$24M auditable savings with dynamic margin optimization in petrochemicals through sales and procurement collaboration

Key Outcomes
Cost reduction
achieved significant savings in raw material costs
Optimal product mix
improved revenue through intelligent product allocation
Optimal inventory
reduced holding costs and improved cash flow
Enhanced EBITDA
improved overall profitability
Margin erosion avoidance
prevented potential loss of margins
Overview

The company struggled with inefficient product allocation and margin losses due to siloed operations. Aligned Automation implemented a dynamic margin optimization Nerve Center, integrating data across functions and utilizing predictive analytics for real-time pricing guidance. This approach led to $24M in auditable savings, optimized product mix and inventory, reduced raw material costs, and improved overall profitability by avoiding margin erosion.

Challenges

  • Inefficient product mix allocation based on tribal knowledge.
  • Slow and non-actionable flow of information across functions.
  • Lost margins and sub optimal buying decisions.

Value Delivered

An advanced margin optimization Nerve Center was established to bring together marketing and sales, production, inventory planning, and procurement. The center utilized a connected data fabric across raw material prices, production batch BOM, POs, finished goods prices, and margin contributions. Predictive analytics were used to guide raw material purchasing and product mix decisions, enabling:

  • Real-time prediction of input price fluctuations based on market indices
  • Estimation of the impact of raw material price fluctuations on margins
  • Proactive guidance for the marketing and sales team on optimal product mix and pricing

Capabilities

Data & Analytics

Process Transformation

AI & ML

About Client

A Fortune Global 500, one of the largest chemical companies in the world. This $47 billion multinational chemical company employs around 19,000 people and is a global leader in innovation, consistently developing high-quality chemicals, polymers, fuels, and technologies.

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