Optimizing Supply Chain Management

Comprehensive digital transformation (DX) and supply chain optimization for refineries and gas processing plants are very difficult due to implementation complexity. Some organizations may therefore hesitate to begin DX efforts, while others may have been frustrated in their attempts. Yokogawa and KBC can help companies overcome these challenges, particularly in the area of supply chain optimization.

Saying a company has a supply “chain” often ends up being an inaccurate description. A chain suggests something continuous that binds things together. For many companies, the supply chain is a series of disconnected and isolated functions.

This is particularly the case when companies rapidly shift from using cleaner fuels or renewable energy. Just extending the flawed functionality of a current segmentalized supply chain is not the answer as it would only deliver partial optimization at best, leaving a huge gap between planned and actual demand.

For many companies, this challenge might be the trigger to kick off the digital transformation required to optimize their supply chain

Issues with traditional approaches

In spite of the importance of supply chain to every area from supplier to final customer, there is often little collaboration with other parts of the company. This lack of cooperation can result in various unusable feedstocks taking up storage space, production interruptions due to inadequate supply of the desired feedstocks, and other issues.

Companies with these types of problems typically have no overarching system to support connectedness or integration. Most operational areas—such as production management, quality assurance, reliability, and so forth—end up relying on their own internal experts, each of whom perform rudimentary planning manually on a spreadsheet, with little or no collaboration with other departments.

This fragmented approach may ultimately reach a degree of equilibrium sufficient to keep basic processes running, but it is not sufficient for a facility to optimize operations across functional areas. Decision making remains stiff and ill-informed without any indication of how value can be increased. Skills and information remain stuck in their respective silos, where they add little benefit to the wider enterprise.

Supply chain management as it should operate

So how does a company turn its supply chain into something far more responsive to benefit the entire company?

To answer that, let’s first consider what truly optimized, digitally transformed supply chain management can accomplish. In the most basic terms, it ensures sufficient feedstocks, fuels, and other necessities are available to support normal production, but this is only the beginning.

An optimized supply chain provides users with the ability to make decisions based on real-time information.

Feedstock and finished product inventories are lean and kept on a just-in-time basis. This avoids costly storage on a massive scale and permits the greatest agility for changes in supply and demand, critical because markets are becoming ever more volatile. Customer demand can change dramatically as companies find ways to shift to cleaner fuels and more renewables. Today’s normal slate of products could be slow-moving inventory next month, tying up storage space and cash.

The binding capabilities of the supply chain are a key element of its effectiveness. Departments must communicate and share any information which can impact production and profitability. The corporate level must indicate where it sees the company going in the short- and long-term, for example:

• Here are the markets we want to serve

• Here are the products we need to offer

• Here is the cost structure we must achieve to be profitable, etc.

All parts of the supply chain must understand their roles in fulfilling those goals. This requires digital tools to tie all the elements together because information must flow freely from area to area. When this kind of flow is in place, positive results follow.

Responding to changing markets

Say, for example, that our company president announces that four of our largest customers have announced that they will adopt a program increase their use renewable fuels in the coming year. This will result in major changes to their normal purchases from us, so how do we respond? With the right supply chain management tools, everyone can move into action:

• Sales provides forecasts for how customers will change consumption, and how production must reflect the new patterns.

• Production engineering determines what processes need to change, including equipment reconfiguration and feedstocks.

• Purchasing can locate new feedstock suppliers, if needed, and negotiate on bulk purchase pricing and delivery.

• Inventory management can determine if there is sufficient storage on site for feedstocks and intermediates.

These groups and others work together easily because the supporting tools allow information to flow freely from group to group, in real time, using customizable formats. Secure and reliable IIoT systems, residing in the cloud, enable asset owners and operators to differentiate their technical, operational, and commercial practices for optimizing and ensuring long-term success.

Digital technologies support business transformation from stodgy supply-push to flexible and responsive demand-pull. It becomes easier to achieve the requirements of sales forecasts and profitable gross margins with lower inventory levels, adding up to higher profitability and faster return on investment.

Adding the tools is manageable because the systems are hosted in the cloud. This helps facilitate adoption since the applications can be accessed anywhere, on any device—while enabling collaboration with supply chain partners, and ultimately end-to-end value chain optimization.

Reaching goals

A company with optimized supply chain management will have full control of its assets and operations:

• No safety incidents

• No unplanned outages

• Rigorous adherence to operating plans

• Quick response to market changes and asset disturbances

• Motivated and informed workers

• A culture of profitability.

 Yokogawa with KBC can help your company optimize the entire supply chain, including:

• acceptance of raw materials

• processing, mixing, blending, and other manufacturing steps

• quality management

• shipping

• utility usage

• environmental compliance

This goal is reached by combining technologies including for improved simulation, planning, and scheduling—all based on deep domain knowledge of process plant operations.

Yokogawa with KBC is the only company with the ability to supply and coordinate all the pieces necessary for this level of control for refineries, natural gas processors, and chemical manufacturers. Yokogawa’s Smart Manufacturing Workshop site [need URL] can show you how to begin the process by combining of their integrated solution technology and consulting services.

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