Exhibit 4: Companies that achieve execution excellence do so through simplicity, speed and discipline

Execution Excellence
• Low operating costs • High success rates
• High capital turns • High client satisfaction
• Fast to market • High flexibility

Simplicity Speed Discipline

• Eliminate duplication • Reduce cycle times • Manage for results

and rework • Reduce waiting time • Build an execution Supporting Methods:
• Eliminate low • Harmonize processes culture
• Process Harmonization
value activities
Processes
Business

• Share information • Measure, report • Lean Six Sigma

• Clarify decision collaboratively and improve • Complexity Management
making authority • Set incentives • Kaizen
• Standardize and • Etc.
Manufacturing

harmonize processes
Operations

3. • Simplification: the elimination of and customer value. The drivers also

duplication and low-value activities can help leadership teams focus on
What capabilities do and a clearly defined decision-making the right methods for addressing market
we need to out-execute authority discontinuities (see sidebar on page 13)

the competition?
Execution excellence is a hot-button
issue among senior executives: Polled
recently by The Conference Board,
CEOs rated “excellence of execution”
as their top challenge for the second
year in a row. Nearly half of the survey
participants—up from roughly a quarter
just six months earlier— were also
concerned about their organizations’
speed, flexibility and adaptability
to change.
Excellence in execution centers on
three drivers and is equally important to
manufacturing and business processes
(Exhibit 4):
• Speed: a reduction in cycle times,
waiting time, and errors; elimination
of waste; standardizing and
harmonizing processes; and the
collaborative sharing of information
• Discipline: managing for results,
fact-based work, performance
measurement and the proper
incentives
These drivers emphasize how the right
day-to-day work processes can help
an organization achieve significant
measurable performance improvements
in cash flow and cost efficiencies
by improving flexibility and speed
to market, quality and reliability,
A leading South American chemicals
company, for example, was faced
with organizational and supply chain
complexities created by a past merger.
The company launched a program to
harmonize its cost-to-serve, demand
planning and inventory management
processes and policies. The benefits
were numerous: reduced inventory,
increased availability of plant capacity,
greater visibility of inventory levels, a
better balance between production and
sales, and optimized shipping (fewer lost
orders). The program is expected to drive
savings of $35 million annually.

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6 Areas for Improving Executional Excellence
Chemical companies seeking excellence in execution may take
one of several paths to address the market discontinuities and
other challenges we described earlier. These paths include:
Asset Utilization/Optimization: CAPEX demand, the market
impact of new capacities, and time-to-build issues can limit
the economic options of a chemical company looking to
grow by investing in new assets. Optimizing asset utilization,
therefore, is often a better option for increasing output (or
reducing waste) to help generate additional revenues. Key
drivers of asset optimization are maintenance excellence,
integrated planning, TCO models and a heavy emphasis on
quality.
Demand/Supply Balancing and S&OP: In the complex market
environment of the chemicals industry, companies must excel
at forecasting product demand and adjusting supplies up
or down quickly in response to changing market conditions.
Improved demand and supply balancing typically increases
service levels and reduces inventories. Sophisticated planning
capabilities also enable companies to adjust costs and service
levels according to their competitive essence (e.g., a low-cost
provider plans with less inventory, trading off against the risk
of stock outages).
Lean Manufacturing and Operations: Increasing cost
pressures have forced many chemical companies to produce
their products at the lowest possible costs. This pressure has
led many organizations to implement lean manufacturing
programs, utilizing techniques such as Six Sigma to optimize
the production process and reduce errors. Lean manufacturing
will also help chemical companies address the war for talent,
which is heating up amidst a shrinking workforce and the
expected decline of well educated engineers pursuing careers
in the chemicals sector.
Merger Integration/Process Harmonization: Leadership
teams considering mergers or acquisitions must carefully select
targets and perform the due diligence necessary to ensure that
the target company fits the buyer’s strategy and competitive
essence. Operationally, merger execution must be as efficient
as possible – across all areas such as culture, infrastructure
(physical and IT), and back-office systems – in order to capture
maximum value. Dow, for example, has a track record of
achieving 14-18% cost synergies with its major acquisitions.
It continued that trend when it purchased Rohm & Haas in
2009. Dow combined Rohm & Haas with its specialty materials
businesses under the Advanced Materials portfolio, creating
synergies of $1.3 billion, including over $400 million in
purchasing synergies.
Customer Interactions: High levels of customer service often
require significant investments, while low service might result
in lost customer sales. It is critical, therefore, that a company
offers service levels that align with its competitive essence.
Doing so requires a clear view of current service levels and
clearly defined objectives for customer service.
Compliance and Risk Management: For obvious reasons,
compliance in the chemical industry is a critical factor in
business performance. Companies must be able to adapt
quickly to new regulatory environments – those that stay
nimble in the ever-changing regulatory environment can
gain competitive advantage.

Paints and
Segment relevance Petrochemicals Polymers Inorganics Coatings Agrochemicals

Asset Utilization/
Optimization

Demand and Supply

Balancing/S&OP

Lean Manufacturing
and Operations
Execution
M&A Integration/
Process Harmonization

Customer Interaction

Compliance and
Risk Management

Source: Accenture research

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