Atten­dees at the 2022 ASUG Best Prac­tices: SAP for Chem­i­cals vir­tu­al con­fer­ence (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.”