Digitalization – The path forward forchemical industry

Digitalization – The path forward for the chemical industry

10:55 AM, 24th January 2018
Digitalization – The path forward for the chemical industry
The potential of digital in chemicals enjoys significant excitement, just as there is about digital across society in general. © Accenture

Opportunities digitalization offers

The process of generation, collection, and storage of data has never been easier and happens to be compatible with computational powers peaking at remarkably lower costs. At the same time, the digital mind-set of society has also expanded, inspiring a willingness to engage with digital technology. This has also resulted in customers having high expectations for the quality of user interfaces and the level of service.

The combination of these factors has opened up a host of new opportunities for the chemical industry. Companies can use analytics to extract top management-relevant information from the massive amounts of data that they generate. This information can then be used to improve operations and to make better-informed decisions quickly across the entire range of a chemical company’s value chain. 

The potential of digital in chemicals enjoys significant excitement, just as there is about digital across society in general. Digital will have a significant impact on many areas of the chemical industry, with the potential to completely overhaul value chains, lead to higher productivity and spurring innovation, resulting in the creation of new channels to market.

Teething Issues

Once pioneers and extensive users of digital technologies, in recent years the chemicals sector has fallen behind companies in other sectors. Banking, media and retail have explored innovative ways to use digital technology to evolve their businesses—not only in altering their operations, but also in engaging end consumers and generating value. Chemical companies are now playing to catch up. As the traditional factors of competitive advantage such as access to raw materials, scale assets, process technology and market reach become common, new ways of doing business are emerging that threaten to disrupt the existing market.

The three key benefits of digitalization

There are three key areas where digitalization promises great potential: customer engagement, newer products and services, and optimization of operations. A comprehensive digital vision by early adopters to fully exploit these opportunities is vital. This will help in the transformation of the existing business to imbibe newer capabilities, platforms, gain insights using data analytics and making timely changes in business decisions to optimize the existing operating model and maximize efficiency and profits.

A strategic advantage and the way forward

For years, chemical companies have relied upon remote sensing and communications technologies for supervisory control and even data acquisition to operate their plants and oversee production processes. Improvements in the condition monitoring of critical manufacturing components has helped minimize the cost of maintenance. In fact, the main advantage brought on by digitalization is that the number of sensors and the amount of data that operators must manage is almost doubled. For improved product quality and yield quality, Chemical companies have more data now than ever before to improve final production quality and yield, while minimizing costs. On-site workers can monitor the operations of the plant to ensure they are within the design parameters, and they can see when equipment shows risks of failure—all of which helps improve plant efficiency and reliability.

With the pace of change accelerating in the chemicals industry, product development cycles are also condensing. New development processes, including rapid development of prototypes and parallel experimentations backed by data analytics, can help companies respond quickly and capitalize on opportunities. Digitalization allows R&D teams to simulate experiments systematically optimize formulations and data mining. This leads to the best possible resource allocation and improvement in the performance of the innovation pipeline.

Besides newer products, customers also look for services that add value to their transactions. The availability of a digital marketplace also affects demand for chemicals. For example, products are increasingly being purchased via online platforms, with consumers making their purchase decision without even seeing the physical product. Instead they take into consideration the options offered and the ratings of suppliers.

Conversely, digitalization will allow suppliers to recon?gure their supply chains and reduce inventory costs. With speedier transactions, companies can even look to automate their core business processes. With access to real-time information, planners will be able to make better informed decisions for inventory management and sales.

Firms considering the transition to digital must start by examining how digital is changing customer needs, their value chain and what the competition is offering. The end objective must be for the firms to identify and reconfigure their processes to serve their customers better.

Competing firms also need to realize that operating in the digital world comes with a high chance of making mistakes, but acting fast and being responsive represents a much lower risk than missing out. Digitalization will create opportunities for successful early adopters through newly enabled approaches, especially when players can spot and tap unfulfilled market needs in their specific segment of the industry.

Source: Ava Chemicals Pvt Ltd.

© Chemical Today Magazine

Reference:

1. https://www.accenture.com/in-en/insight-digital-disruption-in-chemicals

2. http://www.bain.com/publications/articles/digital-opportunities-for-chemical-producers.aspx

3. https://www.mckinsey.com/industries/chemicals/our-insights/digital-in-chemicals-from-technology-to-impact

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