I interviewed Alessandro Menezes who discussed Chemical Supply Chain Challenges.
It’s great to speak with you today, Alessandro. Today I’m looking forward to hearing your views on the topic of chemical supply chain challenges. My first question is: Can you provide a brief background of yourself?
Dustin, first of all, thank you; it’s a pleasure to be here talking to you and your audience about that. My name is Alessandro Menezes; I’m an American born in Brazil. I also lived in Germany, and for a bit more than a year and a half, I am the senior logistics leader for a major manufacturer of chemical additives, which is Afton Chemical Corporation. We are part of NewMarket Corporation—NEU at the New York Stock Exchange. The family of companies is developing and manufacturing petroleums and additives. Our global operation is our support for our regional headquarters in Asia, Europe, Latin America, and North America. When I’m not traveling, I’m based out of our headquarters in Richmond, the capital of Virginia, and I’m heading the logistics and customer service operations for the region of Latin America.
My previous background includes 16 years of several different management roles, mainly within ocean transportation and its added services, especially holding global-product management functions within the container liner industry. Besides also several deep-sea services, I also have worked in coastal navigation in South America, especially in the Brazilian Cabotage, where I was holding positions with the responsibility over supply chain solutions to customers. You can imagine a very complex and undeveloped the infrastructure reality.
Well, my experience also includes global logistics roles based out of Germany, especially related to optimizing the empty requisition position of containers. I’m talking about a fleet of over 300,000 containers dispersed over all the countries in the world. After I left the steamship industry and prior to the Afton Chemical role, I also had experiences within the chemical drybox shipping, helping our global customers to better manage their supply and minimize cost, of course increasing efficiency.
Last, my educational background includes a bachelor’s in business administration, an M.B.A. at Business School Säo Paulo in Brazil, and a master’s in logistics. With this increasing complex global business environment, I have also attended and concluded some programs on negotiation at Harvard. As a matter of fact, last week I was at MIT, the Center for Logistics and Transportation, discussing a little bit about supply chain management and how to drive strategic advantage and innovate for the future. It may be a good opportunity now to talk about this stuff with you.
What are the challenges you see in the chemical supply chain?
Chemical companies in general face a growing era of risk within their supply chains. Why don’t we all understand that some of these risks are specific to the chemical industry? Many others are part of the more general risk companies operating in a rapidly changing and increasingly complex global business environment. It’s unrelated to the uncertainty where the environment is reshaping quickly by factors such as technology, economy, regulation and cultural changes and so on.
There are a number of large challenges that we are facing today as a result of this but, really, the crucial challenge I see for the chemical supply chain, because of this volatility, is to be part of the selected group of companies that are best managing their supply chains, as, most likely, those companies will be the most successful, let’s put it this way, over time. You cannot reach that if your organization doesn’t have an efficient supply chain resilience process. Reliable supply for chemicals is such a volatile environment; it’s a key aspect. Because production and consumption normal, especially in my case, Latin America, emerging markets. We have production-consumption locations mostly separate, and that becomes another high-risk factor that will be one of the challenges moving forward.
Other aspect that becomes more and more relevant is the imperative need of an effective supply chain strategic alignment. Of course, mostly to put in to practice and support the business strategies. To reach this alignment in the chemical industry, for example, we see comparative and sustainable supply chain as one of those big challenges. As we’re dealing with high specialization, especially for hazardous shipping, and when customers’ expectations are going up, looking for on-time delivery, flexibility, and not only at the level that we’ve seen is being featured, but for sustainability.
Can you talk in a little bit more detail about why these challenges exist?
The first aspect I mentioned related to the supply chain resilience is becoming an increasing challenge because most of the concerned risk is for the chemical global supply chain is related to, for example, immediately a big break in the chain. For example, it could be an explosion, at the key supplier. It could be a natural catastrophe, a war, and several other causes. We see, again, being specifically in the emerging countries, within the developing countries, risk management is generally less rigorous than in the developed economy. The risks of a local aspect are even higher when compared to those in the developed world.
Also, these challenges exist when we all take in mind that global trends are effecting regions, countries, industries, and even when we think, for example, about the concerning supply chain risks, we can mention the political and social instability because most of the raw materials are sourced from dangerous and, let’s say, unstable parts of the world. It’s like these global chains, you think they’re about tornadoes and not tsunamis. They are tornadoes: very difficult to predict exactly what’s going to happen, but there is a trend. The challenge is to have the resilience with enough time to react and satisfy the customers’ requirements.
Uncertainty of the bad news is: We believe that it’s a key feature of the 21st century; it’s the new normal. Risk management helps many companies do a great job of risk identification, but then they fail to define and implement a clear strategy for addressing those risks. That leads to another challenge, which we refer to, related to the supply chain strategy alignment. How we work with our supply chain partners, with our suppliers, distributors, customers—and even our customers, because as the marketplace becomes more competitive, it’s critical to enforce the existing relationship and work together. You never know what’s going to be needed tomorrow. Bottom line: these trends, they’re a challenge but they are also opportunities.
How should the challenges be address?
Good question. When we look back years ago and see the lesson of the Japanese disaster and how the supply chain risk management had to change and go beyond the director of suppliers, we haven’t seen, also, regionalization trends, and the implementation of diversifying, and preferably to have the suppliers located in different regions, also to make better service-related decisions, especially in matrix organizations. Most of them used within manufacturing companies, it’s more and more key to understand the operational implications of the cost and service levels involved. What I’m saying is: It’s becoming more important that the groups work together with the supply group, try to analyze the full part and alignment and how it impacts any major service decision and therefore avoid any pitfall.
We also believe that because of this organization knowledge development becomes more relevant. As they need to continue to develop an organization which is accountable, which feels empowered, and encouraging an environment where you have the positive change and a culture of continuous improvement, because things will happen really fast. We don’t know what’s going to happen, but we know they will happen. Last is, these supply chains, they are moving from—and they’re still moving from—a cost focus to a more customer-focused-oriented chain. As a result, we see, also, an increasing importance of having these strategic focus and, really, the need of thinking strategically about the supply chain. We can say it has never been so important as nowadays. We believe, in talking to customers and even to competitors, that successful companies will be able to really drive the supply chain resilience, as I mentioned, as a general competitive advantage. That’s going to be really a must down the road.
Thanks for sharing to day on the topic of chemical supply chain challenges.
It’s a pleasure, Dustin. Whenever you need, I’m available. Thank you so much.
About Alessandro Menezes
Senior Logistics Leader, Supply Chain, Transportation, Liner Shipping, Product Management, Procurement, Ocean Freight