Bayer AGIts best-known brand may be Aspirin, one of the greatest inventions in health and considered one of the most consistently successful commercial products of all time. But Bayer is also an innovator in a number of other areas.
In business for 160 years and considered one of the world’s leading companies in agriculture, healthcare and nutrition, it recently embarked on a mission to reinvent itself, aspiring to ensure health for all and hunger for none. The process began with an overhaul of its operating model to deliver faster innovation and a better experience for farmers, patients and consumers who depend on Bayer products.
From reactive to proactive
“We’re rethinking every role and every process to keep us focused on our mission. This includes accelerating innovation and enhancing financial performance,” said Rogerio Andrade, Bayer’s senior vice president of supply chain. “To that end, we have revised our supply chain strategy to address intercontinental logistics disruptions and gain greater visibility.”
Andrade was speaking recently LogiChem EU 2024 event in Rotterdam, where Europe’s leading chemical companies gathered for the annual logistics conference. The main theme was encouraging end-to-end supply chain connectivity while decarbonizing operations.
Andrade described how Bayer, like many others in the business, is still dealing with the disruptive impact on supply chains set in motion by the COVID-19 pandemic.
Volatile demand leading to higher inventories, along with spare containers, labor shortages and geopolitical upheavals are among the reasons why supply is not always able to meet demand or optimize working capital. One of the biggest wake-up calls came when a 220,000-ton container ship blocked the Suez Canal for six days, preventing 400 ships carrying billions of dollars worth of cargo from crossing the waterway.
“We operated in an international logistics network that relied heavily on optimal conditions. We were facing the demand effect and found ourselves relying heavily on air transport as a mitigation measure,” he said. “Now, we’re building a resilient supply chain using a multidimensional approach.”
Andrade’s team is responsible for the Crop Science supply chain, making sure that active ingredients, which are the raw materials for pesticides and other agricultural products, are transported according to strict crop protection guidelines. Delivering these products to customers on time requires strong design and superior operations.
Andrade and his team set out to build resilience with a multi-step program to measure, reduce, optimize and innovate across the value chain. The team developed a Smart Data Center consisting of end-to-end digital operational platforms to optimize and operate the supply chain with a customer-centric and data-driven mindset.
Supply chain optimization
Bayer AG
Bayer’s new Smart Data Center, which unifies and aggregates supply chain data from systems such as SAP Business Network, transportation planning and management applications, and many other sources, enables a quantum leap in its logistical operations. Before implementation, decision-making was silenced and fragmented. It required extensive meetings and coordination efforts and was characterized by reactive problem solving.
Now, the company has standardized, interoperable supply chain frameworks that enable data-driven decision making. High data quality and the use of exception alerts help staff move beyond firefighting to proactively allocate existing supply to customers rather than scrambling to find product and ship at exorbitant prices to meet last-minute demands.
Reaping the benefits
An opportunity to test the strategy came when recent attacks on ships in the Red Sea region reduced traffic through the Suez Canal, through which about 15 percent of the world’s maritime trade normally passes.
“By empowering our people to leverage more smart data than before, we were able to avoid a drop in sales and avoided an increase in inventory and freight costs,” Andrade said.
Transport costs play a key role in reducing the ecological footprint, which is at the core of Bayer’s ambitions decarbonisation strategy. The company’s Scope 1 and 2 emission reduction targets and all entities across its value chain for Scope 3 have been endorsed by the Science Based Targets Initiative.
Thanks to the increased transparency and proactive approach to mitigating problems arising from the Smart Data Center, the team has many opportunities to optimize their operations.
The data collected in the Smart Data Center helps logistics teams better maximize truck loads and minimize the number of trips, which in turn helps reduce costs and emissions.
The team also works with its regional partners to optimize the freight mix. For example, some regions such as Europe use a combination of rail and truck transport, while others, such as the Americas, rely more on trucks. In this case, the team is experimenting with e-trucks for short distances and also consolidating warehouses to reduce the number of trips.
The increasing burden on ecosystems is one of the greatest challenges facing humanity. With its strategic end-to-end approach to supply chain optimization, Bayer is not only reducing its own ecological footprint, it is helping to mitigate the ecological footprint of the agricultural industry.
