The Dow Chemical Company transforms its business with analytics
The Dow Chemical Company succeeded for years selling commodity chemicals, but when the company decided to transform the business by transitioning toward solution-based products, investing in green technology and growing globally, it needed a more analytical approach. SAS® Analytics helps the company choose the right products and markets, forecast sales, and reduce costs. Dow says projects supported by SAS have helped increase its ROI substantially.
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Executive Vice President, Business Services
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Global Business Director, Amines and Kaolins
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The Midland, MI, company has always been data driven. But, as it sought to do more than supply the raw materials to companies that created finished goods – along with expanding its global footprint – it needed a sophisticated approach to studying potential markets, analyzing costs and creating forecasts. Rather than approach the issue piecemeal, Dow created a Business Services unit that provides advanced analytics assistance for the entire organization.
"What SAS has been able to do for us is take the statistical methods we know can solve a business problem, help with the math for decision support and help us surface the results in a technology that enables us to do that effectively," explains Tim Rey, Director of Advanced Analytics at Dow.
Finding analytic success
"We can go back and show significant savings," says Kepler, a leading proponent of analytics. "And it helps with margin expansion. It's all about how we can be in the market with the right product at the right time and get focused on that, and then go back to measure our success, model future success and predict what we need to do next."
Modeling, working with customers and building better supply chains
Noack often works with Dow customers internally and externally on supply chain issues. "We help people design and modify their existing or new supply chains. We help people grow their businesses by helping them understand what it means to start selling new products in China or Brazil."
Eddie Kennedy, Director of Corporate Marketing Sites, does similar work with internal customers. "We try to better align sales to production and inventory management between us so we're actually helping the customers with their revenue and their cost plans as well. Now it's still their choice [whether to buy from Dow] but they usually appreciate your insights."
Dow has also been able to use SAS to maintain control of energy costs. In its most recent annual report, Dow notes that 41 percent of its production costs are related to expenditures for energy and hydrocarbon feedstocks. As anyone who has tracked energy prices in recent years knows, this presents some significant challenges. Dow's analytics efforts have gone into reducing the use of energy and hydrocarbons, finding alternatives, and figuring out more efficient ways to ship its products – or produce them closer to the end consumers.
"In order to maintain our margins, you have to keep freight and logistics costs under control; you have to keep your raw material costs under control," explains Rey, who used SAS, for instance, to figure out how to get the best rates for shipping via rail, along with modeling oil and gas costs.
Keeping the global financial crisis from hurting Dow
"The only difference and competitive advantage that companies have going forward is if they make better decisions than other companies," says Kepler. "And with that, then how you collect data and how you make the decisions off that data are really what's going to differentiate you from your competition."
The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.
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Analyze data, model new business ventures, reduce energy costs and forecast demand
A substantial increase in ROI on analytics projects supported by SAS. Sales forecasts are generally accurate to within 10 percent, versus as high as a 40 percent error rate before using SAS to forecast.
“"We can go back and show significant savings. And it helps with margin expansion. It is all about how we can be in the market with the right product at the right time."”
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