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Chemicals supply chain challenges and opportunities in the Arabian Gulf

New technologies and integrated supply chain models can improve the efficiency of operations.

Globally, the supply chain is a critical element in the performance of chemical companies, and that is especially true for companies in the Arabian Gulf region. With the ready availability of raw materials in the region, the industry has grown significantly in recent years. Now, however, the challenges facing these companies’ supply chains have the potential to limit their ability to respond quickly and cost-effectively to shifting demand in global markets.

Chemical companies in the region serve a growing number of markets, and they have to contend with constant volatility in the industry. At the same time, there is an increased focus on custom and specialty products. And today’s extended supply chains mean that chemical companies have large amounts of working capital tied up in operations. In this environment, a flexible, efficient supply chain is increasingly vital to meeting customer needs and controlling costs—and the ability to “squeeze” more competitive advantage out of the supply chain is more important than ever.

In focusing on supply chain improvements, chemical companies in the Arabian Gulf face some key challenges. These are by no means insurmountable, but companies will need to recognize that new approaches are in order. Experience in other industries shows that chemical companies can take advantage of advancing technologies and more integrated supply chain models to bring greater flexibility and efficiency to their operations.

Fundamental supply chain chokepoints in the Arabian Gulf region include:

  • Relatively long and changing supply chains with the need to ship products to customers in more geographic locations.

  • Heavy reliance on ocean shipping with a route and schedule that is mostly fixed.

  • The still-emerging road and rail infrastructure from plant sites to ports

  • Heavy dependence on a single unstable waterway.

  • A fragmented approach that limits end-to-end supply chain visibility.

To contend with these supply chain challenges, chemical companies need to fundamentally change their approach to create integrated, flexible, demand-driven supply chains. To a great extent, this will mean drawing on advanced supply chain technologies, which can provide the enhanced, end-to-end visibility needed to manage the supply chain with greater precision and efficiency. In other words, creating the “digital” supply chain is essential.

This digital supply chain can link siloed supply chain activities, bring together information within companies and across the extended network of companies, and provide deeper visibility into operations and demand. Additional characteristics include improved data integrity, integration across the supply chain, increased agility, analytics-driven decision making, improved sales and operations planning, and a differentiated customer service experience.

With a technology-driven ability to manage more information more effectively, chemical companies in the Arabian Gulf can enable new ways of planning and executing supply chain activities, and succeed with more complex operations. To make the most of the digital supply chain, they will need to look beyond efficiency and simply “doing the same things better,” and instead use these powerful new digital tools to deepen their understanding of changing markets and build greater speed and agility in the supply chain.

Source: "Chemical Supply Chains in the Arabian Gulf: Chokepoints and Opportunities," Accenture and The Gulf Petrochemicals and Chemicals Association (GPCA), May 26, 2014.