Petrochemicals Manufacturing Excellence - Are You Ahead of The Competition?

In being successful, it is important to know just what your competitors are doing.

How well placed are they to deal with the new normal?

- Have they been taking action, like Lanxess, to better position themselves?

- Are they doing things in terms of product or process innovation that will leave them better placed for the future?

I know from my own experience, that it is very easy to become internally focussed, particularly during difficult times – but a level of external focus provides a very useful sense check and challenge to what you are doing.

How do your costs compare?

- Do you have industry benchmark data you can use?
- Do you know what they are doing to address challenges?

There’s a lot of information available and as you would probably expect me to say, you can always enlist the help of consultants to give you that external perspective.

Good luck!

Manufacturing Management in the New Normal

So we've already discussed the new normal  and its consequences, together with covered short and long term success factors, what I propose is a set of challenges, designed to assess just how ready is your organisation to deal with whatever the future holds.


Firstly let’s consider management

1) Do your managers understand the potential implications of the new normal?

By this I mean do they consider the economic outlook and are they identifying the various scenarios that might be created

2) Have your managers identified the things that they must be able to control in order to adapt to a changing situation?

This means having a highly capable AND highly flexible workforce, being strongly focussed on cost effectiveness and systematically eliminating all kinds of waste.

I would like to refer to the example of Lanxess. Last year Lanxess used the strap line ‘continuity meets flexibility’ for its 2008 annual report. Taking a quote from the report “The willingness to critically review our own strategies at regular intervals has played a crucial role in our company’s successful development. In view of the major challenges we now face, our reviews are becoming increasingly stringent.”

What Lanxess did was to actively implement a number of measures designed to give it the flexibility it needed to manage during the downturn.

Looking at the 2009 annual report and the comments of Axel Heitmann, the Lanxess Chairman states “Thanks to the numerous initiatives we implemented worldwide, we succeeded in keeping as many of our highly qualified employees in the group as possible, despite the crisis. We will need them urgently when the economy picks up again.”

He goes on to talk about flexibility of workforce, flexible asset management and reduction of expenditure.
In summary, he says “We are in an excellent position to emerge from the crisis a stronger company.”

I would consider that to be a very significant success.

Continuity Meets Flexibility

In my recent post New Reality for Petchems, I discussed the manufacturing implications of a slow recovery from recession punctuated by periods of volatility (based on the article published in the Chemicals and The Economy blog). Given my conclusions from this post, regarding the need to manage costs whilst retaining flexibility, I was very interested to learn LANXESS has won the ICIS company of the year award for its business performance and the fact that it is so well positioned to manage the upturn. According to LANXESS CEO Axel C. Heitmann: “The results in the first nine months of 2008 highlighted that LANXESS was pursuing the right strategy of profitable growth. Then in the fourth quarter came an economic downturn of historic proportions. Our restructuring skills were called upon again and we reacted swiftly with a package of measures. I am confident that LANXESS will emerge strengthened from the crisis.” The phrase 'Continuity Meets Flexibility' was the strapline for the 2008 annual report which can be found here. In recent months, LANXESS has agreed a number of recession related measures with its workforce. Some of these were tough (but necessary) such as remuneration decreases for all management employees. Other measures focussed on flexibility and the need to have the ability to manage the effects of the downturn. In particular, the agreed package 'Challenge12' defines how the company will flexibly use its assets, recognising the fact that demand may fall when government stimulus packages come to an end. This flexibility is being delivered via a number of mechanisms such as bringing forward scheduled maintenance shutdowns, reducing overtime credit balances, bringing forward non-working shifts, shutdowns for vacation periods, flexible working shifts, temporary closure of production lines and temporary closure of entire plants. Simple but highly effective. The fact that LANXESS has identified and agreed, in advance, the measures that it can use to achieve flexibility, means that it will be very well placed to deal with whatever the recovery throws at it.