As one of the leading manufacturers of industrial gas, Air Products has established a successful supply chain strategy, crafted from industry experience, best practice and knowledge sharing by global counterparts. Maropeng Bahula, General Manager of Bulk Gases and Supply Chain is of the opinion that the fact that the individual strategic focus areas within the supply chain are treated with equal importance, is the reason for the success and the company’s strength in this area.
Bahula explains that the company’s supply chain ecosystem contains both in-bound and outbound logistics. “The in-bound logistics includes the strategic sourcing of equipment, consumables, spares and services and includes warehousing of critical spares. Outbound logistics, on the other hand, includes the delivery of Bulk gases to our Packaged Gases depots and to Bulk customers nationally”.
Incorporating measures to optimize the supply chain
According to Bahula, Air Products has established measures to optimize the company’s supply chain over the years. He explains that they have metrics in place that are tracked on a day-to-day basis to achieve specific objectives. In terms of sourcing, they have robust processes to procure goods and services at competitive prices, thereby ensuring that their customers benefit from competitively priced input materials. They continuously “test the market” to ensure that they are paying competitive prices for goods and services they procure. On the outbound logistics side, specific technology has been deployed to ensure that they optimally service their customers. Other metrics which have been incorporated includes the optimal utilization of Bulk tankers, measurement of fuel efficiency, and the procurement of the best performing truck tractors in the market from a fuel efficiency perspective.
Furthermore, driver efficiency is measured. In other words, the principle they apply is that non-driving delays should be minimized as this enables them to keep their distribution costs to a minimum and avoid passing distribution costs incurred through inefficiencies to customers.
Bahula alludes to the fact that they have also deployed flowmeters on their tankers which help from an efficiency perspective as they are able to accurately measure the product that is delivered to a customer and are thus able to avoid delays that would otherwise be incurred at weighbridges.
Ensuring the supply chain sustainability goals are met
Maropeng Bahula states that the key to ensuring that the sustainability objectives are achieved, is by the deployment of capital in the form of purchasing new truck tractors and tankers. “By making informed purchases, the more efficient vehicles play a crucial role in reducing our carbon footprint – by optimizing our tankers to a specific gas service, we are able to maximize our payloads which ultimately assist us with our sustainable supply chain management endeavours”.
Air Products is guided by their Environmental, Health & Safety policy on sustainable supply chain management and is therefore committed to the basic principle of continually reducing the environmental impact of their operations. Simply stated by Bahula, they have integrated ethical and environmentally responsible practices into their supply chain management, and they believe this is non-negotiable.
The role of data analytics and technology
Air Products’ supply chain success is underpinned by data analytics and technology that is used daily. According to Bahula, Telemetry and the Enterprise Resource Planning (ERP) system, JD Edwards (JDE), are the backbone of Air Products’ Distribution operations which enables them to download reports and data that provides insights into the operations and performance. He explains that Telemetry is a powerful tool that monitors storage tank levels at customers sites 24/7. The system assists the Planning Department to dispatch Bulk tankers timeously to ensure that customers receive their delivery ‘just in time’ and avoid the risk of running out of product.
As a leader in the industry, Air Products places a lot of focus on continuous improvement and has achieved many successful outcomes by adopting improved methods. Various improvements have also been incorporated to ensure that the drivers complete their trips safely and efficiently.
Supply chain challenges, the future and precise planning
Bahula mentions that 2020 was the most difficult year, not only for Air Products, but for companies globally and the effect is still felt today. Shipping has been the biggest challenge as lead times were extended when shipping lines were under pressure. Equipment imported in the past that typically took 6 to 8 months to be delivered will easily take up to 14 months from placing the order to receiving it at present. The other challenge according to Bahula has been the cost escalations, not only for input materials, but also for shipping costs, and he perceives the escalations and extended lead times as a challenge that will continue in the foreseeable future.
“Planning is mission critical. We are faced with having various sources of product, various plant configurations, customer locations across the national footprint, cross border customers, varying tanker sizes depending on customer storage tank sizes etc. Within the industrial gas manufacturing industry, there are stringent requirements and several protocols we need to follow to meet all the regulatory requirements pertaining to “dangerous goods transportation”. These factors all need to be considered, which makes planning critical to ensure that customer requirements are well understood and met “on time and in full” without violating regulatory requirements”.
To maintain the high standards of service delivery and security of supply to key customers within the regulatory framework, Bahula states that Air Products’ Supply Chain is set to achieve clear future objectives: reducing input costs; reducing their carbon footprint; improving fuel efficiency, vehicle utilization and driver efficiency; minimizing inventory and optimizing the Bulk Gases delivery process.