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INDUSTRY 4.0 IN CHEMICAL INDUSTRY Industry 4.0 in chemical industry - Catalysing operations improvement & business growth

Nov 10, 2020

Industry 4.0, which combines digital and physical advanced technologies, can potentially transform the chemical industry itself as the backbone of many end-market industries. Through dual areas of business operations and growth, these technologies enable ‘smart’ supply chains and factories as well as create new business models. The Cover Story, by Deloitte – the world’s largest consulting firm which offers decisive solutions and helps achieve sustainable actions for automotive, oil & gas, technology, power & utility and others - assesses key Industry 4.0 applications across different stages of the chemicals value chain, the opportunities that Industry 4.0 applications present and the ways in which Industry 4.0 technologies could help chemicals companies achieve strategic imperatives, specifically in the areas of business operations and business growth. - Stefan van Thienen, Sector Lead Oil, Gas & Chemicals; Andrew Clinton, Senior Manager, Deloitte Consulting LLP; Brenna Sniderman, Executive Director, Deloitte Services LP; Monika Mahto, India Research Lead, Center for Integrated Research, Deloitte

In one way or another, the chemicals industry contributes to almost every manufactured product. The industry converts petroleum and natural gas into intermediate materials, which are ultimately converted into products we use daily. With more than 20 million people employed and annual sales of $5 trillion, the global chemicals industry serves as the backbone of many end-market industries, such as agriculture, automotive, construction and pharmaceuticals. Changes in the chemicals industry are thus likely to have a ripple effect on several other industries. Industry 4.0 brings together a few digital and physical advanced technologies to form a greater physical-to-digital-to-physical connection, & it can potentially transform the chemicals industry by promoting strategic growth and streamlining operations.

What can Industry 4.0 do for chemicals?

Of the two imperatives of business operations and growth, organisations focused on the former can use Industry 4.0 technologies primarily to improve productivity and reduce risk, while those focused on growth can apply Industry 4.0 to build incremental revenue or generate wholly new income streams. These strategic objectives can be pursued at different stages of the chemicals value chain and in combination with each other. The initial momentum of Industry 4.0 in the chemicals industry is primarily at the level of business operations, mainly due to the abundance of historical sensor data collected by chemical companies over the years. The long-term potential for business growth applications promises to be equally, if not more, transformational, but those applications take time to develop. The productivity of chemicals plants can be improved by various smart manufacturing techniques, like predictive asset management, process control and production simulations, among others.

Improving business operations: Productivity and risk

Improving business operations manifests in two ways – improving productivity and reducing risk. The productivity of chemical plants can be improved by various smart manufacturing techniques, like predictive asset management, process control and production simulations, among others. Reducing risk, though, involves managing supply chains and in-house operations to respond to changing customer needs and to improve safety and quality.

Smart manufacturing: Marrying IT & OT to improve productivity

Smart factory/smart manufacturing combines IT, such as the IoT, Artificial Intelligence and advanced analytics, with OT, such as Additive Manufacturing, advanced materials and robotics. This process can benefit chemical companies in several ways -

  • Predictive asset management

    The chemicals industry is characterised by high asset intensity. As such, advanced IT/OT technologies can help companies optimise their maintenance expenditure and improve asset efficiency through predictive or digital maintenance. Using the continuous feed of data collected from sensors on critical equipment, such as turbines, compressors and extruders, advanced analytics tools can identify patterns to predict and diagnose possible breakdowns. In doing so, smart equipment can send messages to plant operators about any required maintenance, potential breakdowns and parts ordering and delivery schedules. This can enable manufacturers to evolve from scheduled or reactive repairs to predictive maintenance. Also, data from similar equipment installed in different sites can be collected, compared and used for predictive maintenance, performance optimisation and design of new facilities.

    The simultaneous relay of machine performance information to both the chemical company and the equipment manufacturer can also improve aftermarket performance. Equipment that performs according to the performance contract earns agreed-upon payment, while the payment for equipment with failures or breakdowns early in the promised lifecycle is lower. Such arrangements are especially critical for the chemical industry, where equipment is sophisticated and expensive.

