Chemical industry Supply Chain

8/7/2019 Chemical industry Supply Chain

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This document is Part Three o Savi Technology’s ve-part white

paper, “Fundamentals o Asset Management.” In Parts One and Two,we covered the importance o attaining real-time visibility o assets,

provided an overview o diferent automation technologies and

described asset management challenges and solutions or Deense

organizations. Part Three o the white paper ocuses on supply chain

challenges common in the Chemical industry and how Automatic

Identication & Data Capture (AIDC) technologies can help overcome

those challenges.

Modern industry relies upon a steady supply o gases, uels and

other industrial chemicals used in the manuacture o a broad variety

o products. The business o the Chemical industry is to produce

these substances and transport them to the acilities where they willultimately be used. Because the Chemical industry commonly transports

highly toxic, explosive or otherwise dangerous substances through its

supply chain, extraordinary care must be taken to ensure that Chemical

supply chains unction smoothly and saely. In addition to spoilage,

spills, accidents and compliance with government regulations, security

is also a major concern since hazardous chemicals, i they were to all

into the wrong hands, could wreak untold destruction on human lie and

property.

Controlling the movement o chemicals and the assets that transport

them is a top-level priority or the Chemical industry. Every stage o a

chemical shipment’s journey rom production acility to end-user must

be careully planned and executed. In what type o container will the

chemical be transported? Will the shipment travel by rail, road or sea?

What organizations will have custody o the shipment as it travels? Will

these various parties be able to share inormation on the location and

status o the shipment in real time? Chemical companies must careully

consider these questions, and many others, in order to maximize risk

reduction while still meeting customer demand or chemical products.

Fortunately, AIDC technologies such as active and passive Radio

Frequency Identication (RFID), GPS and sensors can help Chemical

companies achieve these goals.

Introduction

A Savi Technology White Paper | February 2010

Asset Management in the

Chemical Industry Supply Chain

The Chemical Industry

Copyright © 2010 Savi Technology, Inc. All rights reserved



Asset Management in the Chemical Industry

The Chemical industry relies heavily on large eets o supply chain assets or shipment

transportation. These mobile assets include cylinders, drums, intermediate bulk

containers, tank trailers, rail cars, intermodal tanks and small containers. For the Chemical

industry these mobile assets have high intrinsic value and play a critical role in production

and delivery ulllment processes. To meet customer demands, Chemical companiesmust maintain the right quantities o assets in the right locations. This balance must exist

across all plants, depots, distribution centers, warehouses and ports to meet the day-to-

day operational needs o the Chemical enterprise. Visibility enabled by AIDC technologies

allows Chemical companies to achieve this balance through close monitoring and control

o supply chain assets.

Asset Visibility

As mobile assets move through the Chemical supply chain they are oten misplaced and inadvertently stockpiled. This is

urther complicated by the nature o the supply chain, which involves multiple parties handling assets across multiple locations.

Additionally, most companies still rely on error-prone, labor-intensive manual processes to maintain asset visibility. The net result

is that Chemical companies ace signicant challenges in maintaining visibility o mobile assets across the supply chain.

Compounding the inherent diculty o attaining visibility, legislative initiatives or improving traceability and mandating the use o

expensive reusable containers are gaining momentum. Governments around the world see the benets o lowering waste disposal

costs and addressing the ethical and environmental concerns o their constituencies. For the Chemical industry, however, meeting

legislative requirements can be a costly endeavor.

The challenges o attaining asset visibility and complying with governmental regulations put pressure on the Chemical industry to

maintain reliable, up-to-date asset visibility inormation. When planners lack asset visibility, they are pressured to create surpluses

in the supply chain. These surpluses cost money whether they appear as additional capital expenditures and leases, the rental o

emergency assets or the stockpiling o inventory.

Chemical companies that cannot aford to expand their asset eet or inventory levels risk local asset shortages and the disruption

o production operations and customer ulllment obligations. This in turn can create the need or costly rushed shipments, or

worse yet, lost business. Even without impending government mandates or asset visibility, Chemical companies stand exposed

to real visibility costs through the labor expenditures required to track down misplaced assets and the high demurrage ees oten

triggered by misplaced assets. These scenarios result in a higher cost o doing business than what should be necessary.

