Customer to Cash
Customer to Cash
3. Customer to Cash
With its holistic, cross-functional approach, Clariant continually optimizes planning, procurement, production, and delivery. By balancing supply and demand, Operational Excellence improves product availability, supplier cost, and risk. This results in ever-shorter lead times and increased On-Time, In-Full deliveries, enhancing both customer satisfaction and Clariant’s profitability.
»With Operational Excellence, we aim to achieve world-class performance in supply chain, procurement and production for all our operations.«Axel Schoenfeld Head of Operational Excellence
3.1. Agility is key
As customers across all markets are becoming more agile, they expect the same from Clariant. While long lead times for high product volumes were the norm in the past, short lead times and small volumes are now more typical. This is particularly pronounced in Asia, where production time is often more decisive than price, requiring Clariant to enhance its focus on optimizing lead times. For example, in one of the Shanghai production facilities for Business Unit Masterbatches, lead times in 2018 decreased from about two weeks to five days, with a future goal of only three days. This was achieved by implementing a value stream design approach developed in Kaizen workshops. Although Clariant’s products are well-known for their high quality, the company is striving to also be known as a fast, reliable supplier.
3.2. Optimizing procurement and delivery with digitalization
Digitalization offers many new opportunities, and Clariant is in a leading position to seize them. Clariant aims to further integrate the operational with the commercial value chain to make comprehensive information more accessible to all departments. By connecting all steps from planning to delivery, Clariant will be able to integrate sales volumes in production planning in realtime and quickly react to changes in customer requirements. With a smartphone app, sales representatives will obtain immediate information about raw material availability and production capacity, allowing them to inform customers about delivery dates within minutes.
Digitalization is also influencing Clariant’s procurement. Opportunities to purchase raw materials via electronic interfaces such as e-auctions are constantly growing, speeding up purchasing and enabling instant cost comparisons between various suppliers. In addition, artificial intelligence applied in production will identify machine outages, allowing for predictive maintenance and impeding production bottlenecks.
3.3. Continuous cost saving and risk reduction
As a global player with a comprehensive product portfolio, Clariant is embedded in an extensive supply chain. In 2018, approximately 7 000 vendors delivered raw materials worth CHF 2.9 billion to Clariant, and Clariant purchased about CHF 1.3 billion of other products and services from roughly another 27 000 suppliers. Careful procurement is therefore vital in overall cost savings. In 2018, Clariant achieved savings greater than the cost of inflation thanks in large part to Clariant Procurement Excellence (CPX). CPX takes a broad perspective on procurement to profit from countries with favorable sourcing conditions and bundles purchasing power, reducing supply risks and costs as well as improving free cash flow.
Clariant’s spend on raw materials amounted to CHF 2.9 billion.
Clariant also continued de-specification in 2018. By widening specifications and available sources, the company reduced supply chain complexity and broadened the supplier base, leading to lower purchasing prices, a minimized need for high safety stocks, and more efficient inventories. A thorough analysis of Clariant’s supply chain led to the implementation of a customized tool that improved estimations of upcoming efforts and trainings. This helped optimize external contractor management, which further reduced costs in 2018.
3.4. Steady advance of the Integrated Planning Landscape
The Integrated Planning Landscape (IPL), launched in 2015, enhances organization, aligns best-practice planning, and optimizes capabilities and IT tools. One key element is the Inventory Health Check, which continuously improves inventory performance by determining optimum levels, defining targets, and optimizing cash flow based on market research and data analysis. Inventory Health Checks are now regularly applied across all Business Units. In 2017, Clariant began rolling out the Manufacturing Execution System (MES), a powerful tool used in production. It provides a real-time view of the production status and online information that is essential for continuous improvement. By the end of 2018, 50 plants with about 20% of total production volume were integrated.
In addition, Clariant Production System methods (CPS) employ lean methodologies within the Customer-to-Cash Process, such as door-to-door material and information flows along value chains of shared facilities. This fosters collaboration between Business Units and is a key lever for increased productivity. Overall, IPL contributes substantially to On-Time, In-Full (OTIF) orders, ensuring profitable operations.
3.5. Toward integrated value chains
In 2018, Clariant thoroughly assessed all its supply chains to establish high-performing supply chain management across all Business Units and regions. The assessment was used to prioritize gaps to close and develop detailed roadmaps that will help different Business Units attain cross-functional processes and end-to-end effectiveness. These new priorities will lead to optimized costs, inventories, and on-time deliveries.
3.6. Operational efficiency through sustainability
Sustainability topics are gaining in importance, not only for Clariant’s customers but also for its operations. CPS embraces sustainable production as a driver for cost savings by optimizing chemical yield and reducing emissions, while simultaneously saving energy. The Production System Yield, Energy, Environment (YEE) initiative contributes to these efforts, as does the eWATCH™ program. Within YEE, specific production processes or production units are analyzed to gain a comprehensive picture of energy optimization, while eWATCH™ identifies savings potential by carefully analyzing energy consumption across Clariant’s entire operations. Read more
3.7. Safe and healthy operations
Running a safe operational chain is not only a stipulation of a responsible employer, it also minimizes disruptions in production. Clariant’s ambitious health and safety target of zero accidents reflects both of these factors. In 2018, Safety Moments – brief documents containing safety messages – were rolled out internally and used at the beginning of meetings to raise safety awareness. Safety Moments helped slightly decrease the lost time accident rate (LTAR) from 0.2 to 0.15 days lost per 200 000 hours of work in 2018. Read more
The Lost Time Accident Rate (LTAR) decreased to 0.15 days lost per 200 000 hours of work.
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