What role should the supply chain play?
What role should the supply chain play?
The European petrochemical sector faces a challenging outlook with weak margins due to overcapacity and high energy costs, impacting its competitiveness on the global stage. The situation is further impacted by the continent’s largely aging sector infrastructure, with market intelligence experts ICIS stating that European crackers are, on average, 45 years old.
This figure is twice that of the Middle East and three times that of China, which ably demonstrates the pressure on refinery managers to find a way to compete with more limited resources and higher production costs. In this situation, the importance of effective turnarounds is clear, as upgrade and maintenance works become increasingly pivotal for Europe’s petrochemical industry.
The turnaround process is undoubtedly complex, requiring a mix of strategic, ongoing and short- and long-range planning, as well as the ability to adapt during the pre-turnaround phase and while executing the turnaround itself. This difficulty is exacerbated by the fact the global chemical industry is facing acute labour shortages, with a study by Accenture suggesting that 30% of the sector’s employees are over 50 years of age and likely to retire in the next decade or so.
Brindging the knowledge gap
Yet in a business landscape where relevant expertise is becoming scarcer, refinery and turnaround managers may need to adapt away from existing, entrenched methods. Previous year-long turnaround timescales may need to be extended to accommodate planning to ensure personnel with appropriate skillsets can be engaged in good time. As part of this, it is advised that plant decisionmakers move away from a transactional relationship with their wider supply chain, and instead more actively leverage its expertise on an ongoing basis – especially where scoping works is concerned.
Engaging these relevant stakeholders earlier on not only bridges relevant knowledge gaps brought on by labour shortages, but it also provides greater opportunities to make savings elsewhere during the critical turnaround process. Indeed, this is the most effective way plant stakeholders can address these sector pressures. By shifting to a more proactive footing and engaging supply chain expertise well before turnarounds occur, refinery managers can better navigate the stresses associated with this period and achieve cost and efficiency gains.