The main issue for chemical-company leaders is to know more clearly where digital influence will strike the industry and what it will indicate for their companies.
FREMONT, CA: There is a lot of excitement about the potential of digital in chemicals, just as there is about digital across society. We think digital will significantly impact many areas of the chemical industry, possibly changing value chains, resulting in higher productivity and more innovation and forming new channels to market. Given all the agitation about digital, it is important to separate the substance from the hype and cautiously evaluate what this will implies for the industry.
Let's take a moment to review the changes underlying digital. Data generation, collection, and storage have never been so cheap, and this is experiencing just as computational power is achieving unprecedented heights and at lower costs. Simultaneously, the digital mindset of society has extended, spurring a willingness to undertake digital technology and much greater expectations for the quality of user connections and level of service.
The hype and cautiously evaluate what this will implies for the industry.
The combination of these factors has outspread new avenues for the chemical industry. Companies can utilize advanced analytics to remove management-related data from the large amounts of unstructured data they generate. These details can then be employed to better understand how plants are run and to make better-knowledged and faster decisions across the complete range of a chemical company's business processes. In the whole world, the chemical industry is an important supplier to myriad other industries. So the ways these industries are being transformed by digital translate to opportunities and disputes for chemical companies.
The main issue for chemical-company leaders is to know more clearly where digital influence will strike the industry and what it will indicate for their companies.
How will digital impact the chemical industry, and where can the greatest impact be expected?
There are three key ways in which digital will impact the chemical industry:
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Utilizing digital-enabled approaches to enhance companies' business processes, which we call functional excellence.
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The possibility for digital to impact demand patterns in end markets, with significance for the chemical industry's value chains.
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Where digital developments induce changes in the business models using which chemical companies capture and create customer value.
Accomplishing a new level of functional superiority.
Chemical companies' business procedures, comprising manufacturing, marketing and sales, and R&D, provide possibilities for performance advancement according to data capture and interpretation. Functional greatness has created significant productivity improvements over the past two decades. Digital gives the means to unlock a new level of productivity betterment.
Manufacturing operations provide one of the biggest and most easily accessible areas of opportunity, cutting across all chemical industry segments, from petrochemicals to pesticides. We notice the potential for a 3-5% point advancement in return on sales from digital production operations. Most chemical plants continually produce a huge amount of data but discard most of it. Instead, managers should collect and interpret the data to reveal means to accomplish higher yields and throughput, lower energy intake, and more effective upkeep. For numerous companies, these are possibly easy wins that can be accomplished through existing IT and process control systems. In contrast, companies that enlarge the types of data they gather may be able to catch further gains.
The contribution to profits can be considerable. A major polyurethane maker applied modern analytics to half a billion data points gathered from the principal production process at one of its plants. This allowed it to identify ways to adapt operations that raised the plant's isocyanates output by 10% without making any capital investments. It also generated cost savings by cutting the plant's high-pressure steam use by 25%. A major specialty-chemical company went a step further at one of its major plants: it employed advanced analytics to model its production procedure to a new level of precision and then utilized the model to deliver detailed, real-time guidance via a specially designed app for the plant's operators on how to adapt process parameters to improve performance. Just one month into the implementation, output at the plant—already the company's most profitable—improved by over 30%, and yields increased by 6% points, thus saving on raw materials, while energy consumption fell 26%.
