Executive Briefings

Dow's Innovative Ways to Cut Shipments of Dangerous Goods

The chemical company launched a proactive initiative to reduce the company's risk profile, improve public safety and provide industry leadership on a safe and secure chemical supply chain.

The Dow Chemical Company always has placed a high priority on the safe production and transportation of its products, a commitment that is reflected in its shipment history: 25 years with no major incidents involving highly hazardous materials and an incident-free rate of 99.97 percent overall.

The terrorist attacks of 2001 and subsequent public policy initiatives, however, convinced the company to step up its efforts even more. "Dow's ultimate objective is to drive to zero incidents-no excuses-and to provide a leadership role within the chemical industry," says Dana Mathes, director of supply chain logistics operations.

The company developed a 10-year strategy for supply chain sustainability that includes four initiatives:

• Supply chain redesign to reduce the number of shipments and container miles for certain highly hazardous materials;

• Improved visibility of shipments through implementation of RFID and GPS technologies;

• Improved shipping container design to prevent tampering and to reduce the potential for chemical releases due to accidents or security incidents;

• Enhanced collaboration with carriers and local communities to improve emergency preparedness and response should a chemical release occur.

Supply chain redesign centers around reducing Dow's global footprint for highly hazardous materials. "Our goal is to reduce the number of shipments and container miles of these materials by half," says Mathes. The company is doing this in a "risk prioritized fashion," he adds. "We are committed to making no additions to our footprint with additional shipments of these products, especially in less developed countries." The company also is working with businesses to look at where it can make exchanges and swaps with competitors. Mathes explains that since these hazardous products are commodities, it makes sense to provide them from the source nearest to the customer to reduce transportation exposure. Often, two companies can swap customer deliveries to reduce risks, he says.

Longer range, Dow looks to convert these materials to less hazardous derivatives before shipment. "We are working with suppliers and customers to explore alternate products and co-location of facilities that would eliminate the need for transportation," he says. "We also are making significant decisions about assets, which may lead to closing some facilities and reopening elsewhere."

Dow's significant global footprint is a function of its size. "We are a big company," Mathes says. "Last year we did more than $46bn in sales, we employed 42,000 people worldwide and we shipped more than 100 billion pounds of material." These 100 billion pounds translate into 2.5 million shipments each year, 20 percent of which are of hazardous materials and 1 percent of highly hazardous and toxic materials.

Because of its global presence-and to protect its image and brand-Dow feels an obligation to take on a leadership role in terms of safety and security, Mathes says. "We don't want anyone in this industry to start thinking about sustainability when their name is in the headlines."

Since all transportation moves cannot be eliminated, the second leg of Dow's sustainability strategy is visibility. The company is adopting global positioning system (GPS) and radio frequency identification (RFID) technology to keep closer tabs on its materials through the supply chain for better safety and security. Dow worked with an outside consulting board and internal managers to identify ways to employ these technologies. Four hundred opportunities were identified and this list was condensed to 50 projects that will be prioritized and implemented over the next 10 years, including 10 within the next two to five years.

One example is a full-scale container tracking application implemented in partnership with Savi Technology. This uses a combination of RFID and barcoding to track tens of thousands of metal cylinders containing chemicals throughout Dow's global network. The new solution also leverages Savi's Geographic Information Systems mapping capability as well as its business-rule-based alerting tools to perform exception monitoring.

From the Savi-hosted web site, Dow personnel and the company's logistics partners and customers can graphically track the location of all cylinders on a world map and match the physical location of a container with shipment documents, inventory records, and routes and destinations.

Another project will equip railcars used to transport these materials with GPS. "Half will be done by the end of this year and the rest by the end of 2007," Mathes says.

Based on 12 pilots designed to test these technologies, Dow expects to realize a 50-percent improvement in response time to identify and resolve in transit problems, a 20-percent reduction in excess stock and a 20-percent reduction in containers needed to ship product.

