Flexibility and cooperation essential to tackling supply chain disruptions
According to Mohd Yusri Mohamed Yusof, Managing Director and CEO of PETRONAS Chemicals Group Berhad, supply chain issues are “a distraction that we have to deal with”.
Yusof has divided his approach to supply chain management into three levels.
“First of all, we’re trying to create flexibility in how we look at the supply chain,” he said. “We have to look at the options available to us, [like] maybe several different types of containers.”
The second level, he said, is for businesses to engage in these options in order to reach desired customers.
“We need to work with regulators to make sure our customers get what we promised them,” Yusof said, speaking on a panel at the 2022 World Petrochemical Conference.
The final level, he said, is learning to deal not just with regulations but with regulators as well — a lesson industry leaders learned, especially at the onset of the global COVID-19 pandemic. he noted.
“Ships had to wait two weeks for crews to be quarantined before they could even enter port,” Yusof said.
Yusof reflected on the challenge for industry to comply with the constraints caused by the COVID-19 restrictions that were established to protect workers, balancing the protocols and safety measures recommended by scientists and health professionals by to the economic impact of these restrictive recommendations.
“We did what we could,” Yusof said.
Luis Serra, President and CEO of NOVA Chemicals, shared his “glass half full analysis” of supply chain disruptions.
“We talk about supply chain issues as a bad thing, but there’s also a good part of it,” Serra said. “For North America, the ability of others to export to the continent is becoming more and more difficult. The difference … between China and North America, for example, was and continues to be at a very raised.”
That difference, Serra said, provides opportunities for North American manufacturers, “and we’re certainly taking advantage of it.”
Serra pointed to the conundrum of the economy of container ships traveling across oceans.
“There is a significant difference in direction with the same container crossing the same ocean east or west. One price is 16 times more expensive than the other, so we have the option of going in the opposite direction and enjoy it. These are good things,” he said. “We are also able to benefit from it.”
Using local suppliers to source from local markets means less competition from imports and getting a better freight rate, Serra explained.
“We should try to make the most of it,” he said. “We don’t export a lot.
Addressing the need and potential reward for the industry working with regulators, Tom Crotty, INEOS Group Director, said his company was able to “launch a new consumer business thanks to COVID-19 – our business of hygiene of alcoholic products, wipes, hand sanitizers etc.”
“It required, collectively, a lot of flexibility on the regulations,” he said. “There are certain restrictions in the movement of alcohol in terms of customs, excise duties, etc. We have cooperated extensively with all the governments we have dealt with to streamline this process so that we can get into production quickly. .
“I think there were a lot of positives.” Crotty called circularity “a new consideration for the supply chain.”
“Circularity is a big issue for our industry,” he said. “We are all working hard on advanced recycling techniques and making good progress.
“The requirement for the supply chain to move to raw materials, which are used plastic, is huge. It’s a new supply chain that needs to be built almost from scratch.”
Serra said embracing circularity is an example where industry “can see light at the end of the tunnel” with decarbonization.
“Circularity is much more complex because there are many more players involved, from public landowners to us and our customers,” he said. “It requires a lot more coordination and interaction across the whole supply chain.”
For change to happen most effectively, Crotty said, industry leaders must engage in a “perfect triangulation” between the consumer at the end of the supply chain, industry and regulators. .
“That’s where we have to have a lot of cooperation,” Crotty said.