The optimization of the total raw material supply chain, including an improved functionality of other commodities and reagents for the production process, is an area of a large but often neglected company strategic importance.
Setting the stage
Securing a supply of raw materials for the production process has always been an important concern for companies operating in many sectors of the process industries. Some upstream industries in the process industries have a long tradition of development and use of a captive (corporate-owned) raw material supply base. The mineral and metals, petrochemical, and forest industries are examples of industries in which maintaining a strong captive raw material supply base has proven to be a winning strategy. In the mineral industries, for example, the size of the captive raw material base is closely related to both metal prices and the extraction rate (recovery) of individual minerals or metals from each deposit.
For this reason, process innovation is not only a tool to improve production economy in those industries but also a tool to improve and/or enlarge the captive raw material supply base. Improved exploration of existing deposits or search for “green field” deposits is the normal way to upgrade the captive raw material supply base. However, such exploration will also often benefit from close internal collaboration and interaction with process innovation in order to find innovative process and extractive technology solutions for improved raw material utilization.
Our perspective
Companies located farther downstream in the material supply chain need to secure suppliers of price-competitive raw materials with desired material specifications and “processability”. An external collaborative approach in the development of such raw materials is an avenue that has not yet been explored to its full potential. It is thus surprising that higher priority has not yet been assigned by companies in the process industries to securing a price-competitive and high-quality raw material supply base in a long-term perspective, as well as the collaborative development of such raw materials. In other manufacturing industries, such as the automotive industry, an intimate collaborative innovation with component suppliers in the supply chain has long proven to be a successful business strategy. Suppliers taking over the development of improved components and systems is a collaboration model that was born in Japan but now has gained worldwide acceptance. In that perspective, the collaborative development of raw materials with the suppliers can still be regarded as being in its infancy in the process industries.
The substitution of recycled materials for other raw materials is also likely to be of ever-increasing importance in the process industries in the future. Virgin raw materials will then be gradually replaced by recycled materials; scrap-based metallurgy, for example, is becoming more important in the steel industry, as are recycled paper products in the forest industries. This trend has also been influenced by external regulations. Further process and product innovation will determine what is to be regarded as a recyclable resource for creating new sources of raw materials in the future.