Attendees at the ASUG Best Practices: SAP for Chemicals virtual conference last week (Nov. 8-9) heard from thought leaders, customers, and SAP experts, who shared insights on best practices and innovations for the chemical industry.

Matt Reymann, Global VP of the Chemical Industry Business Unit (IBU) at SAP, kicked off the conference with a keynote session on the current and future state of the chemical space, outlining challenges and opportunities on the path ahead.

“The pressures on our industry are, quite frankly, relentless,” said Reymann, speaking to regulatory pressure, the energy crisis, supply and demand volatility, and profitability and growth as pain points for chemical companies. Discussing “top-of-mind” priorities for these companies, Reymann angled his opening keynote around business transformation, supply chain resilience, and sustainability.

“The importance of operating as a network is becoming more evident as a key enabler of supply chain resilience,” said Reymann, noting SAP Business Technology Platform (BTP) as a technology designed to enable cross-company collaboration and provide unprecedented levels of visibility, both imperative to functional supply chains.

Digital Transformation Journeys

The value of digitization was a focus of ASUG Best Practices: SAP for Chemicals right from its opening session, which included insights from Lisa Dalesandro DiChristopher, EVP and Head of SAP’s North America Industry Executive Advisory Practice, and Patrick Thompson, Chief Information & Digital Transformation Officer at Albemarle, a global specialty chemical manufacturing company.

Albemarle’s digital transformation journey, involving the deployment of SAP S/4HANA and other SAP solutions, started in 2017, said Thompson, who noted that leading with IT transformation, followed by business transformation and digital transformation, allows companies to “get the basics right.”

Supply chain, customer, back office, and manufacturing excellence have remained four areas of focus through Albemarle’s transformation; to that end, simplifying processes and tools that empower users to focus on customer experience has been a “north star” for the company, Thompson said. Notably, S/4HANA was deployed “out-of-the-box” by Albemarle with zero customizations, which allowed the company to reduce its technical debt and focus on digital acceleration.

DiChristopher remarked that, amid digital transformations she observed in the chemical industry, companies are positioning for longer-term growth and seeking out solutions for current business challenges, including volatility and sustainability. “Volatility is now the new norm and has forever changed the way we view our supply chains,” she said.

“The world is decarbonizing, and every customer is facing this net-zero sustainability strategy,” she added. “Carbon tracking has been front and center, but companies are rethinking sustainability as part of their core business goals and incorporating it into their platforms, as well as using sustainability analytics across their entire enterprise.”

Thompson discussed “supply chain to supply chain integration solutions” as one future of digitization enabled by SAP and increasingly endorsed by customers amid widespread consolidation and volatility. DiChristopher welcomed this topic, noting that the “collective intelligence” unlocked by user groups, business networks, and the ASUG community has yielded innovative solutions intended to bolster supply chain resilience.

“The pace of change has never been this high,” said DiChristopher, calling this global community a “force multiplier” for change. “It requires us to step up.”

The Journey Toward SAP S/4HANA

As the chemical industry migrates toward SAP S/4HANA, with companies in various stages of their journeys, speakers discussed the necessity of taking on this challenge while identifying specific pain points they see other companies encounter.

In their session, two Enowa representatives (Rick Place, Partner and Vice President of Marketing and Client Development, and Bruce Horwath, Senior Director of Engagements) discussed the experiences of Enowa’s clients in the chemical industry and offered tips for preparing for successful S/4 implementation.

While Enowa customers had previously expressed skepticism about S/4HANA, current assessments overseen by Place and Horwath lean toward deciding what scope of S/4HANA implementation to pursue—a sign of progress, the pair agreed. Executives ask about project costs, timelines, operating expense reductions, efficiency gains, and overall business necessities. IT departments are invested in understanding deltas between ECC and S/4HANA, potential gaps and opportunities, licensing specifics, third-party integration, custom programs, and the relevance of RISE. Business stakeholders want harmonization and optimization but are wary of adoption, disruption, and data loss.

In advising on success factors for S/4HANA projects, Horwath noted business alignment, governance, and resource-to-win as strategic considerations: change management, solution design, data governance, the need for a program management office as tactical considerations, solution readiness, run strategy, and solution build as operational considerations.

Offering insights into S/4HANA transformation, Horwath discussed standardization, optimization, and innovation as three areas in which the technology can affect business processes across an organization:

  • Harmonizing existing processes
  • Addressing gaps in current one.
  • Providing additional opportunities for growth

Being a Good Corporate Citizen Is Good for Business

The importance of minimizing one’s carbon footprint, especially in terms of the chemical industry’s relationship with plastics, came during a discussion between Alex Karim, Sustainability Principal at SAP, and David Wascom, SVP of Executive Programs at ASUG.

Only 9% of plastics are being recycled, said Karim, a statistic that demands industrywide rethinking around linear models of resource extraction, manufacturing, and disposal. In identifying a more sustainable, circular model and “closing the loop” to reduce pollution and disposal to landfills, streams, rivers, and ocean floors, Karim advised attendees that “there shouldn’t be a trade-off between profitability and sustainability.” Instead, SAP has a suite of sustainability solutions, including SAP Responsible Design and Production, that can help. “Being a good corporate citizen is good for business,” said Karim.

Regarding sustainability, citizens and consumers push for action, and governments respond with regulation. This enables extended producer responsibilities in post-consumer consumption, requiring companies to improve the visibility of their environmental, economic, and social impacts.

