Embrace Digitalization

Study says U.S. chemical industry should adopt a more ambitious approach

By Mark Rosenzweig, Editor in Chief

Late May saw the release of a research report about the progress U.S. industry is making in digitalization, i.e., the integration of digital technologies. Developed by Longitude Research, London, on behalf of Siemens AG, Munich, “The Race to a Digital Future: Assessing Digital Intensity in U.S. Manufacturing,” summarizes the results of a survey of 209 senior executives and directors at large companies. It indicates these American manufacturers are making progress but concerns about cyber security and inability to successfully grapple with data present major hurdles. (For more on the latter, see “Deal with DRIP.”) The report is downloadable here.

Now, Siemens has shared exclusively with Chemical Processing the details of a sub-report drawn from that survey that focuses specifically on the U.S. chemical industry. “The Digital Catalyst: Chemicals Sector at a Digitalization Tipping Point” reflects inputs from more than 40 chemical makers.

This report states that many chemical companies appreciate the potential of digitalization to transform their business. It notes that almost half (49%) of the firms surveyed are using cloud storage to eliminate the need for physical hardware and infrastructure, and more than half (51%) are relying on connected sensors in plant operations to improve efficiency.

However, the survey also found under one third (30%) of these chemical makers are using advanced analytics tools and 23% aren’t employing such tools much at all. Yet, it notes that 19% of those surveyed collect most or all data involved in production; in contrast, less than 5% of companies in other sectors do so.

The vast amount of production data already generated and stored by these chemical firms means they’re positioned to take advantage of advanced analytics tools if they want. To point up the potential value of these data, the report cites Dow Chemical’s experience in better utilizing data already being generated. (For more on Dow’s success, see “Data Initiative Improves Insights”; for details on digitalization efforts at two major German chemical makers, BASF and Evonik, see “Digitalization Drives Development.”)

“This should be a wake-up call for chemicals industry stakeholders who have been slow to embrace digital technology or to acknowledge the benefits it can bring to them,” states the report.

In addition, it chides chemical makers for lagging behind manufacturers in other sectors in adopting innovations, bluntly stating: “Our survey shows they are less likely to make investments in the more-advanced digital technology that can help them achieve operational excellence, focusing instead on applying the more rudimentary digital technologies that deliver incremental improvements around safety and efficiency.”

More chemical industry respondents (37.2%) cite improved uptime as the leading reason for digitalizing manufacturing operations. Not far behind as reasons are improving operating margins, meeting industry standards or regulations, and reducing time to market, each noted by 32.6% of respondents. Then comes improved planning and decision-making at 30.2%, followed by increasing employee productivity (27.9%), enabling move to a service-based offering (25.6%) and keeping up with competitors (25.6%).

The survey notes: “83% of executives report that digitalization has added new revenue streams from the provision of services, and 66% have experienced some increased cost efficiency since implementing digitalization.”

It concludes: “The chemicals industry is at a tipping point. Companies that adapt and embrace opportunities to improve their operations today will make themselves more competitive and resilient for years to come.”

“To take the next step, chemicals company leaders need to find a digital champion who can generate stakeholder support for a digital strategy, then craft a roadmap for implementation — including pilot projects that will deliver measurable results,” the report counsels.

Digitalization is inevitable. The U.S. chemical industry should embrace it sooner rather than later.


rosenzweigweb.jpgMARK ROSENZWEIG is Chemical Processing's Editor in Chief. You can email him at mrosenzweig@putman.net.

 

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