Gaining Strategic Advantage In Chemicals With Digital Transformation

By: | Category: Distribution / Manufacturing, ERP

“In the chemicals industry, based on our project experience and research, the impact of technology-enabled improvements can be significant and lead to step-change improvements in performance— especially if the initiatives are integrated and tailored to the specific requirements and chokepoints of the business.” – Accenture

The opportunity to apply new technologies to drive efficiencies as well as the potential to utilize transformative technologies to integrate production, sales and marketing and customer service is the future of the industry.

Here Are Three Tenets Of Transformation

1. Innovation

Innovation provides a competitive advantage in the chemical industry as with any market – independent of industry or product. And chemicals companies are innovating. But the accelerating rate of innovation must be enabled and supported by highly efficient operations which are also agile in nature – in order to take advantage of the innovations and opportunities. Chemical companies with a bias for growth are investing in their operational infrastructure in order to support new innovations.

“It used to be that one breakthrough could set a company up for success for years. Today, innovation is still important, but it’s more about revamping existing products to deliver things that business customers really need. Chemical companies are using innovation to enhance functionality, customize existing products and adapt products to new market opportunities.” – Bain Insights

2. Data-Driven Decision-Making

To operate at the highest level of effectiveness and productivity, companies want a single source of data regardless of whether that data originated in one or many systems. This enables them to be fully informed about suppliers, solutions and customers, and able to make ‘smart’ (data-driven) decisions. Having simple and easy access to fully harmonized data will increase productivity, keep managers better informed with quicker decision-making capabilities across a full complement of a chemical business’s operational processes.

An effective ERP system is a driver for a centralized database and harmonized data set across the entire enterprise. This consistency of data, a “single source of truth” enables BI and data analytics tools to provide real-time insight for superior decision-making.

3. Risk & Compliance Management

Risk is an inevitable part of any business, and in an industry where security and compliance are foundational to business operations, risk management is a crucial issue.

It is estimated that approximately 7% of the revenues for US companies is lost to fraud every year, much of that originating from internal sources. Comprehensive business management technology like ERP software will create an audit trail. Add its safe and granular access controls, theft originating from internal sources will be much more difficult. Using a chemical-industry ERP system gives access only to users who need a specific function without having to give employees access to everything.

In the United States, chemical companies are subject to numerous agency regulation and oversight. The Environmental Protection Agency (EPA) governs and monitors spills, emissions, releases, and exposures to hazardous and toxic materials and substances. The Department of Transportation (DOT) monitors the storage, use, and transport of these materials. The Occupational Safety and Health Administration (OSHA) regulate workplace factors which impact workers health and safety. Food and drugs fall under the auspices of the Federal Drug Administration (FDA), which regulates ingredients that go into these products. Hazardous waste is the domain of the EPA and subject to state regulations, as is any fungicide, pesticide, or rodenticide used or manufactured falls under the EPA. Finally, the Department of Homeland Security (DHS) administers the Chemical Facility Anti-Terrorism Standards (CFATS) program by working with facilities to ensure they have security measures in place to reduce the risks associated with certain hazardous chemicals and prevent them from being exploited in a terrorist attack.

Most U.S. chemical law falls under the Toxic Substances Chemical Act (TSCA) of 1976 which places the burden of chemicals compliance on the companies that manufacture them. This means that business systems, purpose-built for Chemical are critical to monitor and report all the necessary information required for compliance with the regulations required by the many organizations and programs listed above, and more.

Advanced technologies now make it possible for chemical companies to automate production, apply (and continuously improve) process controls, integrate asset sensors, and take advantage of manufacturing execution systems at the enterprise resource planning (ERP) level. Our experience shows that such technology-enabled solutions can produce yield increases of up to 5 percent.” – Accenture

Chemical manufacturing and distribution businesses are gaining a strategic advantage with three different yet equally important tenets of digital transformation: innovation, data-driven decision making, and risk and compliance management. Business leaders in the chemical industry are looking for a complete business management strategy that provides a fully integrated, purpose-built solution and improves business efficiencies and security.