Digital transformation has become a part of the fourth and latest industrial revolution. Although many industries are making great strides in digital transformation, the chemical industry has been more a laggard than a leader. However, to remain competitive and explore new opportunities, many chemical companies are using digital technology for smarter manufacturing, stronger customer relationships and faster innovation. In the front ranks of digital transformation are companies that are no longer selling chemicals; they’re selling solutions to customers’ problems through new business models for the delivery of enhanced services and customized speciality chemicals.
Making your next move
Maintaining a conservative attitude has often proved successful in the chemical industry. By its very nature, chemical manufacturing involves significant capital expenditures, long lead times for development, and massive infrastructures for supply and distribution. It’s a three-dimensional chess game where you want to think carefully before making your next move.
On the global chessboard of the chemical industry, leaders are well aware of the potential of digital technology, but many are still moving cautiously and selectively in their progress toward real transformation. Chemistry 4.0 strives to digitize and transform every element in the value chain, but new technology is often limited to point solutions or upgrades to existing systems and processes. In many cases, innovation is held back by a vicious cycle: the lack of budget for digital initiatives means that fewer resources and skills are acquired which, in turn, results in fewer digital achievements that could justify a larger budget for digital investments in the future.
In 2016, KPMG in Germany interviewed 75 CEOs, owners, managing directors and department heads from the chemical industry in Germany to ask for their assessment of the state of digital transformations in their company. Familiarity with digital transformation was a predominant theme among respondents, but 60 percent of chemical companies said their organizations did not devote sufficient resources and competencies to digital initiatives. A way out of this dilemma starts with the customer.
Customer-driven innovation
Today’s customers know what they want-and they want it now. That’s why increased growth and volatility in customer demand is helping to kick-start innovation for manufacturers and the chemical companies that supply them.
Adidas is developing a new way to manufacture and deliver sneakers in a fraction of the time with digital technology. Currently, their shoes are made mostly by hand in Asian countries. However, the cost of manual work outsourced to the region is rising and a labour shortage is anticipated in the years ahead.
More importantly, the manufacturing process takes up too much time for today’s customers. From the first sketch of a new pair of sneakers to making and testing prototypes, ordering materials, retooling a factory, working up production and eventually shipping the finished goods to the shops can take as long as 18 months. Even refilling orders for existing models can take 2 or 3 months. Meanwhile, three-fourths of new sneakers are on sale for less than a year.
Digital transformation has become a part of the fourth and latest industrial revolution. Although many industries are making great strides in digital transformation, the chemical industry has been more a laggard than a leader. However, to remain competitive and explore new opportunities, many chemical companies are using digital technology for smarter manufacturing, stronger customer relationships and faster innovation. In the front ranks of digital transformation are companies that are no longer selling chemicals; they’re selling solutions to customers’ problems through new business models for the delivery of enhanced services and customized speciality chemicals.
Making your next move
Maintaining a conservative attitude has often proved successful in the chemical industry. By its very nature, chemical manufacturing involves significant capital expenditures, long lead times for development, and massive infrastructures for supply and distribution. It’s a three-dimensional chess game where you want to think carefully before making your next move.
On the global chessboard of the chemical industry, leaders are well aware of the potential of digital technology, but many are still moving cautiously and selectively in their progress toward real transformation. Chemistry 4.0 strives to digitize and transform every element in the value chain, but new technology is often limited to point solutions or upgrades to existing systems and processes. In many cases, innovation is held back by a vicious cycle: the lack of budget for digital initiatives means that fewer resources and skills are acquired which, in turn, results in fewer digital achievements that could justify a larger budget for digital investments in the future.
In 2016, KPMG in Germany interviewed 75 CEOs, owners, managing directors and department heads from the chemical industry in Germany to ask for their assessment of the state of digital transformations in their company. Familiarity with digital transformation was a predominant theme among respondents, but 60 percent of chemical companies said their organizations did not devote sufficient resources and competencies to digital initiatives. A way out of this dilemma starts with the customer.
Customer-driven innovation
Today’s customers know what they want-and they want it now. That’s why increased growth and volatility in customer demand is helping to kick-start innovation for manufacturers and the chemical companies that supply them.
Adidas is developing a new way to manufacture and deliver sneakers in a fraction of the time with digital technology. Currently, their shoes are made mostly by hand in Asian countries. However, the cost of manual work outsourced to the region is rising and a labour shortage is anticipated in the years ahead.
More importantly, the manufacturing process takes up too much time for today’s customers. From the first sketch of a new pair of sneakers to making and testing prototypes, ordering materials, retooling a factory, working up production and eventually shipping the finished goods to the shops can take as long as 18 months. Even refilling orders for existing models can take 2 or 3 months. Meanwhile, three-fourths of new sneakers are on sale for less than a year.
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