The third innovative component of Dow's strategy is to improve shipping container design in order to prevent tampering and reduce the potential for chemical releases due to accidents or security incidents. Dow has entered into a partnership with Union Pacific and the Union Tank Car Company to develop a "breakthrough" next generation rail tank car for highly hazardous materials that will provide a five- to tenfold improvement in safety and security performance. Dow expects to complete the design in early 2007 and roll out the first prototype tank car in 2008. "We are looking at all sorts of concepts, including double walls, the use of special steel, head and side impact limiters, electronic brakes, and much more," says Mathes.

The fourth strategic component is expanded collaboration between Dow-and the chemical industry as a whole-and public and private sector partners to improve supply chain infrastructure and emergency preparedness and response. "For sustainability to be truly sustainable, it must be the product of active collaboration between shippers, transportation service providers and government and public sector partners, all of which have responsibility for public safety as well as economic growth," says Mathes. "Dow is committed to working with its many supply chain partners to effectively eliminate incidents and alleviate safety concerns."

Dow Thanks a Host of Partners

One of the most important components of Dow's supply chain sustainability strategy is the focus on expanding the collaboration between Dow-and the chemical industry in whole - with public and private sector partners to improve supply chain infrastructure and emergency preparedness and response.

Dow has long been involved with many significant efforts to increase supply chain efficiency and security by engaging in extended collaboration with its supply chain partners, including carriers and local communities.

We would like to take this opportunity to thank our partners, vendors, industry groups, government, and private sector groups that dedicate their time, efforts and resources to improving supply chain security, safety and sustainability. The following organizations are some-but not all-of the companies that have showcased tremendous efforts towards our united goal.

1. American Chemistry Council
2. American Plastics Council
3. Associação Brasileira da Indústria Química
4. Canada Border Service Agency
5. Cefic, the European Chemical Industry Council
6. Chemtrec
7. Customs-Trade Partnership Against Terrorism
8. Michigan State University
9. Responsible Care
10. Stanford University
11. The Chlorine Institute Inc.
12. The European Petrochemical Association
13. Transcaer
14. Union Pacific
15. Union Tank Car Company
16. United States Coast Guard

The Dow Chemical Company always has placed a high priority on the safe production and transportation of its products, a commitment that is reflected in its shipment history: 25 years with no major incidents involving highly hazardous materials and an incident-free rate of 99.97 percent overall.

The terrorist attacks of 2001 and subsequent public policy initiatives, however, convinced the company to step up its efforts even more. "Dow's ultimate objective is to drive to zero incidents-no excuses-and to provide a leadership role within the chemical industry," says Dana Mathes, director of supply chain logistics operations.

The company developed a 10-year strategy for supply chain sustainability that includes four initiatives:

• Supply chain redesign to reduce the number of shipments and container miles for certain highly hazardous materials;

• Improved visibility of shipments through implementation of RFID and GPS technologies;

• Improved shipping container design to prevent tampering and to reduce the potential for chemical releases due to accidents or security incidents;

• Enhanced collaboration with carriers and local communities to improve emergency preparedness and response should a chemical release occur.

Supply chain redesign centers around reducing Dow's global footprint for highly hazardous materials. "Our goal is to reduce the number of shipments and container miles of these materials by half," says Mathes. The company is doing this in a "risk prioritized fashion," he adds. "We are committed to making no additions to our footprint with additional shipments of these products, especially in less developed countries." The company also is working with businesses to look at where it can make exchanges and swaps with competitors. Mathes explains that since these hazardous products are commodities, it makes sense to provide them from the source nearest to the customer to reduce transportation exposure. Often, two companies can swap customer deliveries to reduce risks, he says.

Longer range, Dow looks to convert these materials to less hazardous derivatives before shipment. "We are working with suppliers and customers to explore alternate products and co-location of facilities that would eliminate the need for transportation," he says. "We also are making significant decisions about assets, which may lead to closing some facilities and reopening elsewhere."

