Operational excellence has always been crucial to the success of chemicals companies. However, it’s not the sexiest of things to talk about and you could argue it’s been underappreciated in the past.
A 2018 McKinsey study found that nearly half of the top 100 chemicals companies said they’d react to change by adapting their corporate portfolios instead of considering comprehensive operating-model transformations. Whereas only 15% considered driving performance improvements.
But these companies didn’t know a global pandemic was on the horizon…
The past 12 months has changed everything and renewed interest in operational excellence as companies continue to make improvements in safety, reliability, sustainability and cost of operations.
COVID-19 safety regulations forced companies to adopt new ways of working.
This included working from home (WFH) schemes which have proven both productive and cost-effective. For example, virtual meetings have saved travel time and costs. People in my network have also spoke about how going virtual has sped-up unnecessary, lengthy processes (because no-one wants to be stuck on Zoom all day).
Following this success, companies are unlikely to completely reverse to their traditional ways of working. Businesses have invested WFH and many chemicals professionals are happy with their current work/life balance. As we move forward, expect to see more meetings go online.
To meet COVID-19 guidelines and adhere to social distancing, we’ve also seen sites operate with fewer staff with support from digitalisation tools, software and platforms.
There’s been increasing adoption of digitalisation in the chemicals industry, which started before the global pandemic. This helped major players like BASF, Evonik, Borealis and Eastman improve operational efficiency, automate processes and enhance R&D.
In the past 12 months, this proved crucial.
Digitalisation helped companies return to site and restart operations safely. Infrared cameras were used to prevent crowds from gathering and to measure people’s temperatures before entering the site.
Cloud services and the industrial Internet of Things (IoTs) also meant that operators could access data without being in the control room, meaning fewer people were required onsite. This helped adhere to social distancing regulations.
Digitalisation has proven successful during the pandemic and more widespread adoption of the technology is expected, as companies intensify their pursuit for operational excellence.
This will impact manufacturing because that’s where businesses will find the quickest returns, using existing data sets as well as new data capture to further the gains.
For example, in a previous CM Industrial article, my colleague Oliver Davies spoke of a leading commodity chemicals business that applied advanced modelling techniques to an existing dataset at one specific plant. This improved output by 10% and reduced energy consumption by 25%. In a challenging post-pandemic era, these improvements would be invaluable for any business.
Digitalisation will also advance research and development (R&D). Citrine Informatics, a start-up using AI for materials innovation, uncovered low-cost formulations in less than 90 days by evaluating, optimising and assimilating ingredient recipes and domain knowledge. I’m excited to see more company take advantage of these R&D applications.
As more workers return to sites, digitalisation will also continue to improve safety. Already, we’re seeing inspections like the ultrasonic testing of welding be carried out drones. With digital software and platforms also supporting this trend.
There’s also application for digitalisation in alternate scenario analysis, integrating variable regional supplies and disparate demand segments.
Digital twins – which serve as a virtual representation of a company’s operations – play a crucial role in developing operational excellence and will continue to in the future.
They provide added insight on operations and capabilities of production systems, which enables greater visibility on status and integration, as well as deep exploration of alternatives to aid operational decision-making.
This type of simulation is particularly valuable in the current economy, when boundaries are well beyond what common spreadsheets can handle. Simulations with broad flexibility on constraints and parameters that also include economic considerations are precisely what is needed to optimise operations in this challenging market.
Engineering simulations of process operations can be focussed on a single asset, across a plant or system-wide to optimise operations and production. These models can be deployed offline and online, calibrated to plant operating conditions through autonomous model-tuning.
Plant digital twins optimise alternative production scenarios, such as the reduced production rates and alternate raw material environment that many companies experienced during the pandemic. This will continue to be useful as the market recovers from the pandemic.
As you can see, operational excellence has played a crucial role to help chemicals businesses overcome the many challenges of the global pandemic. Its helped companies stay ahead of their competitors and gain an advantage by lowering operating costs. Looking ahead to a post-pandemic world, it's clear that changes like virtual meeting and the increasing adoption of digitalisation will continue to be prevalent throughout the industry. With the market still in a volatile state, operational excellence is everything.
Do you agree? Is there an area of operational excellence that I should have talked about more? I’d love to hear your feedback. Please email me at Daniel.Olufunwa@industrial-cm.com.
Sustainability is becoming a priority for industry leaders throughout the chemicals space, especially in base oils.
What a 2021 it promises to be! With a vaccine on the way, there's light at the end of the tunnel for us all. There’s optimism throughout all the industrial markets we serve, here’s what our CM Industrial team are looking forward to most.
I was joined by two representatives from Biofabrik Technologies: COO Marc Fröse and CTO Benjamin Richter. We spoke about their innovative technology that turns plastic waste into a renewable energy source.