Customer to Cash
Clariant has permanently optimized its operational chain, using digitalization to propel efficiency, agile approaches to respond to customer demands, and short-term changes to effectively respond to COVID-19. Continuous cost savings in procurement, embedding sustainability in the value chain, and safe, functional operations also support Clariant’s overall profitability.
3.1. Digitalization helps predict maintenance
Clariant utilizes digitalization to optimize process efficiency in operations. Operational Excellence has clearly defined single process steps using Lean Management methods, increased data availability, and advanced controls, enabling Clariant to implement digitally steered processes. In maintenance, for example, Clariant is working to switch from preventive to predictive routines, which will reduce downtime and optimize repair costs. By mining historical data, the company can obtain adequate warning signals for when a machine needs to be replaced.
3.2. Big data optimizes throughput, yield, and energy efficiency
Clariant pioneered a big data analytics approach to increase throughput, yield, and energy efficiency in 2019 by combining and modeling data from different sources such as SAP, the supply chain, and the quality system. This approach was rolled out company-wide in 2020 and targeted savings have already been achieved. In 2020, Business Unit Catalysts successfully launched the first digital solutions to increase throughput in production by combining process data with machine learning and advanced analytics. Read more in Intellectual Capital
»Clariant Production System focuses on lean processes, high asset utilization, high yield, and optimal energy efficiency, supporting Clariant’s overall profitability.«Axel Schoenfeld Head of Clariant Excellence
3.3. Agility becomes more important
To live up to customer expectations, Clariant continuously increases its agility. By planning demand and supply and immediately reacting to production bottlenecks, Clariant achieves attractive lead times. Benefits for customers are the primary driver for improvements to the operational chain and are fine-tuned with feedback from users in the Business Units such as controllers, procurement officers, and production personnel. To spread agile approaches, team trainings in digital topics were conducted in 2020, and the black belt curriculum was adapted. Within Clariant’s agile teams, the SCRUM methodology, including programming sprints, has also been fully adapted.
3.4. COVID-19 challenges supply and delivery
The pandemic caused by COVID-19 required Clariant to thoroughly assess its demand planning and supply chain management. Clariant had to verify the availability of raw materials, as even a multiple-supplier strategy could be affected by regional lockdowns. The company further had to anticipate issues with product delivery since personnel for unloading at customer sites could be limited due to lockdowns. Clariant utilized its global sourcing network to mitigate supply shortages and its ability to react on short notice to effectively respond to these developments.
Integrated Planning Landscape and Manufacturing Execution System
Clariant uses the Integrated Planning Landscape (IPL) to improve inventory performance and optimize organization, capabilities, and IT tools throughout operations. The Manufacturing Execution System (MES) is a powerful tool providing a real-time view of production status, thus triggering continuous improvement. Plant managers using the software benefit from detailed insight into production processes and digital process control.
3.5. End-to-end supply chains support proactive business steering
Clariant continues to build integrated end-to-end supply chains, translating customer requirements into demand planning. Enabled by digital solutions and technology such as machine learning, demand sensing, and advanced analytics, as well as an agile mindset, Clariant interlinks the commercial with the operational value chain. In 2020, Clariant’s end-to-end supply chain management dashboard supported a higher On-Time, In-Full (OTIF) rate for customers and reduced inventories, thus increasing cost efficiency. Through the extension of business planning with monetized scenarios, proactive and forward-looking business steering is supported. Operational Excellence collaborates with the different Business Units to develop tailored solutions. For example, in Business Unit Functional Minerals, logistics costs are high due to the heavy weight of materials, so a regional approach guaranteeing short distances is applied. On the other hand, for Business Units such as Catalysts, lower product weight reduces logistics costs, allowing for global supply chain steering.
3.6. Achieving continuous cost savings in procurement
Clariant manages an extensive global supply chain. In 2020, more than 6 800 vendors delivered raw materials worth CHF 2.6 billion to Clariant. Thus, coordinated procurement is vital in overall cost savings. By increasing the maturity of the Clariant Production System and optimizing purchasing processes with the Procurement Excellence approach, cost efficiency was again increased. In 2020, savings of CHF 38 million were achieved, compensating for inflation effects and project costs. Procurement Excellence diagnosed various spend categories and elaborated road maps for future optimization.
3.7. Further embedding sustainability in operations
In 2020, Clariant made sustainability a key priority across its entire value chain. For its operations, this includes purchasing renewable energy, reducing the environmental footprint of production processes, and sustainable sourcing. Clariant continued to increase its renewable energy share in 2020, proving that it can be a cost-effective measure with positive environmental impacts. Advancing toward climate neutral production requires Clariant to rethink operations. Among other impacts, this influences the design of plant construction. For instance, reactors usually require plenty of energy for cooling and heating. If these processes are coordinated, a continuous and balanced flow minimizing energy consumption can be achieved. Customer demand for sustainable chemistry encourages Clariant to consider criteria such as carbon footprint and origin when sourcing raw materials. If necessary, solutions for alternative materials are sought in cooperation with the Business Units. Read more in Relationship Capital
Programs for sustainable production
Clariant drives sustainable production to reduce cost by increasing yield, saving energy, and reducing emissions. Both the production system Yield, Energy, Environment (YEE) and the eWATCH™ program support these efforts. YEE analyzes production processes and units to optimize energy consumption, while eWATCH™ creates energy savings opportunities by analyzing energy consumption across Clariant’s entire operations.
Read more in Natural Capital
3.8. New organization to drive transformation road map
To synergistically strengthen innovation, sustainability transformation, and best-in-class operations performance, Clariant formed two new units: Group Innovation & Sustainability (GIS) and Group Operational Excellence (GOE). Operational Excellence will form part of GOE and drive the next steps in Functional Excellence, developing a Lean Six Sigma approach to a data science-driven, advanced-analytics approach to continuous improvement. Another focal point of GOE is the reduction of CAPEX consumption for every significant CAPEX project.
3.9. Operational safety as baseline
Clariant considers a safe operational chain an obligation as a responsible employer and necessary to minimize disruptions in production. This is reflected in Clariant’s safety target of zero accidents, a key priority in operations. In 2020, Clariant started the »Digital Work Permit.« The app-like software coordinates a global feedback process with various stakeholders. Such feedback includes the confirmation of maintenance work at plants, which is necessary to start production processes, and ensures safe operation. In addition, further »Safety Moments« documents were developed and used. The lost time accident rate (LTAR) increased slightly to 0.16 days lost per 200 000 hours of work. To guarantee the health and safety of employees during the pandemic at all times, Clariant established additional security and safety concepts. Read more in Human Capital
The value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product. View entire glossary
A substance that lowers the activation energy, thereby increasing the rate of a chemical reaction without being consumed by the reaction itself. View entire glossary
Stakeholders are people or groups whose interests are linked in various ways with those of a company. They include shareholders, business partners, employees, neighbors, and the community. View entire glossary