosphonate
Water Treatment
assigned significant L Aspartic Acid
Chlorobenzenes
Pharma
Services
legacy liabilities
Acrylic Fiber
High
Business position
Note: Size of globe represents relative size of business
Consequence: Chapter
11 filing in Dec. 2003
Out of Chapter 11, Q1
4 2008
6. Saflex – The Key Ingredient in
Laminated Glass
Key Product features
Safety and security
Quiet
Design
characteristics
Application Segments
Automotive
Architectural
6 Photovoltaic
7. Core Market: Automotive
Asia market driven by Chinese
growth
European market is driven by
Eastern European growth
North American auto builders are
under severe pressure
Regional Autom otive Dem and Asia Automotive
200 60
50
150
40
M Sqm
Msm
100 30
20
50
10
0 0
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013
Europe North America South America Asia Pacific China Other Asia
Asia Automotive Means China
7
8. Core Market: Architectural
Asia growth concentrated in lower-
specification China market
European market growth focused on
3.2 meter wide product
North American market driven by
hurricane belt applications and
commercial construction
Architectural Market Growth 2008-2013
4%
Regional Architectural Dem and
15% 23%
250
200
M Sqm
150
100
7%
50
0
2007 2008 2009 2010 2011 2012 2013
Europe North America South America Asia Pacific
51%
Europe North America China Other Asia South America
8
9. New, Fast-Growing Market: Photovoltaic
Photovoltaic: Turning sunlight into
energy
Application: thin-film solar panels
(used in solar farms)
Role of Saflex: encapsulates
(protects) electrical components
Small base Regional Photovoltaic Dem and
Rapid growth-especially in 120
100
Asia and Europe M Sqm 80
60
Driven largely by energy 40
policy 20
0
2007 2008 2009 2010 2011 2012 2013
Europe North America South America Asia Pacific
9
11. Strong but regional growth, market
moves East, fast !
Global PVB Demand Key Growth Area's
Photovoltaic China Automotive
Architectural China Architectural
Automotive Europe Architectural
Photovoltaic
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
• Photovoltaic will be fastest growing
segment
New applications could increase •China will generate majority of market
market growth: growth.
•Trilayer acoustic products will become
(e.g. automotive side laminates,
an increasingly important segment of the
automotive roofs) automotive market.
11
12. First step: develop the business
strategy
Clear objective
“Saflex will grow with the market while increasing
margins so as to create sustainable and attractive
returns on future capital investments.”
4 pillars to support
this strategy
Achieve lowest
delivered cost by
maximizing service
levels as a key pillar
12
13. Supply Chain Strategy
Optimize with constraints
- Logistics tendering
Two ways to Release constraints class A
- MRP2
- Advanced planning-systemsS&OP
Global
achieve lowest - People developmentCollaborative forecasting
-
Service level
- Asset strategy
delivered costs
Day-to-day
actions on
ati
(optimize within itia
ls itu
In
constraints)
Long-term Cost / sqm PVB film
actions (release
13
constraints)
14. Global Market mismatch supply /
demand on mid-term
Regional Sheet Supply/Demand Balance
MM m2
North America Europe
124
104
93 109 Asia Pacific
53 59
66
2004 2008 49
2004 2008
37
Global
2004 2008
Legend 259
South America
2004 213 243
Capacity
MM m2
Demand
2004 2008 7 10
4
2004 2008
14
2004 2008
Implied Operating Rate 88% 94% 1
15. Global Sheet Asset Infrastructure
Ghent, Belgium
Bor (5)
Roermond (26)
Kentucky (9) Trenton, MI
Uentrop (22) Ulsan (22)
Indian Orchard, MA (IO) Frankfurt (52) Suzhou, China
Cuernavaca(4) Fayetteville (10) Shiga (45)
Santo Toribio, Mexico Rayong (6)
Solutia 140 Sao Jose dos Campos
Sekisui 107
DuPont 47
Kuraray 57
15
16. Inter area shipments do not add value, have
unpredictable pricing, unreliable leadtime
Europe:
2300 Cont
. .
.
120+580 100+86
Americas: .
1800 TEU
.
. Asia / Pacific:
100+71 413+242 500 TEU
Saflex : 4600
Solutia : 36000
containers/year
176+50
16
USA : 65; Lat:34; Be : 46; Asia : 20
17. Conceptualisation of Saflex SC network
Raw materials Intermediates Extrusion Interleaving Finishing
Ghent, Belgium
Newport (UK) (1961)
TEG
Antwerp, Belgium
Ghent (BE)
2EHA Antwerp (BE) Wales
Newport, (1991)
Plasticizer
(1998)
ETHANOL
Trenton, MI Indian Orchard, MA (IO) Indian Orchard (US)
(1955)
VAM (1927) Suzhou, China
(2007)
Trenton (US) Contractor (US)
BUTCHO
Santo Toribio,
Mexico Santo Toribio (MX)
(1996)
PVOH
San Jose Dos Campos (BR)
Sao Jose dos Campos, Brazil
(1989)
Suzhou (CN)
Singapore
Singapore (SG)
1
Finishing Center
(1998)
17
18. Capacity and capability needs
Global PVB Demand
PVB market growth will require
Saflex to invest in new capacity
Photovoltaic
Architectural
Automotive
Growth will be strong in Asia
and Europe
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Saflex will require more
Key Growth Area's
capability in strategic product
categories – 3.2m billet
China Automotive
architectural, three-layer co-
China Architectural
Europe Architectural extruded acoustic
Photovoltaic
18
19. Asset strategy: where to start?
Many questions and potential options…
Shall we integrate backwards? If yes,
how far and with which technology?
Where shall we extend our Where and when shall we install
resin capacity first? product specific equipment?
Shall we expand or close our
South American extrusion line?
When shall we expand our
?
Where shall we invest?
What is the ROI?
What is the immediate next step
to reduce capacity unbalance?
What do we do if the dollar
lines in China? falls under 0.6 EUR?
Shall we open a line in India? If
yes, with what specs?
…which are interdependent (how can we
model this with spreadsheets?)
19
20. Methodology
Multidisciplinary Supported by
team, coordinated universities for
by supply chain modeling and
and including scenario analysis
Manufacturing
Technology
Purchasing
Sales
Business
management
20
21. Asset strategy is developed using
an optimization model
…instead of spreadsheet simulations
Conceptual framework
Excel template
Mathematical model
Investment plan presented
to board & shareholders
21
22. Building a holistic model is
time consuming and complex
Organisation
Need internal OR knowledge
Data, data and data
• Forecast data, by month/sku
• Costing data by plant
• Freight data, by leg
• Duty data, by country
Data issues
• Integrity
• Availability
Modeling
Objective function
• Profit maximisation
• Cost minimisation
Variables
• Mixed Integer vs Linear
Aggregation level
22
23. Value of the model
NOT
Absolute truth
It remains a model -> hence
abstraction of reality
BUT
Insight generation
Scenario comparison using same
baseline
23
Speed
24. Saflex convinced shareholders to
invest
In the past 4 years,
despite Chapter 11, Saflex
managed to invest more
than 200 M$
Acquisition & expansion in
Mexico
New plant in Suzhou
Third line in Ghent
New resin plant in
Antwerp
Expansion of resin plant
24 in Indian Orchard US