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WHITE PAPER Profitability Through Supply Chain Excellence: A Technology Insight for Specialty Chemicals Producers Executive Summary The quest for differentiation is driving higher business and operational complexity for specialty chemicals producers. This increase in complexity is being compounded by a dynamic market environment where specialty chemicals emphasis is growing amongst diversified producers and company business portfolios are being transformed through a steady stream of merger and acquisition transactions. Specialty chemicals producers are challenged on a daily basis to navigate through this increasing complexity to drive both customer satisfaction and profitability. Effective management of supply chains is critical to both objectives, and can even help specialty chemicals producers exploit complexity for competitive advantage. This white paper spotlights some of the challenges in supply chain management for specialty chemicals and identifies technology solutions that align people and processes for success. Illustrated with two examples from leading specialty chemicals companies, this paper suggests ways for specialty chemicals producers to unlock opportunity and deliver an operational edge. 2 Profitability Through Supply Chain Excellence ©2016 Aspen Technology Inc. 11-8918-0816 Supply Chain Excellence Through Software Specialty chemicals companies who implement supply chain excellence programs report as much as a 10% increase in margins. This tangible impact on the bottom line demonstrates that supply chain excellence is not an esoteric term, but an actionable initiative that specialty chemicals companies cannot afford to ignore. Supply chain leaders need to evaluate the critical issues that prevent their supply chain operations from adapting to their business needs. Typical issues include operating in business silos, lack of visibility and a lack of decision support tools, which when compounded, significantly hinder the ability for the business to respond quickly to customer demand. It is important for business leaders to identify these challenges in their organization and take action to achieve supply chain excellence to successfully navigate market complexity and unlock opportunity. This paper discusses the challenges of effective supply chain operations and decision-making, introduces software solutions to transform the sales and operations planning (S&OP) and scheduling functions, and outlines the benefits for specialty chemicals producers to maximize profitability to gain a competitive edge. Challenges Facing the Specialty Chemicals Business Specialty chemicals producers must navigate an increasing level of business and operational complexity on a daily basis when making decisions around forecasting, planning and scheduling on both short and long-term time horizons. The typical challenges that add complexity and place pressure on operations include: • Shifting business portfolios – The specialty chemicals landscape is being continually transformed through increasing emphasis by diversified producers and through heavy merger and acquisition activity. Company business portfolios are constantly changing as producers add divisions, enter new markets, divest divisions and integrate mergers. Combined with the well-established trend towards globalization, this shifting landscape has increased the complexity of company business portfolios. • Uncertain demand patterns – Specialty chemicals producers face uncertain and unpredictable demand patterns with limited visibility of future customer orders. When compounded with growing customer portfolios spanning many end-use markets, visibility into demand variability represents a key challenge for specialty chemicals producers. • Expanding product portfolios – Specialty chemicals producers continue to innovate their products in order to m