Unlocking Efficiency:
Understanding ERP in the Chemical Industry

By: | Category: ERP

Chemical manufacturers are searching for ways to save money, increase efficiency, and maximize customer satisfaction. But, without the right technology, it’s much easier said than done. 

The good news? That’s where enterprise resource planning (ERP) comes into play. With next-generation ERP software, your chemical company can turn these objectives into reality. From production planning to sales order processing and all steps in between, the right solution will take your organization to the next level. 

In this post, we’ll cover everything you need to know about ERP for chemical industry applications, including why it’s important, how it benefits your business, and best practices for getting started. 

The importance of ERP for chemical industry companies

Chemical ERPs are purpose-built solutions designed specifically for chemical manufacturers, labs, and distributors. Unlike many off-the-shelf, one-size-fits-all platforms, chemical ERP software addresses the industry’s unique complexities, including:
ERP in Chemical Industry

  • Inventory management
  • Production planning
  • Regulatory compliance
  • Quality control
  • Plant maintenance

No matter what role you play in the chemical manufacturing industry, all organizations can benefit by deploying a modern ERP system. With one source of truth, ERP enables every team to perform its best. It allows you to manage product quality, control overtime costs, pinpoint inefficiencies, and make informed decisions — all from one interface. 

Start your digital transformation on the right track with our Chemical Industry Technology Checklist.

Industry challenges: Why you need chemical ERP software

Here are some of the key obstacles chemical companies are facing that necessitate a modern ERP implementation:

Regulatory compliance

Compliance requirements are always changing. In the United States, 86% of chemical manufacturers say the overall level of regulatory burden has risen, and they expect the volume of new regulations to rise even further across all levels of government.  

Of course, global enterprises are subject to a more complex web of standards and laws. From occupational health and safety to environmental reporting, navigating these obligations isn’t easy. That’s especially true if you don’t have a comprehensive system simplifying the effort. 

Production planning

The chemical production process is intricate and multi-stepped, necessitating meticulous planning and coordination between the management and the shop floor. Given how many factors there are to consider, it’s often difficult to keep production schedules on track and running smoothly. ERP systems give you a top-down view of the entire process, allowing you to organize, optimize, and adapt on the fly. 

Increased competition

Emerging markets introduce stiff competition from local companies, which might offer lower prices and quicker adaptability to local demands. Unfortunately, legacy ERP systems and outdated technologies can hinder business agility and prevent you from scaling operations to compete on the global stage. On the other hand, modern solutions give you the tools to nimbly address changing landscapes and beat your rivals to market. 

Knowledge gaps

According to Deloitte, at least 25% of the current chemical workforce is aging into retirement — and when they do, they’ll take their valued expertise along with them.

As the demand for labor rises, embracing technology can level the playing field and mitigate the issue. As Deloitte’s experts argue, “using technology to elevate human capabilities … can unleash human potential and create a work environment where individuals and teams are empowered with the tools, technology, and culture to contribute their full potential.”

Quality assurance

Ensuring the safety, efficacy, and purity of chemicals is paramount, requiring robust quality control systems. More than just compliance measures, these processes assure customers that your products are trustworthy and secure. ERP can support these efforts, ensuring that raw material inspection and documentation are complete and accurate. 

Price volatility

Fluctuations in raw material costs — such as crude oil —  impact budgeting and pricing strategies. According to Accenture, some prices change 20-30% in the same week. This type of turbulence can make forecasting a major challenge, but ERP systems give you the data necessary to make decisions with clarity and confidence. 

Lack of visibility

Without insight into real-time stock levels, inaccuracies can easily lead to operational disruptions, financial losses, and upset customers. Per Deloitte’s Chemical Industry Outlook, visibility is likely the industry’s most critical capacity given its impact not only on inventory management, but also on pricing, cost forecasting, and supply chain operations. 

Harnessing business intelligence

Leveraging advanced analytics and business intelligence is essential for informed decision-making and innovation in chemical manufacturing. However, without the requisite technology, it’s almost impossible to collect, analyze, and activate data in the first place. Siloed, disparate systems make it difficult to share data across the entire, severely undercutting its potential use. 

Chemical ERP features and capabilities

Luckily, industry solutions have evolved to meet the needs of today’s complex chemical sector. However, no two ERP software systems are exactly the same. Some, like Sage X3, offer all the capabilities you need to succeed — but others, not so much. 

Here are some of the must-have features, broken down by relevant ERP modules:

1. Finance management

Finances can get messy when you’re operating on an enterprise level, let alone a global scale. Essential financial management tools include:

  • Multi-currency and multi-legislation support: Enables companies to manage financial operations across multiple countries, accommodating various currencies and complying with local regulations, which is crucial for global operations.
  • Cost accounting models: Provides detailed tracking of production and operational costs, allowing for accurate costing of chemical products which can vary greatly in terms of materials and production complexity.
  • Budget control and forecasting: Helps firms manage their resources more effectively by forecasting future spending and tracking budgets against actual expenses.

