Chemical. MainePointe.com. Boston Vancouver Schaffhausen Shanghai

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1 Chemical Breaking through the barriers to dramatically enhanced revenue, EBITDA results, and risk management across a dynamic chemical and process industry value chain. MainePointe.com Boston Vancouver Schaffhausen Shanghai

2 A New Pathway A New Pathway to a More Dynamic, Fully Optimized Strategic Supply Chain Maine Pointe drives profitable business transformation through n Operations Excellence n Strategic Procurement n Logistics and uniquely integrated approaches to Sustainability and Organizational Improvement. 2

3 The Maine Pointe team applied a roll up your sleeves and get to work approach to our engagement that identified areas for improvement as well as detailed processes to implement and monitor the success in sales and operations planning, maintenance and operations excellence. Their team blended seamlessly with our personnel. We feel that our investment in Maine Pointe was well worth it; the project rendered the tools and processes necessary for us to sustain improvements. Luther C. Kissam, IV President Albemarle Corporation For some time now, chemical companies have been diversifying their mix of products and customers to improve margins and stimulate more consistent revenue growth. Concerns over economic factors such as unstable foreign exchange rates and fluctuating oil prices have focused industry leaders on selling assets and acquiring new businesses as a means to gaining market share and enhancing EBITDA. While this strategy has been successful, it has often injected more complexity into operations or instigated havoc upon the supply chain. There are factors that are now converging to alter the competitive context such as greater demand for ever more scarce raw materials, rising energy costs, and demographic shifts. Smart CEOs are already responding with a greater emphasis on differentiated products and service models in addition to implementing alternative production methods (such as lean principles and automation). They are also transitioning to greater segmentation of their customers supply chain requirements. Regionally-focused chemical companies are looking to scale globally at the same time that the large market leaders are going more vertical in an effort to create new niche opportunities. Cyclical sectors, such as commodity chemicals, are restructuring as those companies become more specialized to ward off encroachment from private equity firms looking for deal opportunities. Companies expanding overseas are navigating tax and regulatory obligations along with license to operate and stakeholder issues. As they divest from their installed base and relocate operations to more financially advantageous footprints issues of centralization, rationalization, cost management and intellectual property engender tensions with tax authorities in a complex web of global asset restructuring. Ongoing development issues in emerging markets such as Eastern Europe, India, and China are requiring companies to apply new approaches to a range of operational concerns. 3

4 Chemical CEOs continue to be concerned about market and financial volatility amidst global trends toward more regulation, proactive government oversight, and public sector investments in commerce. Nevertheless, they are hedging their odds and penetrating new markets especially regions where their presence may be limited or non-existent such as China and Brazil. Rather than building research facilities, their focus is on scaling manufacturing operations, leveraging a range of local resources including human capital (via training and development) and engaging new customers. Attracting and developing the next generation of skilled workers at all levels remains a potential impediment for capacity building in the near term. As company leaders address this gap, more senior personnel are being pulled from their native posts and assigned to new, or developing, market initiatives to help ensure a successful build out. Evolving operations and reporting standards are raising expectations for responsible business practices, bringing greater attentiveness to environmental, health and safety concerns as well as transparent financial practices. Company leaders are increasingly viewing safe work environments, sound financial standards, reducing pollution levels, and improving energy and resource utilization as pathways to more durable competitiveness. Don t Be Fooled into Going it Alone Chemical and process industry companies are compelled to develop operational efficiencies and quality management standards unlike what they have achieved before. They must reinvent many aspects of their business model in order to support a renewed priority around optimizing the supply chain as a driver of operations excellence, competitive agility, and risk resiliency.

5 Achieving supply chain optimization will require greater utilization of e-procurement technologies, lean manufacturing, outsourcing noncore activities, reducing cash-to-cash cycles and minimizing material inventories. By focusing on the full range of operational improvements including enhanced sales and operations planning, distribution and delivery companies can significantly lower costs while converting their supply chain into a differentiated driver of perpetual growth. Many chemical leaders have not focused on building a depth of supply chain expertise or transferring best practices from other industries. Their teams have necessarily concentrated on solving day-to-day issues and executing on current initiatives to keep up with immediate priorities. It s common to underestimate the importance of practical, on-the-ground supply chain experience to deliver results quickly. Companies tend to go it alone but if they do hire a consultant they retain one with singular chemical industry experience. Trouble is, those options are what everyone else does and the result is more of the same. Collaborating with a trusted advisor who can integrate extensive chemical and process industry experience with cross-modal logistics expertise, frontline operations implementation, and multi-industry insights on global procurement practices can be a game-changing tactic. Engaging such a resource can put the best feet on the ground to achieve bottom-line results more quickly than an internal team can on its own. As a result, company leaders and facility managers become better able to calculate and build capacity for meeting true real-time demand. They ll no longer be held hostage to reactionary or impulsive responses to expectations that are not validated. 5

6 The Difference We Make Maine Pointe works with all types of chemical and process industry companies from basic, commodity and agricultural to specialty and consumer entities. We dramatically compress the cycle to greater profitability and cash flow with less upfront investment in time and resources. Our specialists offer deep frontline experience across the entire chemical and process industry value chain to effectively align facilities, capabilities, processes and strategic initiatives for long-term advantage. By leveraging the right combination of functional competencies, we deliver innovative cost-saving business transformation solutions that are accountable and measurable. We reorientate supply chain operations from the traditional Total Cost of Ownership model to Maine Pointe s next-generation Total Value Optimization (TVO) framework. Redefining the Results You Should Expect Maine Pointe consistently delivers an average engagement ROI of 6:1 to 10:1, supported by a guaranteed 2:1 ROI based on annualized savings. Our industry engagement successes include: Saving 7-10% in the direct spend for key raw materials of many specialty chemical manufacturers including companies that serve the garment, pharmaceutical, consumer product, film, food thickener and LCD screen markets. 6

