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Digitalization of Chemcial Industry - A Need of 21st Century

Digitalization of Chemcial Industry - A Need of 21st Century

“The chemical sector is undergoing significant transformations, from revolutionary process technologies to sustainable plastics. Now, digital transformation in the chemical industry is bringing enormous, hitherto untapped potential for not only increasing efficiencies but also assisting companies in developing new products and processes.”

The energy and chemical industries are known for its conservatism. Its processes may be more complicated and riskier, but its outmoded technology needs to be updated if businesses are to progress into the digital age. It takes a similar path that the music industry did in the 1980s and continues to this day. Both industries digitised 30 years ago and are currently doing so.

What Does It Mean for the Chemical Industry?

Chemical firms may increase their profitability by embracing digital technology, which enhances agility, productivity, and creativity. Companies might, for example, significantly accelerate innovation to obtain a competitive advantage by leveraging complicated analytics tools for collaborative research and development. To achieve strategic agility and operational excellence, companies are turning to predictive models to undertake what-if simulations based on data. In addition, big data analytics is critical for managing ongoing price volatility in energy and raw commodities, as well as reacting to shifting client demand.

Companies can simulate the effect of price changes on customer demand and final margins thanks to digital transformation, allowing them to produce real-time pricing quotes for their prospects. They can also share the information with suppliers in order to collaborate and combat price and supply volatility.

Realizing the benefits of digital transformation in the chemical industry

Advances in networks and sensors, data availability and processing, and engineering and material technologies all have the potential to boost the chemical industry's efficiency and production. However, digital revolution in the chemical industry offers substantial prospects for product and solution innovation. Digital crowdsourcing platforms, for example, can be used to generate ideas for reducing carbon emissions across the product life cycle.

Chemical firms require a consistent framework for assessing current state, establishing desired future state, and mapping out particular milestones on the digital journey in order to realise the promise of digital transformation. The company's digital maturity stage will influence strategic decisions and action measures in five key areas for growth:

  • Experiential learning
  • Enabling talent
  • Asset performance and dependability
  • Innovation in material systems
  • Ecosystems are living things.

Three pillars for the future of digital in the chemical industry

Chemical firms that are planning for the future will be successful if they perform and respond in three important areas today:

Innovation and growth: The chemicals business faces both potential and problems as a result of disruptions in the automobile, construction, agricultural, and other end-use industries. While relatively new technologies such as additive manufacturing, which is currently being demonstrated but not fully commercialised in a variety of applications ranging from engineering parts to house construction, may create a need for new materials, they may also reduce the consumption of traditional chemicals and materials.

Most chemical companies are already rethinking their long-term growth plans, including looking into digital value-added services to complement their current product offers.

Performance and cost optimization: The next generation of digital performance optimization should extend far beyond the plant and easily interact with physical assets. New digital technologies such as blockchain and predictive analytics, for example, can be easily linked with existing IoT infrastructure to allow track-and-trace capabilities. Some refinery-scale plants have already implemented new process technologies such as crude-oil-to-chemicals.

Sustainability and circular economy: To meet legislative constraints on single-use plastics and microplastics, chemical companies are collaborating with their clients to develop new products, invest in recycling technologies, and incorporate renewable and recyclable materials into their expanding product offering. With a redesign approach, chemical manufacturers will need to bring together stakeholders for product innovation and technology commercialization.

The call for circularity and sustainability

Chemical firms are confronted with huge obstacles. With uncertain policies and rigorous government rules, trade and taxes have gotten increasingly complicated.

The battle for engineers and industrial workers has intensified, and the talent pool of engineers and factory workers has shrunk. Customers have grown more aware and critical of how chemicals are created, consumed, recycled, or disposed of as a result of the concept of circular economies. As a result, sustainability and circularity are no longer optional—they now define competitive advantage and serve as the foundation for company reforms.

Toss in some creativity.

Chemical firms must fundamentally reinvent their products and services in order to take full advantage of these new digital value propositions. To gain a return on their digital investments, they must also offer new and extraordinary value across core business processes at scale.

Only about a quarter of the 121 chemical companies we evaluated with annual revenues exceeding $1 billion were successful in growing digital innovation in R&D and across their production and operations. Not only did these organisations scale more than half of their proof of concepts (POCs), but they also earned higher-than-average returns on digital investments (RODI). They're known as the Chemical Champions.

