One of the biggest challenges facing the petrochemical industry's supply chain today is maintaining consistency of deliveries.
"Consistency of delivery is paramount to us," said Rick Lisa, senior director of logistics management for Formosa. "It all drives to the customer, and a lot of our customers have very tight supply chain windows. Equipment unavailability, weather delays, transit delays and switching delays make it very difficult for us."
Bob Rhoades, general manager of global supply chain for Chevron Phillips Chemical, said he agrees with Lisa, adding another issue that supply chain professionals have in common is production "not always [being] perfect."
"We really ask a lot for our suppliers to help us wherever we have an issue, to adapt often to our own problems as well as to outside issues," Rhoades said, joining Lisa on a keynote panel discussing supply chain needs in 2019 and beyond at the Petrochemical Supply Chain and Logistics Conference held recently in Houston.
Co-panelist Joe Kelly, logistics manager of polyethylene for Shell Chemical, noted the supply chain is a "beast that has to be flexible" when the customer calls.
"And we all want to service our customers, but it comes down to capacity along the supply chain from drivers to rail to ports, etc.," he said. "So line up all of those pieces, connect the dots and try to find a way to do that to achieve our goals -- and try to embrace more technology to do that."
Kelly said it is also necessary to be more collaborative across the supply chain.
"Try to make yourself the customer of choice to the supply chain providers that you work with," he added.
Benefits of SOP
While all panelists agreed that obtaining information from customers is critical, they also credited sales and operational planning (SOP) with helping them better understand markets.
"We use history and all kinds of things to try to understand demand from the domestic market," Rhoades said. "It gets a little bit more complicated with exports, but it's a process. We set a plan at the end of every month, and then we change it every other day, of course, because something changes."
Rhoades noted he believes one of the best things about SOP is that it creates dialogue and relationships.
"It breaks down the silos of production, planning, customer service and sales, and creates that essence of cooperation," he said, while admitting the process "doesn't always go smoothly."
"There are some pretty tense discussions that can happen. But in the end, it builds relationships and [encourages] understanding each other's problems," he said. "Again, the ultimate goal is the customer."
Lisa said Formosa's approach to SOP is similar -- and helps avoid chaos.
"I think in a business as complex as ours, with the different SKUs (stock keeping units) and different lanes, the question is how we drive better data, better information and more consistency so we can mitigate the plan in place on Monday that, by Monday at 2 o'clock, is changing," he said.
"If you have a change, it's all communicated and you can agree on what the solution is," he said. "There's no more 'on the fly' of coming up with some solution that nobody else in this process knew about."
Ongoing dialogue between carriers and providers, whether ports, trucks or rail, allows stakeholders to have the appropriate assets deployed so there's little or no obstruction, Lisa said.
"Now, nothing is perfect. As the saying goes, 'Logistics is an outside sport. There is no domed stadium,'" he concluded. "We have to deal with what's given to us."
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