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13 November 2019
CM Industrial By CM Industrial

Better Late Than Never: Digitalisation Dawns on the Chemicals Industry.

The chemicals industry, unlike so many others, has been incredibly resistant to adopt advanced technologies like AI – despite the world’s dependence on it to thrive.

Now a digital revolution is finally here, better late than never…

While there’s been uptake from some smaller companies, the prominent digital pioneers have been the industry giants.

Companies like BASF, Evonik, Borealis and Eastman are beginning to implement Industry 4.0 technologies and AI in a big way. Improving operational efficiency, automating processes and enhancing R&D, it’s dawned that these technological changes could stabilise profits if the market declines, and create enhanced revenue streams.

There’s a lot of excitement around digital in chemicals, with its potential to improve production yields, increase innovation and shorten the value chain.

Now these massive returns are being seen, more companies are striving benefit from digitalisation.

I’ve seen technologies help customise orders, streamline inventory, automate logistics and transportation processes, improve telecommunication networks and include a multitude of sensory applications to harness the power of machine learning.

For this to work, data is everything.

Useful data has been collected for a long time. But now the combination of advanced analytics, increased processing power and a global digital-ready mindset, means that the industry can finally use this data to its advantage.

The areas this data and these new technologies are taking effect can be loosely defined in four categories; R&D, manufacturing, logistics and commercial operations.

Manufacturing is probably the area where the quickest returns can be found, using existing data sets as well as new data capture to further the gains.

One unnamed leading commodity chemicals business has applied advanced modelling techniques to an existing dataset at one specific plant, to improve output by 10% and reducing energy consumption by 25%. With margin crucial, these improvements are invaluable.

In manufacturing, another company, Bayer, are utilising machine learning with automated equipment to take data from R&D processes and use it to determine quality and possible anomalies in each batch, reducing waste product and improving quality control.

Digitalisation is having a similar positive impact in R&D, reducing product development times to get high-margin products through to commercialisation quicker. Mirroring pharmaceutical industry processes, specialty chemical companies will be able to model experiments virtually to avoid wasted time and resources when developing new molecules.

That’s exactly what’s being done at Monsanto, a global leader in Agrochemicals. They’ve been analysing data received from thousands of farmers internationally, developing integrated chemical solutions tailored to each individual farmer’s operation.

While many R&D chemists consider data collected through their experiments ‘theirs’, the industry will need to move away from this mentality to truly harness the power of digitalisation.

In support, Evonik are developing a voice-controlled app called ‘Coatino’ which will allow chemists to identify the best additive for the formulation they’re working on. Given the efficiency benefits, I imagine we will see development of other similar apps, or Coatino will catalogue other companies’ additives so that they can be rolled-out across the market.

Connecting the industry has important advantages and digitalisation will also aid this by improving logistics.

A leading example of this, BASF have upgraded their 10km2 Ludwigshafen site in Germany - the largest integrated chemical site in the world. Coining the term ‘maintenance 4.0’, BASF have employed over 600,000 sensors and a personalised 5G network to support its infrastructure and help manage its fleet of autonomous on-site vehicles. This system involves multiple technologies working to predict and mitigate maintenance issues.

With digitalisation enhancing manufacturing, R&D and logistics, the technical benefits are clear. However, digitalisation of commercial decisions is where the largest scope for improvements lie.

Here, digitalisation has led to the emergence of advanced pricing systems which define best prices based on client data. It’s also used to help predict customer attrition, allowing specific account strategies to be utilised by the respective Account Managers.

I’ve even learned of one global specialty chemical company implementing an app for members of their sales team, which directly delivers information on the best sales techniques for each customer and product line. This was also linked to market data on commodities to preserve and maximise margins on-the-fly.

However, all these changes do not come without their potential pitfalls. And these are mainly down to adoption, rather than the technologies themselves – with 70% of executives in chemicals feeling their sector would be disrupted by digitalisation.

Technological turnaround will come at a high cost too, given the mature capital environment and sheer operational size of the industry. There’s so much to think about - the installation of sensors, investment in computers for processing, hiring of multiple Data Analytics Specialists, contracting of outside agencies and potential cybersecurity threats – the list goes on.

This is why many digitalisation projects fail to get off the ground, without strong financial and a human support network around it. While 75% of the process industry has participated in piloting digital technology, less than 25% is progressing past the evaluation stage. Reflecting that, for now, this is only really an option for the industrial giants.

Digitalisation has dawned and adoption is improving, but there’s still a long way to go. Education accompanied by a change in attitude to these technologies will be crucial. Disruption is inevitable, but the long-term benefits will be invaluable.

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