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Chemical industry more open to digital innovation

Posted on November 22nd, 2016 by in Chemicals Industry News and Analysis

Digital economy

The chemical industry recognizes that digital innovation can help it stay competitive. It is important for the industry to identify the key digital technology building blocks and tap into possible shared digital benefits across industries,said Arthur D Little partners Michael Kolk and Frederik van Oene in an interview with ICIS.

Until quite recently, the chemical industry has largely adopted a wait and see attitude on digital innovation. But now some chemical companies are being more proactive. “They don’t want to miss out on the right partners, experts and start-ups”, said van Oene.

“Due to the growing transparency in the digital age, they need to have a good reputation in this area as it will have a big impact in the talent and (start-up) companies they attract,” he added.

Chemical companies that want to be and stay competitive need to able to explore and take advantage of digital opportunities.

Investment in digital innovation is relatively cheap and not so much an issue for firms that are used to make very large investments in fixed assets. But digital innovation requires a different type of decision making that chemical companies are traditionally not used to.

Investing in plant assets and capacity involves long term decision making and planning. Digital innovation requires less investment but high speed decision making. There are risks involved that some companies don’t know how to react to. However, van Oene stresses that there is a cost to not be digitally innovative.

While it is undisputed that digital technology can facilitate innovation at large, there appear to be different schools of thought on whether it will truly transform innovation as we know it, Kolk said.

Digital technology provides an opportunity to overcome and address disruptive forces such as ‘choice restriction’ – ie customers not getting the solutions they really need; ‘intransparency’ (for instance, because suppliers and customers are not “seeing” what is important); and waste – not optimizing production processes or the (re-)use of valuable materials.

Digital technology offers new solutions to better and more quickly match supply and demand of all material and energy streams within a production ecosystem, not unlike BASF’s powerful verbund model with its focus on integrated site structure, said Kolk. “Knowing everything about anything anytime” is one of the key solution promises.

Similarly, digital technology can be used to track products, using sensors on, for example, the packaging of finished products to help further develop and customize product updates.

The performance of products such as adhesives and paints may vary with temperature and humidity so such knowledge can be vital for effective new product development, said Kolk.  It means that finding news sources of important data is key to reacting faster and becoming more effective.

Parallel screening and testing to find technical solutions is also a way of using digital technology to overcome ‘intransparency’ and underpin technology leadership.

“Experience tells us that digital technology holds significant solution promises to make innovation better, faster and smarter…,” according to Arthur D Little.

“Predicting anything better, faster and sooner” is another important promise.

Cognitive computing and artificial intelligence can be applied in the ever smarter design of experimentation in new catalyst development and in advanced predictive formulation of coatings. When successful, such developments will make innovation faster, cheaper and more effective.

Foresight is another digital solution which helps to play out and predict different scenarios. Digital augmented reality can help benefit the chemical industry in terms of maintenance planning, according to the Arthur D Little consultants.

Such solutions provide chemical players with greater information on the physical infrastructure of the plant and how long ago certain parts were installed and when they require maintenance, which can help improve planning and safety.

The virtual reality would mean the “superimposing of highly relevant information and doing things right first time”, said Van Oene.

It is worth pointing out that the chemical industry could learn from other industries such as automotive and aerospace where these virtual digital tools are being used to avoid human errors during maintenance checks.

Additive manufacturing or 3D printing is an example of planning and visualizing the products of the future.

“It offers enormous potential for chemical companies to move downstream in ways they didn’t think they could do before,” said Kolk.

It provides the digital possibility to customize various products for, for example, the automotive, construction and general goods industries.

Being connected and interacting with customers, and internally, on a global basis is also a key building block in digital innovation.

Chemical companies, many of which have a global footprint, can benefit from “working seamlessly with anyone, anywhere” within their organization, across sites and functions, according to Arthur D Little research.

But Interacting globally can be difficult. “Fundamentally, digital technology can alleviate part of this problem by facilitating [the flow of] information and concepts between people in different offices and by enabling true collaborative decision making”, said Kolk.

Ideas can be shared digitally through various means such telepresence-quality video conferencing and digital workshop flipcharts in the cloud and at a modest cost.

The chemical industry has been slower to adopt digital innovation compared to other industries but that is because chemical sector companies are often overwhelmed by the array of digital options available to them.

“Ii is one thing to have powerful tools but you need to be able to use them in the right way,” said Van Oene.

Generally speaking, the larger digital innovation opportunities in maintenance and production are most prevalent in chemicals upstream. Downstream, the opportunities are more prominent in the interaction with partners and customers, said Kolk.”

It is, therefore, worth mentioning that the chemical industry can draw upon the digital innovation successes of telecoms and energy utility companies that use digital tools to predict demand and reach out to their customers’ customers.

It is important that chemical industry players learn new digital skills and tailor them to their specific needs in order to maximize the opportunities.

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All opinions shared in this post are the author’s own.

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