Strategic Management - Dow Chemical Company

Introduction and background

        Dow Chemical Company is the world largest chemical company that uses the power of science and technology to innovate what is essential to human development (The Dow Chemical Company, 2015). Herbert Henry Dow founded the Dow Chemical Company in 1897 through the introduction of new chlorine cell to make bleach as its original product, which contributed to the success of the company today (American Chemical Society, 2015). There are a few types of market and solutions that Dow Chemical Company provides such as agriculture, automotive and building & construction. An example of the solution for building and construction is the GREAT STUFF™ Insulating Foam Sealants that helps to save energy and money by preventing air leaks through gaps such as windows and doors (The Dow Chemical Company, 2015). Although there are numerous solutions that Dow Chemical Company has provided, there are still issues that arise such as: 1) lack of product storage and loading infrastructure due to the increasing demand of consumers in product, 2) increased rate of motor vehicle accident 3) ineffectiveness of project planning and organization. The recommendation to improve the issues are practicing Just-In-Time (JIT), implementing rules and regulation, and implementing employee empowerment.

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Problem description and analysis

        Dow Chemical Company had encountered an issue, the lack of product storage and loading infrastructure to meet the rise of consumers demand in product line where the plant production had to produce large amount of products (Buss and Ivey, 2001). The product storage and loading infrastructure will have to be enlarged at the manufacturing site but there are no excess spaces as the site was packed with railcars (Buss and Ivey, 2011). Enlarging the product storage and loading infrastructure will result in traffic congestion and lead to delay of the process of loading and shipping. The delaying process will cause dissatisfaction and loss of customers. Chances that customers will cancel their purchase if the products are not delivered on time. Those undelivered products will be either kept in the inventory or threw away as they do not generate any profit and occupied the storage area. Moreover, enlarging the product storage and loading infrastructure cost $3.2MM. Instead of using the original plan, Six Sigma Rail Delivery Project was a better method because it requires capital investment of $0.75MM rather than $3.2MM and manage the increase of demand while enhancing the performance to consumers (Buss and Ivey, 2001).

        Besides that, the increase rate of motor vehicle accident was another issue of Dow Chemical Company. This was due to lack of awareness about the safety of the workers in Dow Chemical Company. For example, 25 workers from sales and marketing whom drive to customer’s sites and around the Hydrocarbons and Energy facilities suffered from motor vehicle accident and the profitability of Dow Chemical Company was affected where the workers were not able to work due to injury (United States Department of Labor, 2005). Based on the survey done on the drivers, the three main causes of the accidents were not paying attention on driving, not realizing the surroundings’ object and not checking when reversing the car (United States Department of Labor, 2005). The reason of the three causes of the accidents might be due to lack of sleep, distraction such as mobile phones, driving behavior and laziness. All of these behaviors probably derived from the slack rules and regulations of Dow Chemical Company. Furthermore, the accidents happened when the workers of Dow Chemical Company are not familiar with the customer’s site. The customer’s sites may not have a proper road sign such as danger sign or two service road sign that could lead to serious accidents. Thus, Dow Chemical Company was motivated to implement a program to address this issue using Six Sigma to reduce 50% of the motor vehicle accidents and to find out the accurate causes of this issue while using the least cost (United States Department of Labor, 2005).

        In addition, the ineffectiveness of project planning and organization in Dow Chemical Company was caused by the poor communication between the different departments (Mindjet, n.d.). Each department uses different tools in the project planning and organization such as Vision and PowerPoint and this resulted each department to have different software program (Mindjet, n.d.). Using different software program will seemed to be lack of teamwork and interaction between the departments in Dow Chemical Company. This will give an impression to customers that Dow Chemical Company are not practicing with professionalism and might drive potential customers away. This will occurred when Dow Chemical Company are presenting a business proposal to customers which involve the participation of different departments. If the workers are not familiar with the different tools used by each department, problem such as software not able to support the tools will arise. The flow of presentation will be disrupted and not fluent. The lack of understanding between the functions of other departments will not be able to convey clear message to customers. Master Black Belt and technology leader Chris Haney suggested to use a mutual tool to conduct meeting through Internet broadcast and in-person (Mindjet, n.d.). Thus, Chris Haney was motivated to use Mindjet Platform, the basic part of Six Sigma that is user-friendly while fully utilizing the time to overcome this issue and increase productivity (Mindjet, n.d.)

Evaluation of strategies

Lack of product storage and loading infrastructure

        To cope with the predicted increase in demand of customers, Dow Chemical have to design a new rail delivery system for one of the manufacturing plant in their site. The company had identified one solution for the problem after the whole project was done and all of the elements in checklist and functions had been defined. Dow’s strategy will be Double Pulls which the manufacturer deployed the additional rail switching to increase the quantity of daily throughput of loading rack. The railcars will be fully filled by the products and became additional storage for the products. When there is no order from customers, the product would be transferred to particular location for storage purpose. When customer order is received, the railcar which previously loaded by the product will straightly release and send to the doorstep of customers. The advantages of using Double-pull strategy would be the strategy doesn’t required additional storage tank which can save capital cost. Double-pull became more flexible when adding more handling step as it can quickly be routed to a customer order and fulfill their needs as fast as possible.  Below will be the TQM tool that will be used in this strategy: Check sheet. It enables Dow Chemical to display the period of railcar to fill the products day by day in more effective way.