How Chemical Companies Can Use Logistics to Gain a Competitive Edge

Chemical companies could significantly increase their competitive advantage if they leverage logistics as a strategic management tool, according to new research commissioned by DHL.

The worldwide chemical industry generates more than 700 million tons of freight annually. Chemical company supply chains are challenged by the variety of products, highly specialized transportation and storage requirements, and growing safety issues. With the ongoing globalization of the supplier and customer base, chemicals are fast becoming commodities, and as a result competitive advantages are getting harder to find.

To meet these challenges, the report urges senior management to see logistics as a strategic asset rather than a transport and delivery service. DHL’s whitepaper, Supply Chain in the Boardroom – 5 Levers to Boost a Chemical Company’s Bottom Line, identifies five ways chemical companies can use logistics strategically:

1. Optimize logistics costs by adopting a total cost of ownership approach. This means creating an end-to-end analysis of supply chain costs and integrating supply chain and logistics management into decision-making.
2. Free up capital for better balance sheet management by optimum use of just-in-time solutions and reduced inventory. Innovative companies see logistics as one of the “must-win” battles of the future.
3. Invest in the best logistics assets — owned or with service providers — and adopt a collaborative approach to get best return on capital employed.
4. Focus on safety and security. A proactive approach to standardizing safety across an international supply chain can be a long-term and profitable differentiator.
5. Get the right logistics services for the product and business unit. Differentiated services and supply chains specifically designed to meet customer requirements can create a competitive advantage in an industry where standard molecules are basically the same no matter what region they are made in or by which company.

Earlier this year, DHL and Cisco released a report saying that over the next decade, the Internet of Things (IoT) will generate $8 trillion in value worldwide.