• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Dow Chemical Co. Adopts a New Model for Supply-Chain Resilience

Dow Chemical Co. Adopts a New Model for Supply-Chain Resilience

December 15, 2011
SupplyChainBrain

For all the effort that companies spend on predicting the future, there's no magic formula that can foresee which disruption will occur next. The one sure defense against the unknown lies in the ability to react quickly to whatever happens. Hence the renewed focus by many businesses on supply-chain resilience.

One of the leaders in that area is The Dow Chemical Co. It has adopted a new framework for assessing supply-chain risk on multiple fronts. The initiative is helping the company to make the best use of fixed assets and working capital, especially for supplier management.

Dow began with a model known as Supply Chain Resilience Assessment and Management (SCRAM), developed by Ohio State University. Researchers from Dow's Supply Chain Technology Center adapted the framework to meet the company's specific needs. In the process, Dow came up with a simulation tool for testing the resilience of its supply chain to any number of potential disruptions.

Even within a global multinational like Dow, big efforts start small. The company first adopted SCRAM for its Glycol Ethers P-Series family of products. These are chemicals used largely for protective coatings for industrial, automotive and architectural applications. The P-Series Glycol Ethers are also deployed extensively in solvents and cleaning formulations. The group of products accounts for annual North American sales of about $114m.

The supply chain for the Glycol Ethers family is complex enough on its own. A workable resilience model had to account for internal production processes; external co-producers; a variety of distribution locations; export shipments; alternative suppliers, both local and offshore; raw materials and rigorous quality standards for finished goods.

Dow defines resilience as "the capacity to survive, adapt and grow in the face of turbulent change." As led by supply-chain analyst Shannon Hemmelgarn and oxygenated solvents global supply-chain director Jennifer McIntyre, the initiative was broken into three components: assessment, resilience testing and implementation.

Strengths and Weaknesses

Proper assessment requires that a business have a solid grasp of its strengths and weaknesses. The SCRAM framework is designed to do just that. It defines two major categories, capabilities and vulnerabilities, then evaluates each by way of questions posed to appropriate team members. Capabilities might include flexibility in sourcing, manufacturing and fulfillment; capacity; efficiency; visibility; adaptability, and the like. Examples of vulnerabilities are demand turbulence, deliberate threats, external pressures and resource limits.

Each term is defined, then followed by questions which are intended to reveal the current level of probability for that particular area, along with the company's ability to deal with it. Respondents' answers are combined to create a composite score. In each case, the potential vulnerability its balanced by Dow's corresponding capabilities. The exercise uncovers any imbalances in the company's ability to cope with disruptions. It also defines a "zone of balanced resilience," the perfect middle-ground between an erosion of profits caused by excessive capabilities, and the exposure to risk caused by vulnerabilities from which the company isn't protected.

The composite score for Dow's North American Glycol Ethers products was fairly positive - it showed capabilities slightly outweighing vulnerabilities. That conclusion would form the basis for subsequent efforts to test actual resilience and uncover the most dangerous vulnerabilities. In particular, Dow wanted to assess the likelihood of a production site shutdown, raw-material supply outage, or raw-material allocation shortage.

The Glycol Ethers resilience model was further broken down into raw materials supply, manufacturing, tolling, financials, customer demand and terminals/warehousing. At the testing stage, Dow applied iThink modeling and simulation software to assess resilience at each defined point of risk. By simulating a manufacturing outage, for instance, the company could see the stockouts that resulted further down the chain. The impact on customer service was highlighted by the use of green, yellow or red signals for each account, all laid out on a series of dashboards.

The tool can help to uncover dynamics within a network that might otherwise not be visible. For example, a shortage of raw materials might have a greater impact on one distribution location than another. Dow was determined to identify precisely where those vulnerabilities were most likely to occur.

Some Unexpected Results

While no system can completely erase a company's vulnerability to unforeseen events, the SCRAM model allowed Dow to make significant progress in that direction. In some cases, it was able to gain a better understanding of alternative sourcing strategies that were already in place. The model even drilled down to seemingly minor events, such as a production site raising the fee for renting an on-site storage tank. Dow discovered that the increase would have a negative impact on customer service, so it released the tank.

According to Hemmelgarn and McIntyre, the company saw a 500-percent return on its modeling effort. It also identified a potential $1.1m in savings through the redeployment of assets and working capital in line with the model's conclusions.

In the critical area of customer service, Dow managed to maintain a 95-percent service level during simulated disruptions. At the same time, it boosted both flexibility and reliability through the implementation of dual sourcing strategies and changes in order size. That came as something of a surprise; Dow hadn't intended the resilience model to aid in the development of future business strategies.