  • Process management and control

    In the earlier days, control rooms of petrochemical companies used to have analog controllers along the walls; operators walked around the room, manually checking readings to ascertain plant operations and conditions. In modern control rooms, data is collected through connected systems and presented to operators digitally, obviating the need for manual reviews and saving operators’ time and effort. However, digitisation is only the first step. Industry 4.0 technologies, such as real-time analytics and automated control actions, bring together the digital and physical realms —supporting prediction, alerts and prescriptive responses. This, in turn, enables greater control over batch consistency and quality.

    Process variability results from a variety of factors, starting from the quality of the raw materials to variations in internal processes, such as raw material dosing, temperature control, residence times, system fouling and aging catalysts. Similar to predictive asset management, process management involves collecting structured and unstructured data via sensors from various sources, such as the lab, alarms and process equipment. Analytics models help to identify patterns and deviations in chemical processes before they occur, thus reducing production risks.

  • Energy management

    Energy costs contribute significantly to a chemical plant’s production costs. A typical plant involves multiple activities and interactions, and it is difficult for operators to select optimal operating conditions. A leading manufacturer, Borealis, uses data mining and modelling to develop dynamic target values for the energy consumption of a plant, accounting for factors such as the current conditions of the plant, outside temperatures, fouling of the systems, aging of the catalysts, etc.

    The chemical industry has a high degree of automation, and most plants monitor standard variables, such as temperature, flows, tank levels and pressures to derive optimal plant working conditions. However, Industry 4.0 technologies, such as soft or virtual software sensors, can augment these data points with additional information and enable control of non-standard process variables to improve energy efficiency. Soft sensors are neural-network-based inferential estimators that can process several variables collected through standard instrumentation, estimate new process & equipment parameters (not otherwise collected) and improve operator effectiveness & plant efficiency. Soft sensors can be helpful in cases where physical instrumentation is expensive or difficult to install.

  • Safety management

    Given the sensitive nature of their products, it is particularly critical that chemical companies ensure the safety of their employees, supply chain partners and customers throughout the product life cycle. While traditional safety methods involve monitoring and testing samples, connected technologies can help companies in continuously monitoring products, by-products, as well as any waste generated. For example, ‘smart’ (piezoelectric composite) paints can sense mechanical vibrations or other changes, such as corrosion or cracks in a chemical tank and inform the operators, reducing production risks.

  • Production simulation

    Chemical companies are increasingly using 3D visualisation and Virtual Reality for training operators and maintenance staff. Siemens’ Immersive Training Simulator, for example, provides operators a virtual experience of various on-site situations. They can also collaborate with their peers, and individual & collective performances can be monitored by instructors. Operators can also access the real plant data created using digital twins. In addition to operator training and prognostics, 3D virtualisation also helps operators prepare before the plant operations begin.

Supply chain planning: Predicting changes to reduce operational risk

Industry 4.0 helps chemical companies plan their supply chains in two ways – first, sensors and connected systems can help improve visibility into the supply chain, reducing risks. Second, advanced analytics tools can help the companies predict demand patterns and accordingly align their supply chain & manufacturing operations.

Supply chain visibility

Chemical companies largely operate on a business-to-business model, selling products that are used by their customers to create another set of products. In some instances, customers may require that the products be delivered within a specific range of temperature or pressure so that they are suitable for subsequent production processes. To monitor chemicals during transit, a delicate time for monitoring and controlling conditions, many companies in the upstream and downstream value chain use connected tools, such as Ovinto satellite monitoring devices, on railcars. The system generates alerts when the railcar is near the customer location or is involved in an impact or collision or when the physical properties of the chemicals being transported exceed the set ranges, thus triggering automated action or manual intervention. The visibility provided by the direct, continuous interaction between the railcar and chemical company can enable better supply chain planning while helping to ensure safe transport of dangerous chemicals.

Growing the business: Incremental and new revenue

The transformational plays related to business growth that Industry 4.0 offers lie on two ends of the value chain. On one end, companies can develop new offerings or improve existing ones through R&D of advanced materials and specialty products. On the other end, digital technologies enable chemical companies to integrate with customers’ operations & customise products, extend their products with information & services in a way that allows them to charge premiums and, at times, develop new business models.

