How Trends in the Chemical Industry Are Shaping Digital Transformation
Evolving into an intelligent enterprise takes time for large chemical companies, but trends in the chemical industry are adding urgency to their transition. Four emerging business models in the chemical industry show these enterprises are leveraging technology to advance toward intelligent operations as well as address immediate demands.
At the threshold of a new decade, chemical manufacturers are on the horns of a dilemma: Holding fast to market position requires transforming into an intelligent enterprise but also ensuring output from core operations. Moreover, trends in the chemical industry are creating additional pressures for these businesses. As a Global Senior Director for Chemical Industry Solutions, I see more and more challenges from new competition within the chemicals industry. An enormous commoditization and reduction of product lifecycles took place. Customers are taking advantage of a broader field of suppliers and demanding greater product customization. Raw materials and energy price volatility and shifting supply and demand centers in the global market make it essential for the C-suite to have visibility into markets and real-time decision-making ability. Additionally, chemical manufacturers must deal with ever-changing regulatory compliance requirements with agility and know-how.
Forward-looking enterprises have been able to unravel these challenges and overcome them by altering their perspective. Specifically, they’re not looking at digital transformation as a box to be checked while addressing current trends. They’ve discovered, instead, that it’s the means to the end. A chemical company can focus on areas of its business in the greatest need of efficiency and modernization to pivot quickly with change as an intelligent enterprise.
SAP research reveals the emergence of four business models in the chemical industry. Let me outline the different strategies:
One of the biggest movements in the chemical industry is the shift in customer objectives. To provide the answers potential customers want, chemical companies are collecting data on their products to quantify quality and performance. A coatings manufacturer, for example, may use IoT sensors to determine how a product performs while being processed at customer locations, providing data on optimal conditions for application and use. Similarly, a resin manufacturer could remotely monitor product processing under various conditions to provide guidance to a finished goods manufacturer, helping to ensure overall product quality and reduced waste. This data can become a compelling part of a company’s differentiating strategy for engaging users and closing sales.
Chemical companies are also beginning to use technology to achieve operational excellence. They’ve discovered the advantages of automating standard back-end processes with technologies, including machine learning and IoT. These technologies minimize the need for human intervention — as well as the potential for human error.