Having successfully tackled resilience in the Glycol Ethers P-Series product line, Dow has set out to extend the use of the model throughout the company's global operations. Hemmelgarn and McIntyre note that the conclusions yield strategies that can be applied to multiple product lines, as Dow seeks to buffer itself against transportation delays, material shortages, natural disasters and other major supply-chain disruptions.

"The resilience work process has also been employed in numerous other businesses," Hemmelgarn and McIntyre note, "and is expected to yield an even greater impact as these efforts mature and yield additional measurable results."

Resource Link:
Dow Chemical Co.

    RELATED CONTENT

    RELATED VIDEOS

    SupplyChainBrain

    Mars Responds to Child Labor Accusations

    More from this author

    Subscribe to our Daily Newsletter!

    Timely, incisive articles delivered directly to your inbox.

    Popular Stories

    • A YELLOW CORP TRAILER IS BEING TRANSPORTED BY A FREIGHT TRAIN.

      Yellow Considering Offer to Revive Company, Rehire Thousands

      Global Logistics
    • A ROW OF MEDICAL DEVICES IN A WAREHOUSE

      Hospitals Face Mounting Shortages of Essential Medical Supplies

      Data Management (Big Data/IoT/Blockchain)
    • AMAZON TRUCK ON HIGHWAY

      Amazon is Now the Biggest Delivery Business in the U.S.

      Last Mile Delivery
    • GROUND VIEW OF THE SHANGHAI CITY SKYLINE BENEATH A BLUE SKY.

      China’s Slowing Economy Is Putting a Damper on Its Plans for Global Dominance

      Sourcing/Procurement/SRM
    • SHIPS SAIL THROUGH THE SUEZ CANAL

      The Panama Canal Is So Backed Up Ships Are Rerouting Through the Suez

      Ocean Transportation

    Digital Edition

    Scb nov 2023 lg

    2023 Supply Chain Innovation Award

    VIEW THE LATEST ISSUE

    Case Studies

    • A GRAPHIC SHOWING MULTIPLE FORMS OF SHIPPING, WITH A HUMAN STANDING AT THE CENTER, TOUCHING A SYMBOLIC MAP OF THE WORLD

      Enhancing High-Value Electronics Shipment Security with Tive's Real-Time Tracking

    • A GRAPHIC OF INTERLACING HONEYCOMBED ELEMENTS REPRESENTING GLOBAL BUSINESS TRANSACTIONS

      Moving Robots Site-to-Site

    • JLL Finds Perfect Warehouse Location, Leading to $15M Grant for Startup

    • Robots Speed Fulfillment to Help Apparel Company Scale for Growth

    • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

    Visit Our Sponsors

    Antuit Zebra Anvyl AutoStore
    BEUMER Group Blue Ridge Global Brightdrop
    Brother CHEP Cleo
    Coenterprise Comarch Data Capture
    E2open Enveyo Eva Air
    ForwardX Robotics Frayt GAINSystems
    Generix Geodis GEP
    Global Supply Chain Marketing Summit GreyOrange Here
    HICX Holman Logistics Infor
    Inmar Kinaxis Lexis Nexis
    Locus Robotics Logility LogistiVIEW
    Lucas Systems MCA Connect MCA Connect
    Moody’s Analytics MPO Old Dominion
    OneRail Overhaul PartnerLinQ (Visionet)
    Port of Virginia Rockwell Automation Ryder E-commerce by Whiplash
    Saddle Creek Logistics SAP Servicon
    Shyft Sourcemap SPS Commerce
    Tecsys TGW Systems Thomson Reuters
    Veho Verusen Walmart
    Workshop
    • More From SCB
      • Featured Content
      • Video Library
      • Think Tank Blog
      • SupplyChainBrain Podcast
      • Whitepapers
      • On-Demand Webinars
      • Upcoming Webinars
    • Digital Offerings
      • Digital Issue
      • Subscribe
      • Manage Your Subscription
      • Newsletters
    • Resources
      • Events Calendar
      • SCB's Great Supply Chain Partners
      • Supplier Directory
      • Case Study Showcase
      • Supply Chain Innovation Awards
      • 100 Great Partners Form
    • SCB Corporate
      • Advertise on SCB.COM
      • About Us
      • Privacy Policy
      • Contact Us
      • Data Sharing Opt-Out

    All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

    Design, CMS, Hosting & Web Development :: ePublishing