The journey towards digitalisation started a few decades ago in the process industry, when companies began to upgrade from analog and paper-based systems to digital instrumentation. Early solutions for chemical companies included replacing manual adjustments to production units with distributed control systems (DCS) and the use of computer models to predict behaviour in reactors.
What began as disparate point solutions solving singular and local challenges has expanded to include solutions that can deliver productivity improvements and cost savings across the entire business. Digital technologies can now guide improvements at all stages of an asset lifecycle – from unit design and operations optimisation (including production and supply chain) to maintenance programs. Many tools are further refined to meet the specific needs of chemical producers, across the broad mix of raw materials, technologies, production processes and markets.
The interest in digital tools is truly accelerating as many companies realise the power such tools can deliver and see rivals eagerly adopting the new solutions and capturing the benefits. In this competitive industry, companies cannot afford to be left behind.
Producers of specialty chemicals face particularly demanding challenges due to the complexity of operations and the increasing variety and number of products their downstream customers require. Specialty chemicals require greater efficiency in innovation and new product introduction compared to commodity chemicals.
Enabling technologies unlock hidden value
The global chemicals industry has been in a sustainable upcycle for several years now. Innovation, sustainability, and supply chain remain the key high priority strategic areas for the sector. Applying digital technologies is becoming a strategic imperative in many industries, including the chemicals sector. BASF’s website states that “digitalisation presents big opportunities for us. Using digital technologies and data, we are creating additional value for our customers and increasing the efficiency and effectiveness of our processes.”
Chemical industry response is lagging
Although many chemical companies are actively working to use digital technologies in their business, by most accounts, the industry is lagging. In 2017, the Deloitte report, “Digital Transformation: Are Chemical Enterprises Ready?” stated that “most chemicals enterprises lack a digital roadmap or strategy”. The authors cited several possible reasons for the slow progress – from the challenge of large capital projects to the lack of confidence in and knowledge of digital technologies.
In its 2018 update, Deloitte reported some progress but still rated the chemical sector as a 5 on a scale from 1 to 10, even as 85% of executives believe that the chemical industry is moderately to highly digitally mature. At the same time, Deloitte reports that chemical executives acknowledge the value of deploying digital technologies to achieve operational efficiency and productivity, while also addressing key challenges in R&D and in complex manufacturing environments. These challenges are typically leading concerns for specialty chemical companies. Chemical companies are similar to oil & gas companies in operational efficiency and productivity concerns but have greater need for innovation and advanced manufacturing.
The challenge for many companies is gaining enough understanding to harness the advantages that are possible with digital technologies. Organisations struggle to learn the terms, correlate with current and future assets, harness data to ensure safe and secure operations and leverage advanced models to develop greater business expertise.
Leaders are gearing up for change
Leading companies are introducing new organisational approaches to digitalisation, as they see value across their portfolios and align their organisations to best capture the advantages. Evonik established a digitalisation subsidiary and named a Chief Digital Officer in 2017 and has since moved to invest 100 million euros in developing and testing new digitisation technologies.
Wacker Chemie has launched a new program to advance digital transformation across its supply chain. In its 2018 annual meeting, President & CEO, Rudolf Staudigl acknowledged the value, stating that “digitalisation will help us satisfy customer needs even better. It is a topic that encompasses the entire supply chain, from product development & manufacturing right through to customer service.” In 2018, Dow added Chief Digital Officer to its Chief Information Officer title to reinforce the company’s emphasis on digital tools. In her role as CDO & CIO, Melanie Kalmar leads a team of executives, business-line presidents and functional vice presidents to develop Dow’s digital strategy.
In heavy asset process industries like, chemicals and refining, leaders are embracing an asset optimisation strategy to enhance the entire asset lifecycle using digital tools. Asset optimisation has always been about digital technologies. Now, it is accelerated through new developments like Artificial Intelligence, Machine Learning and multivariate analytics and further enhanced with concepts like innovation, vertical integration and asset lifecycle.
Value opportunities in digitalisation
In the specialty chemicals market, digital technologies can effectively address the following emerging priorities – accelerating innovation, optimising across the value chain, and aligning with customer demands. Innovation allows businesses to meet customer demands while also staying ahead of competitors. Specialty chemical manufacturers are continually looking to innovate and enhance product performance at lower cost – often with fewer or alternative raw materials. Digital technologies can boost productivity and reduce errors by easing the transition from laboratory to plant production processes.
Manual procedures, hand-written reports and paper-based systems are still common for critical activities such as, recipe execution, quality monitoring and raw material management. These isolated tools limit visibility into data and often delay responses to potential quality issues and regulatory requirements. Through digitalisation, companies can gain insight that allows for improvements in quality and consistency. For example, modelling tools can be used to better predict and control behaviour in plant reactors.
When assessing the entire value chain for specialty chemicals producers, technology solutions enable monitoring, execution and control of the manufacturing process. In addition, planning and scheduling tools offer important capabilities that boost responsiveness and related profitability. Rapidly changing market and customer demands force frequent changes in production schedules. According to some producers, adjustments of 25 to 45% each month are not uncommon. Scheduling tools deliver the best value when linked with manufacturing execution systems, often referred to as vertical integration, so commercial systems are synchronised with process automation.
Improved scheduling tools help companies make better business decisions as variations occur by incorporating key constraints, such as, storage limitations, throughput rates and variable lead times – while minimising excess inventory and offspec production. Better scheduling capabilities can also boost asset utilisation. At the same time, schedulers can see the impact of their decisions and make adjustments to avoid problems along the supply chain before they happen. With targeted plant scheduling tools, the scheduler can rely on the model to inform decisions such as, batch size determination, resource selection and batch sequencing and disposition. The technology enables better asset utilisation and improved customer service by clarifying the profit opportunities and the extra costs in less than optimal operations. The next step is vertical integration, which links manufacturing systems to scheduling. These systems can give visibility to storage tank levels, for example, so scheduling tools can decide when raw materials should be put in tanks and when they should be emptied. This link can also alert the scheduler if processes are taking longer than expected, allowing for adjustments across the production plan. The scheduler can proactively identify optimal solutions in real-time.
Aligning with customer demands is crucial for success in specialty chemical markets. Models of manufacturing assets can be used to automate identification and evaluation of a variety of production scenarios across a variety of timeframes. These models represent the full complexity and options possible, including production rates, constraints, efficiencies, set-up times, sequencing and site logistics. Specialty companies cite an 8 to 12% increase in on-time order fulfillment when these tools are applied. Meeting customer needs includes ensuring that assets operate well and produce the targeted products. Leading companies are using multivariate tools to analyse inter-related operational data to identify and eliminate sources of process variability. Businesses apply this analysis to batch and continuous
processes to ensure more production that meets specification.
Benefitting from digital acceleration
The tools, services and solutions specialty chemical producers need to manage their complex operations and achieve new levels of reliability and profitability are accessible to companies now. The first step is to consider the primary challenge for your business and identify relevant digital solutions. Adopting such tools will set you on a path towards a more holistic approach to achieving the highest possible financial return over the entire asset lifecycle. Aspen Technology has been working with leading chemical manufacturers for nearly 40 years, accelerating the digital transformation of the industries by optimising their assets to run safer, greener, longer and faster.