A $500M specialty chemicals producer was having no trouble meeting market requirements, yet were challenged by intense periodic sales runs creating trade-offs between sales, service, sourcing and production. See how ChemLogix implemented a program resulting in a 1.5% bump in sales, which translated into a 20% increase in profitability.
A business unit (The Company) of a $500 million North American based specialty chemicals producer was having no trouble meeting market requirements for service performance, yet were challenged by periodic, intense sales runs. While the operations groups typically worked, with success, on operational metrics for the first 10 weeks of the quarter, these sprints, along with tension between supply chain functions (sales, sourcing, etc.) over conflicting views of service and financial priorities, took their toll.
The Company approached ChemLogix seeking both a comprehensive view of supply chain performance and a significant boost in overall performance levels — with a goal of besting its opportunities for incremental, functional improvements. In order to achieve these goals, The Company had to navigate the aforementioned trade-offs, including:
Sales vs. Service – Sales negotiation strategy was focused on revenue or volume; contribution, service terms and conditions were a secondary priorities.
Service vs. Sourcing – Sourcing focused primarily on service delivery (short lead time, JIT orders), which drove a high proportion of local, rather than regional and global, suppliers and source points.
Production vs. Service Flexibility – The sales and operations plan emphasized flexibility (to meet service requirements) at the expense of operational efficiency (as reflected by plant throughput and yield).