Sunday, June 8, 2014

DuPont: A Supply Chain Juggernaut

DuPont: A Supply Chain Juggernaut

By Kevin Kowalczyk and Michael Thomas

Officially known as E.I du Pont de Nemours and Company, but more commonly referred to today as simply DuPont, is a company that was founded in 1802 solely specializing in gunpowder and explosives.  Eleuthère Irénée du Pont founded the company on the banks of the Brandywine River in Wilmington, Delaware.  DuPont dominated the market of gunpowder manufacturing, so much so that it was eventually identified by the United States government as a monopoly in 1912, resulting in the division of the company.  The split resulted in DuPont expanding their business into areas outside the world of explosives and gunpowder.  During the early 1900s, they focused on developing new chemicals.  DuPont’s growth led the company to acquiring General Motors and starting a joint venture with Standard Oil, which is now known as Exxon.  Even with all the expansion, the company’s most important economic move was the development of nylon.  DuPont’s expansion of its businesses into many different focuses including agriculture, automotive, chemicals, electronics, energy, food, beverage, and more continues to this day.  Today, DuPont is the 70th largest industrial/service corporation in the United States.  They have approximately 79,000 employees, of whom, roughly half are employed outside the United States.  DuPont has 135 manufacturing and processing facilities in 70 different countries, with an additional total of 75 research and development/customer services labs; 40 of these labs are in the United States, and 35 are in various other countries.  DuPont now characterizes itself as “A World Leader in Market-Driven Innovation and Science” with the motivation of their endeavors to “provide enough healthy food for people everywhere, decrease dependence on fossil fuels, and protect people and the environment for generations to come.”

DuPont has focused on certain supply chain initiative accelerators.  Business Process Management (BPM) is defined as a management discipline that provides governance for a process-oriented organization with the goal of agility and operational performance.  The BPM concentrates on three specific points; industry standard frameworks and models (SCOR), standardized metrics (key performance indicators), and external benchmarking.  This management extremely important to DuPont for six specific reasons: 1. Focusing on process improvement first then designing and delivery of IT solutions.  2. Managing business processes as assets.  3. Aligning work practices roles, roles and technology.  4. Accelerating the adoption of the best practices.  5. Enabling Process-oriented benchmarking.  6. Formalizing Business Process Management governance.   They define themselves as “a market-driven science company.”  DuPont is broken into different segments.  They have more than 70 separate business units.  A few examples are agriculture and nutrition (crop protection and nutritional health), electronics technologies, performance chemicals, and safety and protection. (protection, sustainable solutions.)  At DuPont, their supply chain approach is a combination of being functionally oriented and being process oriented.  DuPont has developed a four step process to meeting their Business Process Management goal.  The four steps include: 1. Establishing a multiyear approach.  2. Developing corporate standard processes. Corporate standard processes are based on the industry’s best practices, such as, framework models like the SCOR, and the definitions and bench marks.  A SCOR is more commonly known as the Supply Chain Operations Reference.  The SCOR model is used to provide a framework that can link the business processes, metrics, and technologies into a united structure 3. Use proven tools and methodology.  4.  Having a shift to “process first” approach.

DuPont has been a successful company for well over a century.  The reason they are consistently “winning” with their supply chain is because they have stuck strong to their proven tools and beliefs that have gotten them to this point to begin with.  DuPont is known for strongly focusing on their processes, their organization, their data, their systems, and governance that has made them a successful company for so long.  They also use a process level hierarchy, working on the enterprise level all the way up to the transaction level.  Lastly, their use of the Architecture of Integrated Information Systems (ARIS) has helped them to constantly “win”.  The Architecture of Integrated Information system is an approach to enterprise modeling, in which one uses various methods for analyzing processes.  In the meantime a holistic view of process design management is also being used.  This provides DuPont with a universal methodological framework as well as a business modeling tool.

The fact that DuPont has grown exponentially over the years leaves the company vulnerable to some major threats.  Having the company spread throughout 70 counties and relying on many natural resources, they will always be susceptible to major natural disasters.  If one factory has to shut down, it could potentially cost the entire company millions of dollars.  DuPont is also one of top five companies in the agriculture industry today.  They are a part of the movement to rapidly increase food production across the world as the demand for agriculture is constantly increasing.  This has made the company vulnerable to another major threat; in recent years there has become an international problem with counterfeit pesticides, leaving many major agricultural companies at risk.  DuPont has taken the problem head-on and formed DuPont Crop Protection (DCP) which is an anti-counterfeiting program.  Using their exceptional supply chain they have already reduced counterfeiting significantly and continue to lead the charge against the illegal pesticides.  Just as any other major company spread across the entire world they are always at risk for the possibility of employees going on strike over wages or working conditions.  Finally, if the company does not forecast properly, there is always a chance that they either under produce or over produce goods.  This threat would cost the company millions of dollars in inventory carrying cost or a major shortage in their goods.

DuPont is a giant in the business world internationally and domestically.  They have ran a very efficient supply chain, which has lead them to become one of the global giants in multiple fields.  DuPont’s willingness to invest in a vast array of fields has gotten them where they are today, and I fully expect them to continue on the same path in the future, locking their spot as one of the most important businesses in the world.


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