Advanced analytics support a world of business decisions

Dow Chemical Company improved forecast accuracy to within 10%

Dow Chemical executives wanted to do more than supply raw materials for finished goods. They wanted to offer solution-based products, invest in green technology and expand their global presence. So they turned to Paula Tolliver and Dave Asiala to lead a team tasked with providing advanced analytics across the company.

Tolliver, Dow’s Corporate Vice President of Information Systems, Procurement and Business Services Operations, and Asiala, Global Business Director, Business Insight and Analytics, use SAS to study potential markets, forecast sales and identify ways to reduce costs. “What SAS does for us is take the statistical methods we know can solve a business problem, help with the math and serve up the results in an effective way to support decision making,” explains Asiala.

Here are some of the substantial returns they’ve achieved by using advanced analytics on complex business challenges:

  • Sales forecasts are accurate to within 10 percent, versus an error rate that was sometimes as high as 40 percent previously.
  • Business unit leaders know by Day 12 of each month how to adjust strategy to meet targets.
  • Regional exchange-rate risk models show where to buy raw materials and how to price finished goods.
  • Distribution optimization projects show how to move products from 188 manufacturing facilities to hundreds of thousands of destinations at the right time without excessive inventory holding costs.
  • A human resources supply/demand model lets Dow hire the right talent at the right time.
We source over $24 billion worth of products and services a year, and so a small change in our ability to buy more strategically generates significant value and receives a lot of attention

Paula Tolliver
Vice President of Information Systems

Better decisions from big data

Dow manufactures 5,000 products at facilities all over the world, which results in massive amounts of data. Competitive advantage comes from turning that data into smarter business decisions, says Tolliver.

“We source over $24 billion worth of products and services a year,” she says, “and so a small change in our ability to buy more strategically generates significant value and receives a lot of attention.”

The key to competitive advantage is the ability to make better decisions, says Dave Asiala, Global Business Director, Business Insight and Analytics. “Business leaders have to make decisions all the time, so direction, speed and precision are important,” he says. “An analytics culture can drive all of those dimensions.”

Eddie Kennedy, Director, Corporate Market Insights & Political Risk, does similar work with internal customers to help them understand their supply chains better. “We try to better align sales to production and inventory management between Dow functions so we’re actually helping Dow businesses with their revenue and their cost plans as well,” he says.

Dow uses advanced analytics to reduce its carbon footprint and to find more efficient ways to ship products or produced them closer to the end consumer. “In order to maintain our margins, you have to keep freight and logistics costs under control, thereby driving gains in sustainable practices as well,’’ says Asiala.

dow-logo

Challenge

Develop a culture of analytics to solve challenging business problems and make better, faster business decisions.

Solution

Benefit

  • Significantly improved forecast accuracy to within 10%
  • Smarter raw material procurement and more efficient logistics reduce costs and carbon footprint
  • Reduced inventory holding costs through distribution and inventory optimization avoids excessive holding costs.

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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