In part one of this post we explored how to manage supply chain complexities and unpredictability. In this second part, we’ll help ensure chemical manufacturers don’t fall into a pattern of bad planning and skillfully anticipate seasonality.
To operate at its peak an enterprise needs to face and recognize the top trends that are reshaping manufacturing. Understanding these trends is the first step toward initiating a digital transformation. You can then take the additional steps designed to solve your business’ current problems, start showing value immediately, and help evolve a stronger business strategy.
Supplier seasonality and promotions
Thankfully, not everything about supply and demand is unpredictable—materials in the supply chain in various parts of the world follow their own, reasonably predictable seasonal patterns. For instance, cotton prices from India (the largest producer of cotton in the world, according to Statista) plunge when the harvesting begins in November, and stay low though when harvesting ends in March of the following year. This, obviously, has a significant impact on the fiber-garment industry.
Another example is oil and gas production—in which production slowdowns are typically anticipated in the Gulf of Mexico during hurricane season. The extent to which weather impacts production, however, is not predictable. In fact, gulf production took a massive hit in 2005, when the oil and gas industry lost over 100 million barrels of oil and more than 500 billion cubic feet of natural gas production due to a total of 12 hurricanes (including Katrina and Rita)—according to the US Energy Information Administration.
Supply variations have a bearing on availability, quantity, cost, and lead times of raw material across the chemical supply chain—making the job of the procurement team arduous and complex. And when various players in the supply chain employ last-minute promotions and discounts with industry-wide impact on cost, availability, and inventories the challenges are only further exacerbated.