How Chemical Manufacturers Meet Supply and Inventory Challenges with Dynamics 365 and VicinityChem

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Recently Chemical Processing interviewed Randy Smith, co-founder, and CEO of Vicinity Software which developed VicinityChem. VicinityChem is a comprehensive process-manufacturing ERP software solution designed for chemical manufacturers. They talked about meeting challenges such as keeping track of inventory, improving operations, delivering high-quality products, driving sustainable growth, and more. Here are some of the questions they covered:

Q: How can chemical processing facilities keep up with inventory changes?

A: Supply-chain interruptions present a lot of new issues. It’s critical to know what you’ve actually got on hand, what was ordered from various suppliers, and what is their delivery timeline. Then you have to predict what your future usage will be. Understanding your inventory in real-time is important so you can alert your suppliers. When you make changes, your system needs need to update immediately so everyone knows what’s on hand. Calculations and material-requirements planning let you know what you’ll need and if there will be future shortages.

There are always unknowns, so control the things you can control without spending a lot of time and effort. That will place you ahead of those in competition for the same chemicals or ingredients.

Q: How will changes in inventory costs affect production?

A: Along with supply-chain issues, price changes are volatile. We see that at the gas pump and the grocery store. Manufacturers have three ways to address this:

  • Increase prices to customers
  • Absorb the price increases
  • Substitute ingredients, if possible, to lower costs

Of course, you also have to factor in transportation cost increases. So, you need to be able to calculate the costs of production accurately now and into the future.

Q: What are the benefits of an accurate chemical usage forecast? 

A:  Being able to predict your raw-material usage and communicate that to your supplier makes you a better customer.  A supplier’s better customers are going to get breaks. Whether that means price breaks, availability of inventory, or when you need something expedited, they’ll go out of their way to help you.

To be predictive you need a system that can assess quantities on hand and material requirements planning. Then you can identify potential shortages and communicate that with your supplier on a timely basis.

Q: Why should you regularly review vendor performance?

A:  Everything changes. The company you bought from five years ago may not be the same now. They have their own supply issues. They may have changes in management. They may have been acquired by a larger company.  Those changes impact quality, price, delivery times, and even customer service. So, you need to monitor vendor performance objectively. Identify how they’re performing against what you need.

Vendors supply products that may differently affect your ability to produce your products. Looking at suppliers in relation to how critical their products are to your business’s success is really important.

With VicinityChem, matched with Microsoft Dynamics for chemical manufacturers, you can monitor those vendor relationships and how they are supplying your business. With actual metrics in hand, you can have the critical conversations with your suppliers. For example: “This is what we’re seeing, how can we work together to make this change?”

Q: How important is data analytics?

A: VicinityChem has been around for about 20 years and I’ve been in formula and batch manufacturing for close to 30. In the past, businesses struggled to compile data. We had to depend on someone in IT or someone keeping piles of papers or keying information into Excel, etc. Now, we have way more data than ever before, from a control system, a piece of equipment, or the web, and it’s readily available. The challenge is how to use data to benefit your business.

Ideally, you’ll keep your data in its original source. There’s no need to push it into Excel and create a whole other stockpile of data. Leave it in the system. Analytic data on the web can be extracted in real-time for the most up-to-date information and tracked over time for comparison.

You can take this information and put it up on a webpage so that your sales reps are able to see it. Now your data is manageable and meaningful to your company and those who need it. Standard dashboards are available as a starting point for sales, operations, quality, and scheduling.

Q: Do you have some closing thoughts?

A:  I think it’s important for people to realize that the tools are out there and they’re not as scary as some might think. You don’t have to invest a huge amount of time or effort to be able to look at data. We’ve got some real challenges ahead of us, but they’re very manageable, especially with a system where you can get to your information, whether that be pricing data, inventory, or compliance data. You can leverage that data to make decisions that are even more important than they were last year. As we come out of the pandemic, as the supply chain starts to clean itself up in the months and years to come, things will get a bit easier for us. And once on the other side of it, we will be stronger, more versatile, and more agile as we move forward.


VicinityChem is a single, cohesive system that can manage all of your daily operations while taking different formulas and multiple batches into account.

VicinityChem offers real-time, accurate data across every department — including inventory overviews, production scheduling, integrated quality control testing, seamless reporting, and more.

If you’d like to know more about how VicinityChem and Dynamics 365 ERP can benefit your business, contact our experts today.

By Vicinity Software,




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