Amid these diculties stands an opportunity or Chemical companies to diferentiate. From a customer service perspective, an

environmental perspective and a bottom line perspective, there is tremendous value in addressing the aorementioned challenges.

Axing AIDC devices to Chemical industry assets and making the asset data those devices collect available via an enterprise-wide

sotware platorm are steps that several large Chemical companies have taken, allowing them to enjoy the considerable benets

that asset visibility can provide.

AIDC & the Chemical Industry Supply Chain

AIDC solutions or the Chemical industry supply chain should overcome the challenges o maintaining visibility o mobile supply

chain assets, monitoring the movements o hazardous materials and securing chain o custody hand-ofs throughout the global

supply chain. The ideal solution must also be able to integrate all types o AIDC and track and manage all types o supply chain

assets and inventory. Let’s now examine ve common types o Chemical industry assets, the critical business challenges they

present and the requirements or any AIDC solution implemented to track the asset type.

A Savi Technology White Paper | February 2010 Copyright © 2010 Savi Technology, Inc. All rights reserved.




Chemical Industry Asset Types

Rail Cars: O the thousands o rail cars moving at any given time on the 140,000 miles o track in the

U.S., about 1% are transporting potentially hazardous chemical substances. The movement o these

Toxic Inhalation Hazard (TIH) substances has been regulated in recent years by the Transportation

Security Administration (TSA). O particular concern to Chemical companies, rail companies and the

TSA is the movement o the TIH eet through urban areas. Considering the potentially devastating

consequences o an “exception” event, particularly in a densely populated urban area, Chemical

companies are wise to implement rail car AIDC tracking solutions that provide the ollowing:

Constant monitoring o location and tank car condition••

Environmental sensors including dome open, lading and temperature••

Rules-based alerting or condition and location exception••

Messaging to acilitate emergency response communication••

Intermodal Containers: Intermodal containers, commonly transported by ship, rail or truck, pose

a number o challenges to Chemical companies. For instance, companies oten lose in-transit

visibility to intermodal containers or long periods o time as they are transported across the ocean.

Companies also may nd themselves unable to accurately account or oating inventory, unable

to re-route shipments to ulll order demand and unable to validate the security o shipments. To

address these issues, Chemical companies need an AIDC solution that provides:

Customs clearance benets••

Re-routing (in-transit reallocation) capabilities••

Real-time location inormation or all container shipments••

GPS tracking capability or select trade lanes••

ISO Tanks: ISO Tanks, large cylindrical containers used to transport chemicals, are problematic in

the areas o visibility, allocation and eet reduction. Chemical companies oten lack visibility to in-

transit ISO Tank shipments, and sufer rom poor ability to plan the return o ISO Tanks located on

customer sites. Maximum utilization o large eets o ISO Tanks is also dicult. An AIDC solution

or Chemical ISO Tanks should have the ollowing capabilities:

Provide real-time location inormation with GPS devices••

Enable reduction o ISO Tank eet size or deer new purchases••

Alerts or excess dwell time••

Automated ship and receipt based on geo-encing••

Re-positioning o empty ISO Tanks••

Copyright © 2010 Savi Technology, Inc. All rights reserved.




Supply Chain Solutions or the Chemical Industry

With such a wide variety o chemical substances and assets in which to ship them, it is no wonder that the Chemical industry

supply chain aces so many challenges. Compounding the industry’s supply chain issues is the act that many Chemical companies

rely on a combination o Enterprise Resource Planning (ERP) systems, Supply Chain Management applications and spreadsheets to

manage supply chain assets. This mix o tools is ill-suited or tracking assets beyond the boundaries o the enterprise and into the

supplier and customer supply chains. Chemical companies need a new breed o application that is designed or real-time tracking

and management o mobile assets.

