Like many sectors, the chemicals industry finds itself at a crossroads, largely as a result of the effects of COVID-19. According to Thorsten Wenzel, vice president and global head of chemicals at SAP, the industry faces three major challenges: how to reconfigure supply chains, ways to optimize strategic portfolio management, and incorporating sustainability into business practices.
During the chemicals sessions at ASUG Best Practices: SAP for Industries, attendees heard how many chemical companies are tackling these challenges and leveraging technology and software solutions to bolster and improve their business. Throughout the two-day program, speakers laid out their digital transformation journeys, detailed strategies to adapt mobile delivery strategies during the pandemic, and gave attendees advice on how to effectively roll out new solutions and capabilities.
Chemicals Companies Making the Jump to SAP S/4HANA
In a conversation with ASUG CEO Geoff Scott, Wenzel discussed the adoption rate of SAP S/4HANA within the chemicals industry. According to Wenzel, about 2,500 ERP customers are live on an SAP ERP platform, be it SAP S/4HANA or SAP ECC. Of those customers, about 250 are currently live on SAP S/4HANA, with another 150 in the process of going live.
Attendees at the event heard from several of these companies who have already adopted SAP S/4HANA and are using the ERP platform to improve their business processes. Ka-Pi Hoh, organizational change management director at the Lubrizol Corporation, was joined by Melody Briggs, the practice manager of process mining and value realization at Enowa Consulting, to discuss leveraged process mining to help with implementation of SAP S/4HANA.
The company used the solution Celonis to document the process, which gave them insurance and helped accelerate the journey. The process mining solution also helped the company by showing the impact of its stabilization efforts. Lubrizol went live with SAP S/4HANA in North America in July 2019, before moving into the improvement phase in July 2020. Since the project was completed, Lubrizol has seen a decrease in its touch rates of the sales order.
Similarly, Jay Hendren, director supply chain at Jayhawk Fine Chemicals, gave a presentation on the company’s five-month go-live journey. Using the SAP Activate methodology, Jayhawk moved from SAP ECC 6 to SAP S/4HANA on-premise version 1809. Hendren said the company kept development to a minimum and focused on leveraging SAP GUI and SAP Fiori solutions as needed. This helped make SAP S/4HANA fully operational on day one—despite the short timeline—and Jayhawk to able to “make, take, ship, and bill an order,” while also being able to receive cash and pay its vendors.
Attendees heard from other chemical companies that transitioned to SAP S/4HANA including Albermarle, Indorama, and Axalta Coating Systems.
Simplifying and Adapting Business Processes
One of the reoccurring themes throughout the two days was how companies implemented SAP S/4HANA as a way to condense their varied business processes and run them through a single, streamlined solution across the entire company.
Christy Baker, chief information officer at Olin Corporation, discussed how the company had to simplify after it acquired Dow Chemical’s North American chlor-alkali and vinyl and global chlorinated organics and epoxy businesses in 2015. The company’s operations spanned 20 countries, and the acquisition took it from a $2 billion business to a $6 billion operation.“We couldn’t just adopt business processes from one company and rebuild them,” she said. “We saw this as a chance to do a much larger transition.”
The key to the project was to have “one company that could operate efficiently.” Olin wanted to implement a low-cost, integrated platform that would support future growth. Baker said the company was focused on balancing business continuity and risk and starting a small, manageable place with the project. Olin became an early adopter of SAP S/4HANA, going live in 2017 with SAP S/4HANA Central Finance. Baker believed that this early adoption was a gamble worth taking. “We would have state-of-the-art technology in our company,” she said. “But it was also very risky.”
Baker encouraged attendees to find the right employees and partners early on, while also preparing for changes to road maps and plans. The company went live in 2019 with a pilot series before going live in 2020 with its largest manufacturing plants in the U.S.
Go-Live in the Time of COVID-19
Attendees also heard from customers who found themselves completing vital aspects of their transition to SAP S/4HANA during the COVID-19 outbreak. Akif Rahman, global head of enterprise applications at Cabot Microelectronics, walked through the company’s implementation—which Accenture assisted with. The company had doubled in size both organically and through acquisitions, so it wanted to create what it called “the business platform of the future.”
“The biggest process improvement we were looking for was to bring standardization across the company,” Rahman said.
The rollout was divided between two projects: a rollout of SAP S/4HANA for the global finance portion of the company, and the business materials group. Cabot Microelectronics was nearing the go-live of the second project when the pandemic hit. Rahman said they worked to mitigate the business disruption while mobilizing a remote workforce. “We were going into a situation where we didn’t know what was going to happen,” he said.
The company did go live, rolling out standard ERP functionality and building a mobile application for the fleet management team. It also introduced new methods of working that allowed financial processes to be completed in less time-consuming ways.
Albermarle also had to complete part of its journey to SAP S/4HANA during the pandemic, which had accelerated the company’s cloud strategy. Additionally, it upgraded from SAP S/4HANA version 1610 to version 1809 using a remote workforce. “We learned a lot during COVID-19,” said Patrick Thompson, chief information officer at Albermarle. “We learned that we can be quicker and faster with our deployments.”
Watch the entirety of ASUG Best Practices: SAP for Industries on demand.