Purchasing and supply chain operations are the lifeblood of any chemical plant or refinery. The flow of raw materials to production is critical to maintain, and the process requires hundreds of separate decisions each year. The purchasing of raw materials and the question of where to participate in the supply chain can be key to both competitive advantage and gaining market share.
Individual business unit strategies and even overall corporate goals need to be tied directly to purchasing to ensure continued success.
With so many moving parts that all need to happen quickly, how can a company hope to apply best-practice decision-making techniques and strategic thinking to these processes?
The client needed to know how to effectively integrate best-practice decision making techniques and strategic thinking into the supply chain and purchasing processes in a way that met corporate objectives and didn’t slow the entire process.
The first step was to put into place appropriate filters to evaluate whether or not a raw material or purchased item was critical to the overall corporate goals. Key considerations included whether it could have a significant impact on earnings or create a competitive disadvantage in the marketplace should there be a problem. Only those items of a critical nature were considered for full decision analysis.
By standardizing many of the typical decision analysis processes, the team was able to focus on the critical decisions for each purchasing and supply decision. This sped up the analysis dramatically. The teams focused on decisions concerning where to participate in the supply chain and what kind of relationships to develop with sellers. We developed simple tools for evaluation of strategies that allowed teams to quickly use qualitative and semi-quantitative tools to gain insights. This precluded the need for full probabilistic analysis in most cases.
By filtering the purchasing and supply chain decisions based on their impact on the overall corporate goals and by evaluating the alternative strategies with regard to those same goals, the purchasing and supply chain business unit was able to tie hundreds of purchasing decisions back to the overarching corporate strategy and provide valuable guidance to each phase of the supply chain relationships. Because our team is highly trained and experienced in corporate strategy consulting, we were able to leverage these opportunities to create maximum value for the client.
Decision Strategies brought us an unbiased look at our issues, which we would not have gotten internally.
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