Chemicals supply chain of tomorrow
With chemicals becoming an integral part of a range of industries, including construction, heavy machinery and food additives, the industry can no longer be considered generic. The future of chemicals is closely linked to that of its customers, and hence it transforms in tandem with them. The chemicals industry of tomorrow will be a result of five major transformation triggers:
1. Increasing customer/supplier involvement
With increasing competition and heightened consumer awareness, the customer will be increasingly involved in the product development, thereby influencing the innovation strategy. In this case, a customer drives the development of products that addresses their specific requirements — leading to development of highly specialized products.
Also, it will feature collaborative R&D and innovation centers where customers can participate in product testing and contribute to product development. This will, in turn, drive increased collaboration with suppliers in product development and R&D, thereby developing an integrated product value chain.
2. Redefining product
Chemicals companies will enhance the value offered to their customers by offering additional services. The agrochemicals players are already on this path, where they are tying up with or acquiring data analytics companies to share recommendations with farmers for optimal quantities of water, fertilizers and agrochemicals based on big data analysis.
Similarly, other producers can offer technical recommendations via an app or software to help customers determine the efficient application of their products.
3. Digitalized plant operations
As digitalization becomes not a differentiator but the need of the hour, all functions — including procurement, R&D, planning, production and distribution — will be utilizing IoT, artificial intelligence, RPA and other tools. The future chemicals industry will witness an omnichannel commerce, where a combination of traditional and online models will be utilized to optimize cost and customer satisfaction.
With online portal technology being combined with blockchain, automated online transactions will become popular across customers, thereby ensuring quicker and more transparent transactions. Further, a smart factory floor supported by RPA and soft sensors for predictive maintenance will be essential for production and cost efficiency.
Additionally, distribution and transportation through automated vehicles equipped with temperature and pressure sensors will be an industry norm. This will drive chemicals companies to develop long-term partnerships with tech companies that provide holistic solutions across the floor.
It will also lead to development of centers of excellence for developing customized technology, in-house, in collaboration with these tech players or through acquisition of tech companies catering to specific functions.
4. Workforce of tomorrow
In an industry driven by innovation, chemicals companies will move toward dynamic R&D teams. In a digitalized environment, scientists will be required to develop a dual skill set of chemistry as well as digital tools.
Further, in R&D, repetitive and iterative experiments could be carried out by leveraging bots and artificial intelligence, thereby adding speed and efficiency. Similarly, bots will be utilized to deliver efficiency in repetitive processes across functions.
5. Evolving role of value chain participants
Additive manufacturing and need for customization will engage end customers with the chemicals players. In such a scenario, where consumers can make cosmetics at home using 3-D printers, a specialty chemicals company will directly be supplying them to the end consumer, thereby eliminating or modifying the role of cosmetic producers, distributors and retailers.
This customization, supported by commercial 3-D printing, may also be done by the retailer or distributor, thereby leading to a shorter, efficient and highly customized supply chain.
Further, as industries increasingly move online for sales, the chemicals industry will be skipping distributors and third-party logistics providers and directly serving their customers through owned or public online portals.
For example, in the automotive industry, the average number of visits to a dealer before purchase has dropped from four to one as customers conduct research and configure cars online. Consumer trust in dealers has been declining steadily.