LOGISTICS TODAY: How does Eastman Chemical characterize its supply chain?
BEGLEY: The Supply Chain at Eastman Chemical Co. is a centralized organization that serves each of Eastman’s businesses and reports to the president of the company. The scope of the supply chain at Eastman includes procurement of raw materials and energy through finished product delivery to Eastman’s customers.
The Supply Chain organization includes four divisions: Procurement, Execution, Process Services and Logistics. Our Execution division is responsible for customer service and product/material management. Our Process Services division serves as our supply chain R&D, process improvement and maintenance organization. The Logistics division is responsible for logistics procurement, distribution network optimization, and supplier interface/performance, while the Procurement organization is responsible for managing a $1 billion external spend for raw materials and energy.
Logistics is a key component of our supply chain. We ship globally in all modes of transportation. We manage a very large rail car fleet and we make thousands of truck shipments. We also ship by marine and air. Our transportation costs and logistics network are a significant component of our total supply chain costs.
LT: What’s your background and how did it prepare you for your current role?
BEGLEY: I have been at Eastman for more than 30 years. I have held various management jobs throughout the entire scope of our supply chain. I engineered our current Supply Chain organization. My experience and breadth of exposure within the supply chain are critical assets in understanding how to optimize our distribution network and how to drive value from a centralized supply chain while maintaining business alignment that is critical to execution of business strategies.
Since joining the company in 1969, I have worked within a number of businesses -- chemicals, plastics and fibers -- and my career has crossed key functional areas: research and development, direct and indirect procurement, product pricing, plastics resource management, business management, product management, planning and customer service. I have held management positions in each of these areas.
LT: What are Eastman’s current efforts in terms of improving or streamlining its supply chain and logistics processes?
BEGLEY: Currently we have three key areas that are critical to improving our supply chain: * Maximizing value of a logistics outsourcing agreement -- We have outsourced our logistics functions to Cendian, who is our lead logistics provider. We believe Cendian offers an opportunity to optimize our logistics costs and the overall logistics network.
* Automation -- We have made a significant investment in technology capabilities from our SAP ERP system to our electronic storefront. We must continue to automate our supply chain processes to drive efficiency and effectiveness throughout the supply chain.
* Six Sigma -- We have initiated a Six Sigma effort at Eastman and have recently been focusing on commercial processes. We must drive improvement with Six Sigma though cost reduction and revenue enhancement projects.
LT: What is the biggest supply chain challenge Eastman faces today?
BEGLEY: The following is an excerpt from an interview our CEO [J. Brian Ferguson] had with our local newspaper: “One of the biggest challenges that we are facing is what I call the crunch in the value chain. We’re getting customer pressure from our mega-retailers that are constantly eroding our ability to pass on price increases to our customers. And we’re getting supplier pressure from our feedstock producers -- primarily oil and natural gas producers -- who are hitting us with unprecedented price increases. We’re getting crunched in the middle of those two forces.”
LT: What can you point to as Eastman’s greatest accomplishment in terms of its supply chain?
BEGLEY: Eastman continues to be recognized as a service leader in the chemical industry. I believe our customer service differentiates Eastman in our industry. The creation and maintenance of a centralized supply chain that is customer focused and business aligned has enabled Eastman to maintain a high level of service. We have achieved a process-centered organization and torn down traditional, functional silos that hinder service and sub-optimize costs.
The scope of the supply chain that covers the procurement of our raw materials from our suppliers through the delivery of final product to our customers has enabled Eastman to optimize our processes and provide a high level of service at low cost.
Terry Begley
vice president, global supply chain, information technology and quality
Eastman Chemical Co. (www.eastman.com)