Additive Manufacturing for testing or developing new products

Additive Manufacturing/3D Printing uses information from the digital realm to create a physical product, encapsulating the IT/OT transition, potentially helping chemical companies save costs during the R&D process. It allows designers to custom-build a reactor with specific geometrical configurations to control the chemical process within, as well as with the specific reaction kinetics or residence time of the chemical reaction, helping companies develop and build advanced materials, creating new revenue opportunities.

Advanced analytics for selecting materials

Advanced analytics can help chemical companies use digital information to create new ‘physical’ materials. Researchers at the University of Illinois, Urbana-Champaign, recently developed a molecule-synthesis machine that develops new drugs and agricultural chemicals; it works by breaking down complex molecules into their basic building blocks, which can then be recombined to create new compounds. Developments such as lower data-storage cost, High-Performance Computing (HPC) and advanced analytics help build databases that store information on available materials and their properties, as well as present new material combinations with desired properties leading to advances in material genomics. Chemical companies could also shift from trial and error to modelled outcomes to digitise the material-selection process.

4D Printing for developing advanced materials

Among many developments in advanced materials, one noteworthy example is that of programmable materials, also known as 4D Printing. Developed at the MIT’s Department of Architecture lab, programmable materials can self-assemble and change shape & form with time – the fourth dimension. External stimuli, such as light, heat and water, trigger expansion and contraction at different places in the material. As commercial developments materialise, the chemical industry can use programmable materials to create new products for customers in the aerospace, automotive, construction and healthcare industries, benefitting from new revenue streams.

New revenue models by forward-integrating into customers’ operations

Chemical companies can use their years of collaborative knowledge to integrate within their customers’ operations. Traditional manufacturers, in addition to selling water-treatment chemicals, provided water-treatment recommendations to their customers based on site visits and their understanding of materials and assets. With Industry 4.0 connectivity, monitoring and analytics, chemicals companies can have direct visibility and interaction with their customers’ operations and can provide real-time recommendations to optimise the operations and improve the design of water-treatment facilities; this, in turn, helps them create a new business model for themselves.

Climbing the pyramid: Where to start

Chemical companies need to build capabilities on each of the layers to achieve some combination of business operations and growth. As chemical organisations seek to build an Industry 4.0 solutions architecture, starting with what one knows or does best, enabling a cross-functional Industry 4.0 team, building and becoming a part of a pervasive ecosystem & managing one’s cyber risks, might help.

Shift from the future to present

Industry 4.0 will likely impact the way chemical companies operate and grow their businesses, as they shift away from the pay-by-the-ton revenue model to provide value-added products and services to their customers. How fast and well companies perform will depend on the decisions they take today and the initiatives they commit to for the coming years. A clear understanding of their strategic imperatives can enable chemical companies to plan their Industry 4.0 journey and help them identify how to integrate their digital and physical assets across different stages of the value chain.

As companies face various challenges in their journey to Industry 4.0, it is critical that they prepare their technology and data landscape to support the evolving changes in their products, services and, at times, new business models to create a competitive advantage for themselves in the long run. The solutions layer architecture provides a simple way to approach the competencies required to deploy Industry 4.0 technologies. Beyond technology, however, the agility of people and organisations in adapting to change determines how effectively they adopt Industry 4.0. As changes in chemicals affect related industries, time is of the essence. Industry 4.0 is no longer a topic of the future.

*An article from Deloitte US from June 2016*

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Image Gallery

  • The physical-to-digital-to-physical leap of Industry 4.0

  • Industry 4.0 transformational plays for the chemical industry

  • Industry 4.0 key objectives and transformational plays related to business growth

  • Stefan van Thienen

    Sector Lead - Oil, Gas & Chemicals

    Deloitte

  • Andrew Clinton

    Senior Manager

    Deloitte Consulting LLP

  • Brenna Sniderman

    Executive Director

    Deloitte Services LP

  • Monika Mahto

    India Research Lead - Center for Integrated Research

    Deloitte

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