The ideal answer is a web-based application that provides continuous on-line tracking, environmental monitoring, and

management o chemical industry assets and their contents rom point o origin to point o destination. Such a sotware

application must be able to manage mobile assets outside the our walls o a single company as the assets move among suppliers,

plants, distribution centers, warehouses and customers. Application requirements include:

Support or automated collection o supply chain asset data rom a wide variety o AIDC devices••

Modeling o customers, suppliers and business units as discrete entities that share common supply chain transactions••

Granular permission controls that allow micro-visibility or business units, suppliers and customers with macro-visibility or the••

parent company

Automated alerts, chain o custody audits and other reports to reduce the risks o transporting hazardous materials••

Ater partnering with an experienced AIDC solution provider and developing a solution that solves their unique business

challenges, Chemical companies deploy AIDC devices such as active and passive RFID tags, bar code and Satellite

Communications (SATCOMM) devices. These tools provide the raw asset data that orms the oundation o asset visibility. Data

rom AIDC devices, ERPs and supply chain systems is then consolidated by a powerul sotware application that packages the

data and makes it actionable. With AIDC-enabled real-time visibility, Chemical supply chain managers can overcome all o the

challenges that commonly arise in the Chemical supply chain.

Road Tanker Trailers: Tanker trailers are oten used to transport chemicals overland. With these

assets, Chemical companies must be mindul o detention and demurrage ees. Asset visibility

is usually provided by driver-initiated carrier transactions, which are prone to error. Chemical

companies oten nd themselves unable to audit or veriy carrier billing, and unable to provide

accurate updated arrival times to the customer. Furthermore, when trailers are not utilized eciently,

they may sit unused or long periods o time in ar-ung corners o the supply chain, resulting in high

detention and demurrage charges. AIDC can rectiy these problems through:

Dwell time alerting••

Auditing o detention and demurrage charges••

Real-time location inormation independent o carrier processes••

Border crossing inormation••

Small Assets: Small assets pose challenges in the areas o visibility, security and chain o custody.

Chemical companies oten have diculty locating and securing shipments o hazardous materials

contained in small assets. It is also dicult to maintain chain o custody inormation on small assets

through a complex, multi-tiered supply chain. Poor asset utilization and a lack o visibility to small

assets on customer sites are other challenges. AIDC can address these problems by providing:

Ability to track high-volume small assets in diferent geographies••

Multiple AIDC support or diferent small asset types••

Multi-level nesting capability (package to pallet to container)••

Analytics and KPI reports to monitor asset utilization••





Conclusion

There are many ways that AIDC technology can correct problems in the Chemical

industry supply chain. The major benets o AIDC in the Chemical supply chain

are: optimized asset utilization, improved saety and security o hazardous material

shipments, improved inventory management, scalability and more ecient operations

The end results o a successul AIDC implementation in a Chemical supply chain are

lower supply chain costs and improved customer service with decreased risk. Savi has

been helping companies in the Chemical industry achieve these results in their supply

chains or nearly 10 years. I you’re in the Chemical industry and are ready to reap the

benets o an AIDC-enabled supply chain, give Savi a call today.




About SaviSavi Technology provides an integrated suite o complementaryAutomatic Identication & Data Capture technology productsand solutions that drive business value by reducing supplychain assets, inventory and operational costs or commercialenterprises, deense agencies and other government customers.Founded in 1989, Savi is a wholly owned subsidiary o LockheedMartin [NYSE: LMT], with headquarters in Mountain View, Cali.,and oces in Singapore; Melbourne, Australia; Farnborough, UK;Lexington, Ky.; and Washington, D.C. For more inormation, visitwww.savi.com.

About Lockheed MartinHeadquartered in Bethesda, MD, Lockheed Martin is a globalsecurity company that employs about 140,000 people worldwideand is principally engaged in the research, design, development,manuacture, integration and sustainment o advanced technologysystems, products and services. The corporation reported 2009sales o $45.2 billion. For additional inormation, visitwww.lockheedmartin.com.

Contact SaviLet us show you how Savi’s supply chain solutions can work oryour organization.

United States+1 888 994 SAVI (7284)+1 650 316 4700

InternationalSavi Asia +65 6403 8000Savi Australia 1800 891 960 (Dial rom within Australia only)Savi EMEA +44 (0) 1252 553200 (United Kingdom)

A Savi Technology White Paper | February 2010 Copyright © 2010 Savi Technology, Inc. All rights reserved. (10-03a)

Chemical industry Supply Chain

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