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Digitalization in the Chemical Industry

26.09.2018

Digitalization is a worldwide trend, which expands more and more every year in all industries around the world, one of them being chemicals. Since numerous amounts of chemicals are used on a daily basis, the power of the digitalization trend should not be underestimated when talking about global impact. Just think about all the things you need chemicals for: cooking, hygiene, medication… and the list can goes on for a long time! Business in the chemical industry relies heavily on the production, according to the European Chemical Industry Council the industry in Europe is worth of 673 billion euros and it is one of the largest industries globally.

The way of making business in all the industries around the world has shifted from offering products to focusing more on the customer demand, the customers are seeking for specialized products and services, so they expect the companies to meet their needs. In other words, companies must be aware of what the customers are seeking for and then offer it at the right time. To stand out from the competitors, the companies have to come up with a way how to offer more specialized products and services in order to stand out from the competitors.  Digitalization has a lot of potential in the future due to its large capacity, but how challenging is it going to be?

Photo by Elevate on Unsplash

First, let’s take a look at the challenges of what digitalization has in the chemical industry. As already mentioned in the previous paragraph, it is a huge industry globally and one of the biggest challenges is the fact that changes do not happen quickly: it takes time to apply new practices to the use. It is not an easy task to encourage people to try out something new, when in their opinion the old way seems to work well enough so implementing new practices is too much struggle.

  • Data security is the first on Paul Goodman’s list about 17 Disadvantages of Digital Technology which has been discussed a lot for many years so far because it is a big concern. The problems come from the privacy issues when sharing any data digitally, for example, there is no guarantee that important company’s chemical records are not shared with competitors. The use of new business models to decrease the production costs and become more innovate can be harmful if the data is not protected well enough. In order to minimize the problems, the companies must pay extra attention in the future to secure their data.
  • Predicting the customer demand is another struggle, because as previously mentioned the old way of marketing does not apply like it used to. Continually developing technology helps to see potential new business models and what customers might be looking for, but it is hard to decide which way to go with the ideas and how profitable is the business idea going to be in the reality. Operating and planning, which are explained more in the next topic, are going to make predicting the demand a little bit easier.

Despite of the existing problems, there are many advantages in digitalization, but the structure of the chemical industry is not making it easy to benefit from them. The companies in the industry need to find new ways to make business so they can keep up with international competition and be ahead of the competitors. Anyhow, there are definitely more advantages than disadvantages in digitalization. Nowadays due to high competition, the companies are seeking for maximal efficiency and employee productivity: according to Chemical Innovation Exchange, there are 4 benefits of the trend.

  • Operating and planning is going to reduce unnecessary costs and help to invest the money to more valuable parts. Setting up goals, which should be set for a longer term, is important part of planning, because it motivates and helps in the decision making. For example, when the company sets a plan to reach a goal to increase the revenue of sold chemicals for the next year, the employees are more motivated to put more effort into their work and become more successful. Digitalization is going to bring new tools to use for making action plans and following the progress.
  • Productivity is one of the key terms for today’s high level of competition since the companies aim for maximal work efficiency. For companies in today’s mindset, the goal is to produce as much as possible with minimal amount of expenses and working hours. Digitalization is definitely going to improve productivity with the help of advanced machines, so the work is done quicker, and less labor force is needed.
  • Improvements in the supply chain management are going to help the industry a lot, since previously the it has been lacking behind. Being able to reach out to new customers worldwide is going to make the business expand in a new way that has not been possible before. Digitalization will bring solutions for the logistics, which helps the chemicals being transported much faster around the world: the company can expand overseas easier than previously.
  • Innovation, new idea or better solution for already existing needs, develops as there are more digital opportunities because they help to be inspired by others and come up more functional business operating models. For instance, following chemical trends online helps stay up to date of what is going on in the industry and seek for the possible new market areas. Planning is an important element of innovation, it is needed to prevent the mistakes and reduce the costs, which leads to faster innovation. All opportunities mentioned above are going to bring new jobs to the market, since new skills are required to be competitive.

Photo by freestocks.org on Unsplash

Because of effecting people on their daily basis around the globe, chemical industry has a lot of potential with today’s quickly developing technology. Existing challenges, such as old mindset to new ideas and problems with data security are slowing down the development. Especially data security needs to be taken under consideration so advantages can be benefitted as much as possible in order to adapt better ways to make business. Despite of the challenges, digitalization creates huge amount of benefits which are going to help the industry for the growth in a way never seen before.