Dow's significant global footprint is a function of its size. "We are a big company," Mathes says. "Last year we did more than $46bn in sales, we employed 42,000 people worldwide and we shipped more than 100 billion pounds of material." These 100 billion pounds translate into 2.5 million shipments each year, 20 percent of which are of hazardous materials and 1 percent of highly hazardous and toxic materials.

Because of its global presence-and to protect its image and brand-Dow feels an obligation to take on a leadership role in terms of safety and security, Mathes says. "We don't want anyone in this industry to start thinking about sustainability when their name is in the headlines."

Since all transportation moves cannot be eliminated, the second leg of Dow's sustainability strategy is visibility. The company is adopting global positioning system (GPS) and radio frequency identification (RFID) technology to keep closer tabs on its materials through the supply chain for better safety and security. Dow worked with an outside consulting board and internal managers to identify ways to employ these technologies. Four hundred opportunities were identified and this list was condensed to 50 projects that will be prioritized and implemented over the next 10 years, including 10 within the next two to five years.

One example is a full-scale container tracking application implemented in partnership with Savi Technology. This uses a combination of RFID and barcoding to track tens of thousands of metal cylinders containing chemicals throughout Dow's global network. The new solution also leverages Savi's Geographic Information Systems mapping capability as well as its business-rule-based alerting tools to perform exception monitoring.

From the Savi-hosted web site, Dow personnel and the company's logistics partners and customers can graphically track the location of all cylinders on a world map and match the physical location of a container with shipment documents, inventory records, and routes and destinations.

Another project will equip railcars used to transport these materials with GPS. "Half will be done by the end of this year and the rest by the end of 2007," Mathes says.

Based on 12 pilots designed to test these technologies, Dow expects to realize a 50-percent improvement in response time to identify and resolve in transit problems, a 20-percent reduction in excess stock and a 20-percent reduction in containers needed to ship product.

The third innovative component of Dow's strategy is to improve shipping container design in order to prevent tampering and reduce the potential for chemical releases due to accidents or security incidents. Dow has entered into a partnership with Union Pacific and the Union Tank Car Company to develop a "breakthrough" next generation rail tank car for highly hazardous materials that will provide a five- to tenfold improvement in safety and security performance. Dow expects to complete the design in early 2007 and roll out the first prototype tank car in 2008. "We are looking at all sorts of concepts, including double walls, the use of special steel, head and side impact limiters, electronic brakes, and much more," says Mathes.

The fourth strategic component is expanded collaboration between Dow-and the chemical industry as a whole-and public and private sector partners to improve supply chain infrastructure and emergency preparedness and response. "For sustainability to be truly sustainable, it must be the product of active collaboration between shippers, transportation service providers and government and public sector partners, all of which have responsibility for public safety as well as economic growth," says Mathes. "Dow is committed to working with its many supply chain partners to effectively eliminate incidents and alleviate safety concerns."

Dow Thanks a Host of Partners

One of the most important components of Dow's supply chain sustainability strategy is the focus on expanding the collaboration between Dow-and the chemical industry in whole - with public and private sector partners to improve supply chain infrastructure and emergency preparedness and response.

Dow has long been involved with many significant efforts to increase supply chain efficiency and security by engaging in extended collaboration with its supply chain partners, including carriers and local communities.

We would like to take this opportunity to thank our partners, vendors, industry groups, government, and private sector groups that dedicate their time, efforts and resources to improving supply chain security, safety and sustainability. The following organizations are some-but not all-of the companies that have showcased tremendous efforts towards our united goal.

1. American Chemistry Council
2. American Plastics Council
3. Associação Brasileira da Indústria Química
4. Canada Border Service Agency
5. Cefic, the European Chemical Industry Council
6. Chemtrec
7. Customs-Trade Partnership Against Terrorism
8. Michigan State University
9. Responsible Care
10. Stanford University
11. The Chlorine Institute Inc.
12. The European Petrochemical Association
13. Transcaer
14. Union Pacific
15. Union Tank Car Company
16. United States Coast Guard