Introduction to Modern Manufacturing

We’re seeing a radical change in production methods overtaking the chemical industry. Technology is gaining more attention in almost every sector, including manufacturing and distribution. The introduction of this new technology is forcing business leaders to upgrade their stack and replace outdated processes to meet the changing demands of the market. Today’s market requires a rapid transformation of the chemical manufacturing value chain to improve customer service, efficiency, productivity, quality, precision and pricing.

Complexity serves no purpose for business, yet it’s been part of the chemical industry for decades. Many companies still suffer from siloed department structures, disparate systems, inefficient data management and a lack of streamlined processes. Each of these complexities creates roadblocks that can affect a business’s bottom line. Most companies don’t realize how their complex independent system affects them until the lack of integration between the floor and functional areas becomes an issue. The lack of system integrations can lead to lost orders, or lower quality products because of suboptimal production runs or poor capacity planning.

Many of these companies suffer these effects for one reason: lack of an agile enterprise resource planning (ERP) solution. Chemical manufacturing companies must take action by redefining their business models and re-evaluating their IT roadmaps. The most successful chemical companies invest in transformation projects such as integrating a cloud-based ERP solution with operations to streamline processes, drive collaboration and efficiency and offer informed decision-making.

Figure 1Agile ERP Solutions in Various Phases of Chemical Manufacturing

Agile ERP Solutions in Various Phases of Chemical Manufacturing

Unforeseen Circumstances: COVID-19

The COVID-19 pandemic is still having an effect on every industry. Production and shipping departments are still facing challenges nearly two years after Covid-19 first appeared. Hundreds of companies have been forced to scale down their manufacturing operations by as much as 40%-60% in part because shipping containers are not where they’re needed. A lack of adequate containers, coupled with the loss of port workers and truck drivers means fewer raw materials are arriving at production plants. By February 2021, the global production of chemicals fell by 2.4%.

The inability to make products is still severely impacting the revenue of chemical companies. Rising transportation costs and a lack of raw materials mean priority has shifted to essential functions. This financial pressure is forcing companies to downsize their workforce while continuing operations. The result is added pressure on leadership to implement a rapid technology transformation.

An Agile Manufacturing ERP

Unlike other sectors, chemical industry businesses can’t simply stop production and send workers home, though some are pivoting operations to meet the demand of the market.

The chemical industry is facing a unique set of challenges including:

  • Fluctuating raw materials prices and their impact on margins
  • The need for constant product innovation
  • Increasing risks in supply chain and manufacturing
  • Tightening regulations
  • Market uncertainty, budget and controlling costs
  • Difficulty in resource management

To overcome these complexities, companies need to possess a detailed overview of the market. Having accurate information lets them identify shifting customer dynamics and plan their production runs appropriately. Cloud-based ERP systems for manufacturing can help identify market needs, shape the manufacturing processes, and inform a chemical company’s financial business processes.

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6 Ways Implementing an ERP Improves Chemical Manufacturing Operations

01.Improved Visibility

An agile ERP unifies data across departments, increasing the visibility of information. Organizations can share information, eliminating unnecessary infrastructure costs while providing higher data security. In a chemical company, process automation add-ons to a cloud ERP can ease resource overload by optimizing workforce utilization on the shop floor. All departments across the company—including inventory management, purchasing, accounting, human resource management, production and finance—function together with a minimum breakdown and maximum operational clarity. Versatile cloud-based ERP systems for manufacturing help companies access real-time data on a uniform platform, boosting throughput and reducing downtime.

02.Enhanced Flexibility

As market conditions fluctuate, the manufacturing supply chain needs to be highly adaptable. Using the right ERP solutions provides this needed flexibility. For example, a chemical company can share important updates plus revised manufacturing plans and schedules using an ERP’s supply chain planning system to plan stock availability.

An effective agile ERP system for chemical manufacturing should follow a tiered approach that includes:

  • A Secure database
  • A Simple user interface with easy access to key functions
  • Easy integration with external tools

Along with basic business requirements, the chemical industry needs to accommodate health and safety regulations to protect workers and the environment. Cloud-based ERPs give these companies the flexibility to customize solutions to suit their needs without moving data or altering the entire piece of software.

03.Better Collaboration and Transparency

Having the right computer software designed for your industry leads to better collaboration across a company. Complex business procedures are simplified, making them understandable to more people. These procedures can then be modified to meet changing government regulations. All modern systems have enough access controls to enable a disciplined method of functionality. A process and rule-based system improve transparency, helping organizations operate more efficiently.

04.Better Supply Chain Efficiency

Companies investing in newer, more robust and flexible ERP systems find that managing their supply chain becomes easier. They have access to more accurate, real-time data letting them plan shipments based on accurate demand forecasts. Data insights collected from an ERP system designed for chemical manufacturing can reduce inventory costs, enhance supply chain efficiency and optimize production processes. These improvements help build a robust, efficient supply chain, with the added benefit of reduced raw materials spending, increasing profit and capital growth.

05.Improved Production

Chemical companies often pay a hefty price when the system they use lacks functionality. The typical end-to-end chemical production process contains many steps with data moving between multiple hands and devices. Every time your data moves from one silo to another, it increases the chance of errors. A poorly designed manufacturing execution system can drain resources and add unplanned costs to the company. An agile, cloud-based ERP system for chemical manufacturing eliminates many of these unplanned costs.

06.Enhanced Customer Service

With the right ERP and customer relationship management (CRM) solutions in place, companies can more easily meet customer-centric objectives, including understanding the customers’ needs, improving service levels and enhancing their experiences. An agile ERP that helps companies meet the needs of their customers makes a huge difference in customer retention.

Final Thoughts

Every day, chemical manufacturing companies face challenges. What matters the most is how these challenges are handled. Whether you produce specialty chemicals, bulk chemicals, private-label, co-pack or you’re a contract manufacturer, having the right cloud-based ERP systems for manufacturing helps to build operational efficiency. Having software helps you bring products to market faster and reduce your operational costs while adding flexibility and responsiveness to any future market changes.