Evolving Landscape: How Logistics Procurement Impacts the Chemical Industry
In today’s rapidly changing business environment, logistics procurement is emerging as a critical factor, especially within the chemical industry. Supply chain disruptions, capacity constraints, and a shift from a buyer’s to a supplier’s market have reshaped the way chemical companies approach logistics services. A recent study titled “Procurement of logistics services in the chemical industry,” supported by Dachser Chem Logistics, offers invaluable insights and recommendations for navigating this new landscape. The study’s authors, Christian Kille, Andreas Backhaus, and Constantin Reuter, provide fresh perspectives on procurement strategies in a transformed logistics arena.</div
The Transformation of Logistics Procurement
Gone are the days when the procurement of logistics services merely involved selecting the cheapest provider. Recent years have witnessed a paradigm shift from a buyer’s market to a supply-driven market. This change has been accelerated by supply chain disruptions, material bottlenecks, and reduced logistics capacity. These challenges have forced companies, especially in the chemical industry, to reevaluate their approach to logistics procurement.
The chemical industry faces unique challenges due to the nature of its products, including hazardous materials that require specialized handling and equipment. Factors like a shortage of qualified personnel, particularly drivers, and surging energy prices further complicate logistics operations.
The Need for Adaptation
The study makes it clear that chemical logistics procurement must adapt to these challenges to ensure long-term corporate success. This adaptation involves expanding knowledge, selecting the right logistics solutions and partners, and adopting a more customer-oriented approach. While customer orientation is well-established in many sectors, it’s still relatively new in some procurement divisions where it’s often considered the role of the sales department.
The study has led to the development of a tailored procurement process consisting of seven steps and 30 questions specific to the procurement of transport services. These guidelines empower procurement officers to make informed decisions in these challenging times, enhancing corporate competitiveness.
Key Recommendations
The study’s analyses underscore the need for a change in perspective when it comes to chemical logistics procurement. Here are some key recommendations:
- Customer Orientation: Procurement officers must view the logistics service user as their customer. Understanding the user’s requirements and weaving them into the procurement process ensures a tailored and secure supply.
- Overall-Process Orientation: Recognizing that the user’s requirements are diverse and integrating them into the overall process is crucial to maintaining supply efficiency and avoiding follow-up costs.
- Building Logistics Expertise: Specific logistics expertise should be a fundamental consideration in chemical logistics procurement.
- Focus on the User: All procurement activities should revolve around the needs and expectations of the chemical logistics user.
- Thorough Tender Creation: Invest time and effort in creating comprehensive tenders that clearly identify goals, requirements, and general conditions.
- Market Knowledge: A deep understanding of the market is essential for implementing a competitive logistics solution.
- Flexibility in Contracts: Avoid narrow scopes of implementation and rigid contractual conditions to adapt to changing circumstances.
- Continuous Information Exchange: Establish an ongoing information exchange between all parties in the logistics value chain throughout the contract term.
Reducing Costs and Enhancing Performance
The study emphasizes that quantifiable cost metrics for logistics services do not reflect the total costs for chemical companies. Errors in the logistics chain can disproportionately impact a company’s total costs. Neglecting logistics partner performance and quality can lead to errors, potentially adding extra costs. An overall assessment of the logistics process that considers all stakeholders can lead to cost savings and process optimization.
In conclusion, the evolving logistics procurement landscape in the chemical industry requires a shift in perspective and approach. By embracing customer orientation, building logistics expertise, and implementing flexible strategies, chemical companies can enhance their logistics performance, reduce costs, and navigate the new logistics era effectively.