7 Achieving a 4:1 ROI in Procurement for a cosmetic formulator. Saving 6-18% for a number of different industry leaders by optimizing their network, upgrading supplier contracts, and shifting truck load to rail. Reducing Logistics costs 17% for a producer of refractory products. Assisting in removing 8,000 trucks from the Logistics spend of a synthetic polymer company while significantly advancing achievement of their corporate Sustainability goals. Improving Overall Equipment Effectiveness (OEE) for an agricultural chemical company from a 52% rate to 63% and increasing production by over 2 million pounds in one facility; consolidating operating costs by 15% in another plant by improving the OEE rate from 55% to 75%. Redesigning of the Sales and Operations Planning (S&OP) function for a leading precision coated films manufacturer increasing productivity by over 35% and reducing inventory by 40%. Eliminating a 60,000 sq. ft. refrigerated warehouse, reducing fresh water and steam usage in the manufacturing process with significant productivity gains for a laminated glass manufacturer; also reducing the plant s waste and scrap levels, chemical waste, and treated waste water produced. Improving EBITDA by $27 million annually and reducing inventory by 30% for a polypropylene manufacturer in the flooring sector. Decreasing overtime by 90% and consolidating three plants into one for a mouldings manufacturer in the building sector. 7

8 Our Values-Based Approach Our Approach Emphasizes: n Alignment with client s work flow and organization culture n Integrity-driven assessments n Thorough, rigorous implementation n Transparent and accountable results n Regular progress reports and meetings n A bottom-line commitment to Sustainability n Collaborative knowledge transfer n A focus on the client team While there are a number of ways for Maine Pointe to collaborate with chemical and process industry leaders, we develop and implement robust savings initiatives in six to nine months following our analysis. We may collaborate with your team on simple, point solution projects or on multiple supply chains and operations across a complex, integrated value chain within your subsidiaries. Implementation n Identifies and implements operational improvements n Optimizes the global supply chain n Aligns the company leadership and teams with the overall strategic imperatives and transformation agenda n Delivers substantiated savings, supported by the Maine Pointe guarantee 8

9 Continual Value Enhancement n Implements new approaches and their attendant methodologies, processes, infrastructure, and behavioral changes Maine Pointe performed a comprehensive analysis, assigning a team of very experienced consultants that worked diligently with our internal team to identify significant cost savings opportunities in direct raw materials purchases, indirect spending, and logistics. More importantly the processes, procedures, training, contract template and toolkit developed by Maine Pointe forms a solid foundation and framework to maintain the savings long after the engagement ended. Despite a myriad of challenges throughout the assignment, Maine Pointe remained impartial, professional and focused. Timothy J. Powell Vice President and Chief Financial Officer Resco Products, Inc. n Perpetuates value through cost reduction, revenue enhancement, and productivity gains n Integrates the Maine Pointe Sustainability framework to substantiate and leverage new sources of value creation Analysis n Utilizes interconnected diagnostic approaches to understand the company strategy and priorities n Enhances acquisition decisions through the identification of value creation opportunities, organizational and productivity improvements, and guidance on risk areas n Delivers an objective, action-oriented and detailed assessment of the current or potential supply chain including its functional and departmental processes n Identifies and quantifies potential bottom line asset improvements, as well as working capital risks and opportunities n Discerns the appropriate value creation opportunities to be factored into ongoing budget decisions as well as future investments n Maps a clear pathway for seizing opportunities that will achieve the projected ROI 9

10 Maine Pointe s unique approach to a savings guarantee for clients, combined with their deep knowledge and practical work experience in supply chain management, sets them apart from others. Through an intense evaluation of existing practices and their focus on low capital investment solutions, process improvements are developed and implemented that yield real and measurable benefits for the long term. About Maine Pointe Maine Pointe is an operations management and implementation firm that is rapidly becoming a leader in sustainable global supply chain transformation. We help chemical and process industry leaders maximize profits and improve cash flow to free up working capital while developing a sustainable approach to business practices. Maine Pointe accelerates value creation by leveraging our frontline operations expertise across multiple industries to break through the barriers to improved growth and profitability. Our methodologies, processes and collaborative knowledge transfer capabilities help transform how chemical and process industry companies actually operate on the ground. Maine Pointe teams work with all personnel to seize opportunities that drive significant cash, profitability and EBITDA enhancements to the bottom line. Blaine Higgs Former Director, Logistics and Distribution Irving Oil U.S. (Headquarters) Independence Wharf 470 Atlantic Ave., 4th flr. Boston, MA Telephone: Fax: Select Chemical and Process Industry Clients: Albemarle Arclin USA Arizona Chemical Baker Hughes Bunge Limited Canadian Natural Resources, Ltd. ChemAid Laboratories CP Films Flexsys Neucel Specialty Cellulose Philadelphia Energy Solutions PotashCorp Solutia The Mosaic Company United Suppliers Jim Kulbeda Executive Vice President, Chemical Cell: jkulbeda@mainepointe.com 10