Regardless of how much they scale, the majority of the rest—more than 75% of the companies we looked into—earned less than the industry average (12%). This means that simply increasing the scale won't ensure success.

A standard framework for dealing with digital issues, making funding decisions easier, and focusing on high-impact initiatives

To fully benefit from digital transformation, an enterprise-wide digital strategy is frequently required, with configurable elements tailored to the needs of particular business units. This digital strategy should also be linked to the digital maturity model, which shows where the company is currently and where it wants to go once the digital transformation is complete.

A unified framework should span five important dimensions to address each stage of the digital journey:

User Experience- Customer analytics and requests are used to get insights about customer trends. Talent enablement refers to the use of cognitive tools such as artificial intelligence (AI), wearables, augmented reality, and robotic process automation to improve employee capabilities.

Asset dependability and performance- Advanced digital technologies such as IoT, remote monitoring, and AI are used to improve asset dependability.

Material system innovation- Using digital transformations to improve research and development efforts, such as process modelling software aimed at improving materials and energy flow within a chemical plant.

Ecosystems- Active participation in the value chain by collaborating to exchange demand projections, improve supply chain management, and commercialise novel products.

In the chemical industry, digital technology is a game changer.

The chemical industry may use the Internet of Things (IoT) to produce new value while also enhancing value from linked devices all around them.

  • Chemical firms can use artificial intelligence and machine learning to utilise autonomous equipment with the use of data, allowing for better operations and speedier transactions. As a result, management may devote more attention to strategic initiatives.
  • The use of augmented reality in the chemical industry has the potential to have a significant influence.
  • Computational chemistry studies, X-Ray diffraction data, 3D structure optimization, conformational analysis, and transition state search are all examples of how chemical businesses are employing this technology to drive innovation.

Chemical end markets are being disrupted by digital technology.

Digital changes have the potential to reshape some, if not all, of the value chains and end markets that chemical companies serve, resulting in demand-pattern adjustments.

Take, for example, the automobile value chain. The rapid advancements in the creation of self-driving automobiles are clearly due to digital, but the implications for chemical producers may not be immediately apparent. Self-driving cars promise to improve traffic safety, which could have an unanticipated influence on chemical demand. Demand for refinish coatings is projected to reduce sharply as a result of fewer accidents, which will have significant implications for coatings manufacturers and chemical businesses that make coatings materials. If shared self-driving cars displace individual auto ownership and lower new-vehicle demand, chemical demand in one of the industry's core markets will suffer further and far-reaching implications.

Chemicals: digital and new business models

Will digital alter the way chemicals are sold and delivered, and, as a result, the flow of value? Will there be a transition from product sales to service and solution sales? Will attackers emerge to disintermediate established manufacturers from their customers, as we've seen in other industries with B2C platforms?

While crop-protection chemicals and some specialty-chemical industries are at danger of business-model disruption, and some chemical distributors see themselves as potential actors in future possible disruptions, petrochemicals are likely to be less affected.

Major Market Highlights:       

  • Solvay has stated that the capacity of its hydrogen peroxide plant in Jemeppe-sur-Sambre (Belgium) will be increased, allowing for increased H2O2 production. The company also intends to enhance the capacity of its plants in Bernburg (Germany) and Voikkaa (Finland) (Finland). These expenditures are in response to increased product demand in Europe, both for existing and new applications.
  • Kanto Chemical Co., Inc. committed around USD 63.7 million in expanding its production facilities in Taiwan to suit the growing demand of key local semiconductor clients. The annual output of semiconductor products will expand from 120,000 to 200,000 tonnes at this facility.
  • Cabot Microelectronics purchased KMG Chemicals (US) and became the North American region's biggest chemical distributor of semiconductor consumable materials. Cabot's existing portfolio will be supplemented by this acquisition, which will expand customer touchpoints with leading semiconductor manufacturers.

Conclusion: A breakthrough in the chemical industry

What is obvious is that the proliferation of digital will generate opportunities for effective early adopters of innovative digitally enabled approaches, particularly if these approaches can be tailored to a certain market segment. Companies must know that they are treading on thin ice and strike the right balance: this is perilous new territory with a high danger of making mistakes, but moving quickly and reversing course if necessary is a far lower risk than being too cautious and falling behind.

There's plenty of evidence that many of the world's most successful organisations are working hard to establish and implement new digital strategies.

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