Chemical distributors, logistics providers, and transportation firms face similar market challenges to their counterparts in the chemical manufacturing industry caused by COVID-19. They also need to adapt to trends such as digitization and sustainability that the pandemic has accelerated and intensified.
Speakers at a logistics and supply chain panel, held on Tuesday as part of the European Petrochemical Association (EPCA) annual meeting, taking place this year in a virtual format, nevertheless agreed that the crisis has made chemical supply chains more agile and innovative than ever before.
Christian Kohlpaintner, CEO of chemical distribution market leader Brenntag, said that that 2020 has been “an interesting ride” for all participants in chemical supply chains, and that companies had managed to maintain business continuity. “We kept the shop open, all of us with few exceptions,” Kohlpaintner said.
Brenntag faced, particularly in the early days of lockdown, “massive swings in demand from customers and suppliers” and the imposition of border controls, at a time when it had to prioritize the safety of its employees and business partners, Kohlpaintner said. “We did everything to maintain financial strength while helping customers and suppliers to navigate through the crisis,” he said. Meanwhile, the measures taken to protect employees meant “we had the best safety performance ever,” Kohlpaintner said.
Kohlpaintner listed three hypotheses for supply chain companies and logistics providers that, in his view, have arisen from the crisis: a shift from “just in time to just in case,” a move from segregation to integration, and a repositioning of sustainability strategies “from the fringe to the core.”
Adopting a just-in-case approach means learning from COVID-19 and getting ready for the next “abnormally strong challenge,” Kohlpaintner said. “We have to be smart and create stable supply chains to be prepared for the next crisis,” he said.
Brenntag relied on its global presence and network of supply chains to cope with COVID-19 as the pandemic spread west from China and the rest of Asia to Europe and the Americas. “It helped us to have early warnings, so products could be supplied to customers from different supply chains,” Kohlpaintner said.
Meanwhile, customer/supplier interfaces will become more integrated and less segregated in a process driven by digitization. Brenntag has seen “strong flexibility, even on the customer and supplier side,” and a huge increase in the use of digital technologies during the pandemic, Kohlpaintner said. “This more integrated view of our value chains will continue,” he said.
Sustainability will be at the core of supply chain companies’ plans following the crisis, Kohlpainter said. “Sustainability needs to be considered a clear driver of our strategy,” he said. All the changes driven by the pandemic, including the closure of logistics sites to cut costs and long-term changes to the working environment, have sustainability implications, he said.
Jan Arnet, CEO of chemical transportation and logistics provider Bertschi, gave an account of how the company has demonstrated resilience during the pandemic, its staff adapting quickly to home-working practices and office processes moving successfully online as the company introduced measures to protect other employees such as drivers and cleaners. “Without that external push [COVID-19], it would have taken us one and a half years to make these changes,” Arnet said.
The key enablers were digitized IT systems and solution-oriented action. According to Arnet, “this current innovative spirit” can be leveraged to increase automation, flexibility, and focus in supply chains partly through “diversification of sourcing without adding complexity and reducing working capital without losing opportunity.”
Gina Fyffe, CEO at petrochemical shipping and trading company Integra, said that COVID-19 had “changed the conversation” about supply chains, focusing attention on building resilience. For the future, areas of focus include supply sources, inventories, and infrastructure, she said.
“COVID-19 has taught us that our supply chains are global and that national agendas such as trade and tariff barriers can backfire,” said Fyffe. “We have the opportunity to renew, adapt, learn, and amend.”
By: Ian Young
Source: Chemical Week
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