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Servicizing Industrial Chemical UsewithChemical Management
What is Chemical Management ?Outsourcing of non-core chemical managementfunctions to chemical management experts.Takes chemical management responsibility away fromchemical producers motivated to use and sell morechemicalsCreates a financial incentive to reduce chemical usageAligns goals of the chemical “supplier” with the goals of thecorporation and the communityPrimary goals of a chemical management servicesprogramReduce chemical usage and wasteReduce Health, Safety, & Environmental riskReduce the total life cycle cost of chemicals2
What is Chemical Management ?Established business practice in many industries forover 15 yearsAutomotiveAerospaceDefense ContractorsHigh Tech ElectronicsManufacturingTransportationPower GenerationResearch and Development3
Chemical Management ServicesSelectProductBuy &DistributeManageInventoryManageUseEnd ofLifeCollateralCostsChemical Management provides services across thefull life cycle of chemical useProcurement servicesChemical Process OptimizationInventory ManagementJIT DeliveryAutomatic ReplenishmentChemical TrackingPoint of use DistributionMSDS ManagementWaste CollectionCustom ReportingConsolidation of Materials /SuppliersEnvironmental Data ManagementWater/Wastewater Management4
Chemical Management BenefitsReduced Chemical Usage and WasteUsage documentation, trend analysis, andbenchmarking to identify opportunities forimprovementProduct selection based on cost effectiveperformanceRecycling programs (on-site and off-site)Elimination of unauthorized useImproved tracking of time sensitive materialsto reduce wasteInventory sharing between departments5
Chemical Management BenefitsReduced Life Cycle CostsPurchase price reduction thru leveraged buyReduce transactional costs with consolidatedmonthly invoiceReduce inventory management costsConsolidation of materials / suppliers toReduce cost of MSDS management, reporting,inventory managementReduce inventory volume / carrying costsOpportunity for bulk / returnable containersIncrease supplier serviceReduce transportation costsEx7
Chemical Management BenefitsReduced Health, Safety & EnvironmentalExposureImproved data for environmental reportingMSDS managementContainer managementDecreased chemical inventoryChemical storage area monitoringSafer / environmentally friendly materialsAssistance with permitting and reportingManagement of materials of interestEx9
Successful Chemical ManagementSuccessful integration of chemicalmanagement into a manufacturing operationsis a result of:A paradigm shift in the approach tosupplying chemicalsFocus on total costSound business relationship11
1. Paradigm ShiftBefore Chemical ManagementSupplier is remote fromthe Plant FloorSupplier has littleaccountability for thetotal processSupplier profits arebased on salesOperator(Plant)12
1. Paradigm ShiftAfter Chemical eringPurchasingSupplier has on-sitepresenceSupplier is an on-site teammemberSupplier is responsible forthe performance of majorprocess chemicals and theentire chemical systemSupplier profits are basedon effective managementof the entire system13
1. Paradigm ShiftSuccessful implementation of chemical managementrequires:Management support of the program from thetop downAn environment that accepts change – noimprovement is possible without changeCooperation between plant and supplierpersonnelJoint development and maintenance of theprogram14
2. Focus on Total CostSuccessful Chemical Managementrequires a focus on the total costand risk of chemical use, not justpurchase price.Other factors include:Employee safetyEnvironmental protectionCompliance riskWaste Disposal costsResourcesQualityProductivity15
2. Focus on Total CostStudies have shown that the actual cost of usingchemicals is from 2 to 5 times the purchase price.E,H,&SCompliance11%Collection ness6%Purchase Cost19%Container andDelivery5%Inventory andHandling22%Purchasing andAccounting15%16
2. Focus on Total CostFocusing on specific cost drivers mayreduce costs in one area, and not affectthe total cost.ReducedpurchasepriceTotal CostIncreasedmaintenancecosts17
2. Focus on Total CostSuccessful chemical management goes“outside the box” to cut the total costTotal CostSavingsReducedusageTotal CostReduceddisposalcosts18
3. Sound Business RelationshipDefined and documented expectationsfor all partiesUnderstanding of the Business Caseand documentation of baseline costsMutually beneficial cost structuredesigned to achieve common goalsOngoing communication and definedmetrics to measure success19
Sustainable Chemical ManagementChemical Management Services cab be an integral partof any organizations sustainability program.Good for the PlanetResourceConservationGoodfor theCommunityWaste PollutionReductionGood ChemicalSafer MaterialsGoodfor the TrainingReducedTotal CostRecyclingCommunityRighttoKnowMSDS ManagementRegulatory ComplianceAutomaticFeed SystemsCompetitiveAdvantageSafe UseInstructionFacilitateCore FunctionsPositive Public Image20
Sound business relationship 11. 1. Paradigm Shift Before Chemical Management Operator (Plant) Supplier is remote from the Plant Floor Supplier has little accountability for the total process Supplier profits are based on sales 12. 1. Paradigm Shift Supplier has on-site presence
