Supply Chain Management & Strategy in Petrochemical Industry

The supply chain is one of the crucial elements in the industry, including the petrochemical industry. This industry needs supply chain management to get the production feedstock or deliver chemical feedstock to other industries.

This article discusses the supply chain, including the strategy and important components. So, read the information below.

What Is the Supply Chain?

The supply chain is a series of processes creating and distributing products to customers, either end customers or distributors. This chain works to maintain the relationship between production and distribution. That way, the products can be marketed and accessed easily.

In the supply chain, businesses will collaborate with suppliers, distributors, and retailers. Therefore, proper supply chain management must be implemented to maintain operational efficiency and the flow of products.

In the petrochemical industry, supply chain management includes manufacturing, storing, and distributing petrochemical products. These products are from crude oil, natural gas, or other raw materials.

Petrochemical products are beneficial for various industries, like pharmaceuticals and manufacturing. The petrochemical industry's supply chain process is complex because it distributes chemicals that require specific care and regulation.

Therefore, it needs to implement effective supply chain management to ensure that products

Why Is Supply Chain Management Important?

Did you know? Statista reported that the global supply chain management market obtained profits of up to USD 16 billion in 2020. This number was supported by smooth economic coordination despite the complex dynamics of supply and demand in the market.

Then, why is supply chain management crucial? Here are some reasons why you should consider doing effective supply chain management:

1. Saving Operational Cost

Supply chain management can identify the chance of waste in the supply chain stage. As a result, you can save on production, distribution, and storage costs as efficiently as you can.

2. Increasing Operational Efficiency

Supply chain management can help you in managing resources efficiently, from feedstock procurement to product distribution. Effective operational processes can reduce operating costs and improve human resource performance.

3. Improving Customer Satisfaction

The importance of the supply chain lies in improving customer satisfaction. Supply chain management can check product stock and distribution timelines, ensuring that products reach customers on time. This will certainly increase customer satisfaction and loyalty.

4. Managing Risk Optimally

Supply chain management can help a company mitigate risk at every stage. For instance, when an accident or product damage happens during the shipment, you can determine the best plan to overcome it.

Components of Supply Chain

The supply chain is a series of processes ensuring that products reach customers precisely, safely, and efficiently. It has several main components to function well, such as:

1. Planning

The first step in supply chain management is planning. In this stage, a company will ensure that its resources are available for fulfilling market demands.

2. Procurement

After you make a plan, you will stock the high-quality feedstock while keeping costs aligned with the company’s budget.

3. Production

Next, you will carry out the production process according to market demand. At this stage, you will not only focus on manufacturing products but also quality and effective operational processes.

That way, the products manufactured meet customer needs and can fulfill the company's stock requirements. In addition, you also need to manage existing inventory because excess stock will increase storage costs, while insufficient stock can hinder the distribution process.

4. Distribution

In this component, you will deliver products with optimal logistic management, in which products must be transported punctually and efficiently. You must also determine the most effective and safe distribution mode and route. For petrochemical products, they are usually sent using special ships, like vessels, or trucks.

5. Return of Goods

Along with shipping goods, supply chain management also regulates the return of goods when customers receive damaged products or incorrect orders. As with the distribution process, you should ensure that the return process is efficient and fast to maintain customer trust and satisfaction.

How to Increase Supply Chain Management Efficiency in the Petrochemical Industry

To make sure that every stage of the supply chain is systematic, you can implement some strategies below:

1. Focus on Sustainability

As mentioned before, the petrochemical industry should pay attention to the environmental impact of the chemical product distribution process. Therefore, you must prioritize sustainable principles to reduce carbon emissions and waste.

The company that prioritizes sustainability is Chandra Asri Group. As a chemical, infrastructure, and energy solutions company in Southeast Asia, we implement the RESPONSIBLE framework as part of our efforts to reduce the environmental impact of our operations, particularly in the logistics sector.

This framework ensures that our business processes comply with ESG (Environment, Social, and Governance) principles, regulations, and standards. Additionally, we monitor emissions and implement the ABCD strategy to control them using green technology.

Due to efforts to align business processes with sustainability, Chandra Asri Group has received several awards, including the PROPER Hijau, ESG Industry Top Rated, a B score in the 2024 CDP report, and many more.

2. Leveraging Technology

Supply chain management has a complex process; therefore, you need to leverage technology, like artificial intelligence and supply chain management software. Those technologies can help you align operational processes in every stage and automate administrative tasks, minimizing manual errors.

3. Optimizing Logistics and Transportation

Transportation is one of the important elements in the supply chain. By using various modes of transport, you can enhance flexibility in distribution. To maximize efficiency and reduce costs, it's also important to carefully plan the most effective delivery routes.

If you are looking for chemical products logistics, Chandra Asri Group has a logistics solution providing vessels for chemicals and LPGs.

Chandra Asri Group, through PT Chandra Shipping International and PT Marina Indah Maritim, has 9 chemical and gas carriers with a total capacity of up to 106,650 DWT. However, this number is likely to increase over time.

Aside from vessels, we also operate land logistics through PT SCG Barito Logistics and PT Chandra Cold Chain. These services include customs, export-import facilities, maritime transport services, and inter-island transportation. We currently operate 155 trucks and warehouses throughout the Cilegon and Java regions.

That concludes the information about the supply chain and its strategy for the petrochemical industry. If you need logistics services for chemicals, be sure to trust Chandra Asri Group!