Karim discussed SAP Responsible Design and Production as a tool for holistically managing packaging and regulatory risk across global markets while supporting a business transition to a sustainable portfolio. The platform allows collating data around production, recipes, batches, logistics, materials used, and sales. SAP Responsible Design and Production also checks volumes of types of materials and assesses impact KPIs, EPR reporting forms, fees, payments, and PRO and plastic taxes. It enables reporting for financial reports, sustainability reports, investors, and audits. This facilitates the redesigns of products and packaging to be more sustainable, provides detailed design screens for product managers, product designers, and packing managers, and assesses the impact of changes in design using new materials.

“Circularity starts with understanding what the carbon footprint looks like and capturing that data at all levels, from extraction to finished goods,” said Karim. He noted that addressing full circularity across all material flows is essential and can enable companies to build a regenerative business in a circular economy.

Wascom shared ASUG Chemical Survey results with attendees at this session, noting that the need to implement more sustainable practices is the predominant trend experienced by SAP customers, followed by navigating changing technologies, rising production costs, and the pressures of digital transformation. Shortages brought about by supply chain issues, as well as pressures from regulation, continue to impact a smaller number of SAP customers.

Aligned with these current trends, chemical customers report issues keeping pace with changing technologies and finding skilled talent, as well as concerns around data protection and environmental impact. The chemical industry is most invested in upgrading technologies, transitioning to more SAP products, and focusing on sustainable practices. In terms of job factors, maintaining and monitoring for sustainable processes and adding automation to accelerate key processes are both important.

Sustainable Sourcing

HCLTech, a fast-growing technology consulting firm, and global SAP partner, currently focuses on “sustainable sourcing,” which Art Wright, HCL Solution Director – North America SAP Ariba Solutions, discussed at length in his Monday afternoon session.

HCLTech is committed to achieving net zero by 2040. As assessed by Edelweiss, its sustainability score is 91.9 out of 100 on 40 key metrics. “If you talk the talk, you have to walk the walk; we’re committed to moving sustainability forward for ourselves and our partners," Wright said.

Defining sustainable sourcing as “the integration of social, ethical and environment performance factors into the process of selecting suppliers,” Wright called it “a continual improvement loop.” He noted that pressure for sustainable sourcing comes increasingly from customers, shareholders, employees, non-governmental organizations, trade associations, labor unions, and government entities. Risks that accompany sustainable sourcing, he added, include:

  • Supply disruption.
  • Cost volatility.
  • Threats to brand reputation.
  • Penalties due to non-compliance with local laws and regulations

Still, “regulatory headwinds are blowing in favor of sustainability, and daunting though it may be, getting started on this path is easier than it’s ever been,” Wright said.

HCLTech’s strategy for sustainable sourcing involves developing and integrating sustainable policies into the supplier selection process, said Wright. This requires “understanding where your current and prospective supply base stands in terms of sustainable practices.” He recognized the importance of educating suppliers, setting and communicating clear expectations for suppliers, integrating sustainable policies into buying practices, and pursuing transparency around sustainability efforts to build and maintain stakeholder trust.

Wright encouraged companies to get assessed by agents specializing in sustainability and to encourage their partners to do the same evaluate sustainability progress accurately and signal a commitment to transitioning toward more sustainable practices. Identifying talent within organizations passionate about sustainability is another major asset to those moving toward sustainable practices, as is working with a trusted partner to identify “low-hanging fruits” that are easy to implement and yield positive results.

Supply Chain Optimization Is Top of Mind

During a roundtable discussion concerning customers’ respective journeys to S/4HANA, Laura Tibodeau, Global Digital Innovation & Transformation, Ascend Performance Materials, discussed impacts to supply chain resilience as a major motivation for digital transformation at Ascend in the planning stages of its S/4HANA migration.

“Every way of working to optimize our supply chain is top of mind,” said Tibodeau, listing considerations such as reducing costs, becoming more agile, scaling, reducing technical debt, and improving user experience.

Advansix’s S/4HANA implementation is set for Q1 of next year. Jacqueline Grunwald, Vice President & CIO at Advansix, discussed evaluating current business processes and transforming data management processes amid the upcoming digital transformation. “We’re taking it from a greenfield perspective,” she added on orchestrating larger business transformation while migrating to SAP S/4HANA.

Grunwald encouraged those pursuing sustainable practices to leverage networks and learnings from partners further along in their sustainability journeys, and to invest in hiring innovative thinkers. “Innovation is an imperative,” Grunwald said. “Change is the one constant you can count on, so innovation becomes a tool you need in your toolkit.” How companies can drive innovation and build innovation skills within their organizations is a question Grunwald wants everyone to ask, as is strategizing how to enact structure around innovation.

“Business process management is critical,” said Tibodeau, adding to Grunwald’s comments about the importance of attracting high-level talent. “It’s all about the people who harness that technology,” she said. “Instead of talking about resources, also talk about sources of innovation.”

Providing final thoughts, Tibodeau emphasized keeping one’s core clean through BTP and spoke to the importance of investing in management of change (MOC). “However much you have invested in MOC, double it,” she said, calling it a critical enabler of any business transformation.

“Think about what capability a partner can also bring to your transformation,” added Grunwald, suggesting that dedicated transformation leaders are essential, as is an embrace of change at all company levels.

“Build support with your board, and make sure you have top-level buy-in on outcomes,” said Grunwald. “Build a culture of innovation, challenge yourself on objectives, and push yourself to the edge. You’ll surprise yourself with what you can do.”

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