2. Supply chain management

Supply chain disruptions are a major problem. According to a recent survey, 93% of U.S. chemical companies say they’ve been impacted by supply chain and freight transportation issues. These tools can help avoid complications and keep the whole system running smoothly:

  • Inventory management with lot traceability: Tracks raw materials and finished goods through batch and serial numbers in real time. This is essential for recall capabilities and quality control, which both support regulatory compliance. 
  • Warehouse management: Provides detailed information on the location, status, and quantity of inventory. An integrated warehouse management system (WMS) also allows the ERP solution to optimize storage and space utilization, thereby reducing retrieval times. 
  • Logistics and distribution: Optimizes the movement of goods from production to delivery, including handling hazardous materials, which requires adherence to strict environmental and safety regulations.

Want to learn more about detecting supply chain breakdowns? Check out our latest webinar.

3. Production management

Of course, chemical manufacturing software wouldn’t be complete without process manufacturing and production management capabilities. These tools can help with various aspects of production:

  • Formulation management: Manages complex formulas and recipes with precision, ensuring consistent product quality and adherence to specifications. This is critical in chemical manufacturing where product efficacy depends on exact formulations.
  • Batch processing: Allows for efficient planning and execution of production batches, optimizing equipment use and labor. This tool is essential for meeting delivery timelines and order fulfillment.
  • Production costing and pricing: Accurately calculates the cost of manufacturing for each product, which aids pricing strategies and margin analysis.

4. Reporting and business intelligence

Chemical companies are not strangers to regulatory and competitive pressure. Fortunately, ERPs offer robust reporting, audit trails, and analytics tools to help simplify compliance and make data-driven decisions. 

  • Document management: Keeps an accurate audit trail for inspections, ensuring proper documentation and proof of compliance. From finance to safety, digitized records are key to minimizing potential liabilities. 
  • Real-time analytics: Provides instant access to operational and performance data, enabling timely decision-making, which is crucial in rapidly changing market conditions.
  • Predictive analytics: Uses historical data to predict future trends, helping chemical companies proactively manage business operations and market strategies.

Benefits of chemical ERP software

Chemical companies have much to gain by implementing a modern ERP solution. According to KPMG research, those advantages include:

  • Reduced costs.
  • Increased efficiency.
  • Simplified compliance.
  • Enhanced data security and privacy.
  • Superior insights. 
  • Stronger supply chain resilience.
  • Greater business agility.

Take Polycoat Products, for example. When the company contacted Net at Work about deploying Sage X3’s chemical ERP software, our experts jumped at the opportunity. Ultimately, the platform empowered Polycoat to scale and grow the business into a multi-location operation. Plus, it reduced the company’s annual audit from a months-long process to just a few hours. 

Choosing the right ERP solution

Deploying the wrong platform can be a major business setback. To help you achieve a successful ERP implementation, here are a few best practices to keep in mind when choosing a partner:

  • Specificity: There’s no such thing as a one-size-fits-all ERP. However, some products are flexibly designed to address your unique needs. Sage X3, for instance, caters to all the nuances of chemical manufacturing. And, with Chem at Work, you can enhance its capabilities for maximum effectiveness. 
  • Scalability: The ideal platform won’t hold your business back, but scale alongside it as operations expand. This is where it helps to have a cloud-based solution. 
  • User experience: Ease of use is key to ensuring seamless adoption. Look for an intuitive, user-friendly interface that makes it easy to complete critical tasks. 
  • Integrations: Despite their enormous functionality, ERP systems still must connect to and synchronize with other applications, such as a customer relationship management (CRM) system or eCommerce platform. Prioritize software that’s compatible with your core business tools. 

Looking for more tips? Check out our eBook on buying business management software for the chemical industry. 

Unleash the power of chemical ERP with Chem at Work

ERP implementation isn’t always simple. That’s why it pays to have an expert partner at your side, walking you through the process. As your trusted advisor, Net at Work’s team can help you achieve a seamless deployment from start to finish — and beyond. 

With Sage X3 — one of the premier chemical ERP solutions on the market — you can streamline all processes from one source of truth. And, with Chem at Work’s value-added features, you can augment its capabilities with:

  • A suite of best practices, features, and dashboards made specifically for the chemical industry.
  • New features, reports, and services released semi-annually. 
  • Maintenance and support to ensure ongoing compatibility with Sage X3.

Ready to unleash the potential of your chemical company? Learn more about Sage X3 for the chemical industry today.