How to Tackle New Polyethylene Supply Chain Changes
COVID-19 had a major impact on already complex supply chains. There is now a call for supply chain transparency, flexibility, and collaboration that Shell Polymers is prepared to answer.
COVID-19 forced companies to become more agile in order to accommodate new health regulations, increased demand for products, and supply disruptions. In response, plastics converters had to get creative to keep operations running effectively while still meeting consumer demands.
This has proven especially true in states where facilities had to run on reduced staff due to capacity restrictions. Extended closures and delays in getting workers back to the plants due to health quarantines and travel restrictions caused production to restart in 2020 at a much slower pace. This pace affected supply chains as well, causing longer lead times and delays that impacted converters' ability to serve their customers.
To respond and recover from these conditions, suppliers needed to take a long look at their supply chain transparency, flexibility, and collaboration. Let's dive into these shifts in the polyethylene (PE) supply chain and examine how Shell Polymers is listening to the industry to address each one.
Addressing Converters’ Supply Chain Challenges
1) The Call for Transparency
Due to the economic downturn and shifts in consumer demand, plastics converters are having to cut budgets and streamline operations. With a focus on optimizing processes to save money, supply chain transparency has become critical to making educated, revenue-saving decisions.1 To achieve a higher level of transparency, businesses are looking into artificial intelligence (AI) as a way to identify anomalies and predict events. Through the use of data analytics and AI, suppliers would be able to keep customers informed about their supply and provide proactive solutions when something unexpected occurs.
In fact, Shell Polymers is doing just that. Our team has already implemented AI for predictive maintenance and will use similar technology throughout our supply chain. For example, AI can be used to quickly identify potential railcar issues and address them via manual fixes or sending trucks when a railcar is down.
2) Collaboration is Key
When it comes to a post-COVID industry, converters need trust-based relationships with their suppliers. There is no room for suppliers who don’t value transparency or collaboration, as broken trust will lead to greater consequences and failed relationships.
According to Forbes, “When manufacturers and retailers work together with a full understanding of operations and assets, they build a level of trust that filters down to the customer... Transparency offers a host of benefits, from material flow tracking and schedule synchronization to an improved capability to balance supply and demand. Using these digital supply network innovations, businesses are driving supply chain efficiency and improved customer satisfaction and ultimately driving greater demand.”2
At Shell Polymers, we pride ourselves on collaborating with our customers, starting with the 1,000 hours of interviews we conducted to better understand converters’ challenges. Those ideas inspired the technologies and ideas we built throughout our plant and business to help converters reduce roadblocks and increase productivity. That includes bringing converters on-site to conduct polymer tests using our industrial scale conversion machines, keeping production up and running.
Learn how Shell Polymers is creating a reliable polymer supply with leading-edge simulation technology
3) The Need for Supply Chain Diversification
Supply chain diversification was a key challenge for the plastics industry, even before COVID-19 and the winter storms in Texas. However, those two events highlighted the need to diversify supply chains as losing productivity for multiple days can be debilitating to the bottom line in a competitive market like PE. Risk management and proximity became key factors when improving supply chains as disruptions continued to shake confidence across the industry.
Shell Polymers’ plant is conveniently located in Monaca, PA to give converters another location to get their PE from. Since most PE suppliers are located in the Southern region, having a supplier in the Northeast region of the US can be a gamechanger. For example, buying practices could stay consistent as there will be reduced need to stock up in the spring to protect supply during hurricane season.
Our owned and operated Storage In Transit (SIT) yard may also help converters get their product faster, as it can be loaded onto the railcar, waiting to be shipped. Rail congestion is another supply chain headache that happens about four times a year. This leads to converters sending trucks long distances to pick up resin, but with our centrally-located SIT yard, converters can reduce this need altogether, letting Shell Polymers deliver resin via trucks or railcars depending on the customer’s need. Diversifying supply chains is not only a way to increase supply security, it’s also a way to take advantage of cost and efficiency benefits.
Supply chain challenges continue to change and they will always need to be addressed. Download the full report for the latest research on current supply chain challenges and best practices on addressing them.