TOP 50 NORTH AMERICAN SHIPPERS - Managing complexity

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Dow Chemical strives for adaptable and flexible supply chainBy Peter A. Buxbaum, AJOTDow Chemical Company has been around for 100 years and, not surprisingly, it has changed dramatically over that time. The company, which has annual sales of $49 billion and employs 43,000 people worldwide, started out as a producer of bulk commodity chemicals and it remains in that business today. It has also diversified to produce a variety of chemical, plastic, and agricultural products for both industrial and consumer end users.
The diversity of Dow’s product line and customer profile has also meant that the company pursues a multiplicity of business models. All of this complexity raises the question of how the company manages its supply chain.
Dow’s answer has been to create a focal point at the enterprise level for supply chain management. The goal of Dow’s Supply Chain Expertise and Technology Center is two-fold: replicating supply chain business processes across multiple business units, and allowing those units to manage their supply chain in a flexible and adaptable manner.
“Our approach to supply chain management involves adaptability and flexibility,” said Donald J. Weintritt, the center’s global director. “We are dealing with business models that range from production of feed stocks, which have long-term contracts and are fairly predictable at the macro level, to manufacturing packaged consumer products, where it is difficult to predict where the market will go with a high degree of accuracy.
“It is all about managing complexity,” Weintritt added, “and to make sure that complexity doesn’t conquer you.”
Dow’s innovative approach to supply chain management has attracted the attention of supply chain analysts. Kevin O’Marah of AMR Research noted, “Dow has some very advanced design-and-modify supply chain processes, which reflect best practices for an asset-intensive industry.
“It is the only company that we have heard talk about whole-scale redesign of their supply networks to accommodate the huge swing of demand and low-cost supply to Asia,” he added, “while incorporating environmental impacts and assessing the risk of hazardous chemical transportation.”
The diversity of Dow Chemical’s business models is reflected in supply-chain management by the level of required performance precision and the level of control that Dow exerts on the process. In the production of bulk chemicals, other Dow units are usually the consumers of the products, meaning that Dow has greater control over the supply chain and enjoys greater flexibility in performance. In the case of “market facing” products, such as those sold to retailers, Dow has less control over the supply chain because it must rely more on the performance of others, such as joint-venture partners, but at the same time must perform with a greater degree of exactitude.
Weintritt’s center of expertise attempts to apply work processes and technologies across the enterprise. “In Dow-speak,” Weintritt explained, “expertise has to do with work processes and how to execute supply chain processes and enabling technologies.” The technology and expertise center employs one-hundred people that are spread out across the Dow enterprise.
Where Dow is realizing value at the enterprise level is where elements of supply-chain processes and technologies coincide. For example, supply chains across Dow’s business units are implementing radio-frequency identification (RFID) technologies, all of which interact with Dow’s Enterprise Resource Planning (ERP) system. The company is also expanding to new geographical areas, such as China, India, and the Middle East. The work of the expertise center allows the company to replicate successes in these new ventures.
“Transporting bulk solids includes some common material handling design and operating parameters as liquid bulk,” said Weintritt. “Some of these can also be applied to packaged products and specialty chemicals.” Similarly, the responsiveness of manufacturing processes to changes in de

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.