The chemical industry is -without question- one of the most important industries in the world. Not only do 90% of our everyday products contain chemicals, but the industry also employs approximately 10 million people. Naturally, they were one of the first to embrace digital technologies such as process control systems or sensors which have a long tradition in production. According to Frithjof Netzer, Senior Vice-President, and Project Lead 4.0 of BASF: “A lot of energy and momentum in the field of digital can be observed, Chemicals are catching up. It is not the question if, but rather what and how it will be done.”
A continuous digital transformation plays a crucial role in several key aspects of the industry. Accenture has identified the six most influenced areas.
- Higher Levels of Efficiency and Productivity
Increase competitive advantages and further decreases the costs through operational optimizations.
- Innovation through Digitalization
Helps boost the productivity in R&D and thus decrease the time till market entry.
- Data Management and Analytics
An improved understanding of customer needs and so the optimization of offerings are integral contributors to any company’s success.
- Impact on the Workforce
Tasks and opportunities, as well as the job requirements, will experience a change with digital transformation. “Finally, technology will take an even greater role in upskilling and training employees and knowledge management.” (World Economic Forum & Accenture, 2017)
- Digitally enhanced offerings
An increasingly important aspect of product performance especially for close-to-end customer markets.
- Digital Ecosystems
Being separated into Innovation, Supply and Delivery, and Offering Ecosystem.
Industry 4.0, however, does not only include aspects of digitalization but mainly artificial intelligence, robotics, Internet of Things (IoT) or advanced materials. In the table below their impact on chemical products is illustrated.
BASF, one of our Keynote Celebrities at the 2018 Chemicals Sales & Marketing Toolbox actively works towards industry 4.0 and has just recently become a member in the research initiative Systems That Learn (Part of the MIT Computer Science and Artificial Intelligence Laboratory), to foster company innovation and process optimization. One application of BASF was the development of an advanced color matching system which applies AI by using neural networks to the process of color matching.
Generally, industry 4.0 can improve business operations by productivity or reduce risk through smart manufacturing or supply chain planning.
A so-called “smart factory” can impact a chemical company in several ways using not only artificial intelligence but also IoT or advanced analytics and materials.
The first and foremost outcome would be a predictive asset management since the chemical industry is known to be an asset intense business area. Sensor technology and advanced analytics create smart equipment that can identify patterns and predict and diagnose possible breakdowns. Also, process management and control will be optimized via real-time analytics and automated control actions that bring together the digital and physical realms. Another crucial improvement can be achieved in energy efficiency and safety management. Especially in safety management, drones play an important role to inspect dangerous and hard-to-reach plant locations.
In Supply Chain Management, sensors and connected systems improve visibility and reduce risk. Many times, chemicals need to be transported under specific conditions, exact temperature or pressure. Thus, monitoring during transport is made significantly easier and additionally, the products can be located at any time. The constant communication between the Transportation Company and the chemical company can build a digital ecosystem that allows several players to work simultaneously toward a common business objective, which is the safe delivery of potentially dangerous chemicals.
Summing up, Industry 4.0 has reached the chemical industry as well. As described above, its impacts will add great value to the future business activities and increase not only efficiency but also help create a safer and more collaborative work environment. However, the investment in these technologies is relatively huge and many companies prefer to observe the development and research process from the sidelines before taking a significant part of their budget for actual investment.