Technological innovation is driving dramatic digital disruption in the chemical industry. These changes are having a profound impact on all aspects of the chemical enterprise, from sales and marketing to operations to supply chain.
What are the key technological drivers and how are they driving change? As seen in the recent post, 8 Operational and Accounting Challenges for the Chemical Industry, exploring digital transformation in the chemical industry leads in many directions … and opportunities.
There are five core technological advances that are creating the extensive changes in chemicals:
- The Internet of Things, which has driven the generation, storage, and collection of data from myriad sources. As objects are connected to each other and to humans, they provide deeper insights and potential opportunities to use the data better. The cost to generate, store, and collect the data is also relatively low.
- Cloud solutions that provide the ability to collect and use that data better. With cloud solutions, companies can provide access to shared datasets to employees and supply chain partners. Enterprise resource planning (ERP) solutions allow companies to bring together disparate data sets from across the organization, organize it, and use it for more effective practices.
- Advanced analytics programs can extract relevant information from unstructured data from myriad sources, and present that data in dashboards and reports that are most useful to end users. With information, often in real time, employees can optimize operations and make faster, well-informed decisions.
- Machine learning uses artificial intelligence and other technologies that help identify maintenance and repair issues. Equipment is optimized for less downtime due to repairs or broken tools.
- Blockchain, the tech used by cryptocurrencies, provides secure and transparent methods to monitor transactions for supplies, materials, and products throughout the supply chain, from source to customer to consumer.
The technologies can be applied in many ways to improve business processes, shape demand, and create new business models.
Business Process Improvement
Most of the data generated by the chemical industry today is discarded. However, companies that use the data effectively can discover improvements to yields, lower energy usage and cost, and more effective maintenance scheduling and execution.
Other technologies can lead to automated vehicles like self-driving forklifts, robotic container filling, improved stability, and fewer accidents. Automated plant performance-management systems and better scheduling to optimize production capacity are possible.
Sharing insights across the supply chain leads to more transparency, better sourcing, and better logistics and warehousing.
Data generated from marketing, production, and past sales can lead to more effective sales and marketing teams via more targeted advertising, optimized pricing, and monetized usage data. R&D teams can use data to shorten discovery cycles and create higher-margin, higher-valued products.
As more goods are purchased via digital platforms, packaging costs are likely to be reduced, which could have adverse impacts on some chemical companies, especially in petrochemicals and plastics. However, that threat also creates opportunities for companies that think differently about packaging and related commodities.
Additive manufacturing, or 3D printing, is on the rise, as is the demand for the polymers and chemicals used in the process. It is possible the industry will seek specialized products and opportunities to partner with other players in like industries.
New Business Models
The digital changes also provide a window for chemical companies to rethink business models. Companies need to consider whether they will become disruptive players or are at risk of being disrupted by upstarts or competitors.
Companies need to determine if the tools and data at play today can be monetized or deployed in new ways to disrupt markets and acquire market share.
At NexTec Group, we help companies understand the complexities of digital disruption and find the right ERP solution to drive innovation. Our teams know the vendors, markets, products, and features, helping chemical companies select and deploy a platform to meet emergent business opportunities.
Download the NexTec Corporate Brochure to learn how NexTec can help your company stay ahead in an era of digital transformation.