Digital Disruption: The Ultimate Transformation Mantra
Digitization

Digital Disruption: The Ultimate Transformation Mantra

Digitalization is having a significant impact on the chemicals and petrochemicals industry with the potential to completely overhaul value chains, lead to higher productivity and spur innovation, resulting in the creation of new channels to market

  • By Rahul Koul | September 13, 2022

From novel process technologies to sustainable plastics, digitalization opens up unending possibilities for the chemical industry Given the fact that there is a growing buzz about digitalization across various industries, the excitement about its potential in chemicals too is considerably remarkable.

With COVID-19 pandemic accelerating the adoption of digital technologies, going digital is not merely a survival tactic to navigate through immense challenges but also as an important ingredient for the industry's future growth. In fact, the digital transformation in chemicals presents a largely unexplored new potential to increase efficiencies and help companies design novel products and processes.

Experts are confident that digitalization will have a significant impact on many areas of the chemical industry, with the potential to change value chains, lead to higher productivity and more innovation, and create new channels to market. Chemical companies can use advanced analytics to extract management-relevant information from the large amounts of unstructured data that they generate. This information can then be used to improve how plants are run and to make better-informed and speedier decisions across the full range of a chemical company’s business processes.

The key issue for chemical company leaders is to understand more clearly where the impact of digital will hit the industry and what it will imply for their companies. The first is using digital-enabled approaches to improve companies’ business processes, which we call functional excellence. Second is the potential for digital to affect demand patterns in end markets, with implications for the chemical industry’s value chains. The third is where digital developments lead to changes in the business models through which chemical companies capture and create value for customers.

Disruptions in automotive, construction, agriculture, and other end-use industries are creating opportunities and challenges for the chemicals industry. For example, while relatively novel technologies like additive manufacturing, currently being demonstrated but not fully commercialized in many applications from engineering parts to house building, might create a need for new materials, at the same time, they may reduce the consumption of traditional chemicals and materials. Most chemical enterprises are already reevaluating future growth strategies, including looking at digital value-added services to supplement existing product offerings.

CHALLENGES GALORE

The chemical industry has become increasingly complex as the variety of products and processes expand and competitive intensity has grown. Digital tools address these challenges well. Digital projects have delivered tens of millions of dollars in savings by optimizing production and business processes. By using data to drive business and operational decisions, many companies are progressing with their own transformation to the next level of performance and operational excellence.

There is a lot of data hanging around and how an organization makes sense out of it, is very important. The necessity of aligning different departments and business functions by using Internet of Things (IoT) based platforms must not be only about capturing process data but improving the quality of analytics.

Another challenge that needs to be addressed is bringing in more data scientists on board to boost the quality of analysis drastically. The kind of issues such as changes in coal prices and availability can be dealt with through predictions so that companies can optimize their use.

Apart from this stated role of digitalization, automation is very much required. A few times there are negative connotations around the term such as loss of jobs but in reality we move the resources to skilled jobs while basic jobs get automated. It has supported our growth journey in better ways.

Digitalization in the chemical industry will require a clear picture of readiness, particularly the steps required to establish an accommodating culture that promotes flexibility and learning. As with any major initiative, digital transformation in chemicals is likely to be challenging.

With a framework to help present a clear vision for how digital and exponential technologies can impact business strategy, chemical companies can achieve aspirations for the five key dimensions that include user experience, talent enablement, asset reliability and performance, material system innovation, and ecosystems.

OPPORTUNITIES

Digitalization is having a significant impact on the chemicals industry with the potential to completely overhaul value chains, lead to higher productivity and spur innovation, resulting in the creation of new channels to market.

With the advent of COVID-19, its importance has increased multifold. Since many of their product offerings came under essential supplies during the pandemic, companies had to operate round the clock to ensure the safety of people. Using IoT deployments, they were able to run their operations and maintain much needed business continuity.

They were also able to assess equipment reliability based on data points, predicting whether there will be failure of equipment or not. Compared to earlier when it used to take days to collect the data individually from different units, they are now able to look after the various facilities and also maintain a tab on energy consumption.

Going forward, the next stage of using digital to optimize performance should go well beyond the plant and readily integrate with physical assets. For example, new digital technologies like blockchain and predictive analytics can be integrated with existing IoT infrastructure to enable track-and-trace capabilities. New process technologies like crude-oil-to-chemicals have already been deployed in some refinery-scale plants.

As an example, Indian Oil Corporation has launched a large-scale digital transformation programme and a Digital Centre of Excellence to bring value, deploy solutions, and enable change. About 100+ initiatives are being implemented to rope in 10,000+ employees, also covering customers, supply chain. With advanced analytics, it unlocked the power of Artificial Intelligence (AI) and Machine Learning (ML) to develop intricate simulations. For historical and real time data, it identified and prioritized the problems and solved them with cutting edge analytics.

Predictive analytics is increasingly seen as the panacea to address chemical industries’ pain points. This AI-powered technique uses historical and real-time data to predict critical future outcomes, reduce risks, improve operations, cut costs and increase revenue. Chemical manufacturers can increase the operating time of critical assets by using predictive analytics to find ways to anticipate their failure.

Many private players in India are devising the strategies to customize their digitalization implementation so as to suit their long term requirements.

WAY FORWARD

To get the full advantage of digital transformation, an enterprise-wide digital strategy is often needed, which percolates down to customizable parts suiting the needs of individual business units. This digital strategy should also tie into the digital maturity model—where the organization is right now and where it aspires to be once the digital transformation is done.

The holistic adoption of digitalization by the chemicals industry will support the transformation of the existing business to absorb newer capabilities, platforms, gain insights using data analytics and make timely changes in business decisions to optimize the existing operating model and maximize efficiency and profits. New development processes, including rapid prototyping and parallel experimentation supported by data analytics, can help companies respond.

Organizational complexity, integration and process re-engineering are the most prevalent challenges for executing smart manufacturing initiatives even in chemical industries. Combined, these challenges reflect the largest change management obstacles. However, just introducing new technologies is not enough and the factory workers must evolve alongside the technology and be on board for the changes to come.

The roadmap to digitalization lies through an accommodating culture that pro[1]motes flexibility and learning, coupled with a complete ecosystem for accelerating its adoption.

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