Chemical Industry is undergoing a phase of technological disruptions that are giving rise to new challenges and opportunities for companies in both short and long run. The speed of innovations in chemical processing has exceedingly increased over the last couple of years. Now there is more focus on optimizing alternative production technologies and using alternative energy sources.
This year, chemical manufacturers have a need to direct their strategic thinking towards all major areas of business operations. They should adopt to new mindset and strategic shift to benefit from growth in the emerging markets. It is important for them to modify and improve their business models and manufacturing footprints appropriately. Moreover, integrating the Information technology into all their activities like formulating, manufacturing, storing, logistics and distribution has become a necessity for them.
In order to experience better growth, manufacturers should consider these 9 Global Chemical Industry Trends in 2016:
1. Business Model Renovation:
Most of the manufacturers need to upgrade their traditional methods and do away with obsolete business models. The big challenge before them is quickly modifying their operations and adapting to the needs of growing markets. Being proactive instead of being reactive is the need of the hour. Manufacturers have to ascertain how the company’s value proposition matches against that of the local competitors in the market. They should also consider changing revenue streams from supply and earn to royalty, contract manufacturing & technology transfers.
Companies need to adopt business models that focus on selling the existing products in emerging markets across different growing regions. They need to take into account all the explicit details of such markets including the competitiveness, new customers and future potential. Considering the specific market needs and their core competency, they should expand their offerings and decide prudently on investments in futuristic opportunities.
2. Leading the Emerging Markets:
Global demand in chemicals is shifting to the emerging markets. With expanding user base for specialized chemicals, more companies have the opportunities to enter and operate in erstwhile niche markets. For instance, according to research by marketsndmarkets: the global ultra-pure sulfuric acid market is projected to be worth USD 311.2 Million by 2020, registering a CAGR of 6.3% between 2015 and 2020.
Until now, only a handful of industry leaders have been dominating the larger part of chemical market share. But as new players are entering the business, it is giving rise to more and more competition. As a result, companies now increasingly are manufacturing products that serve the specific needs of customers from emerging markets worldwide, in order to stay ahead of competitors.
3. Utilizing Automation and Information Technology:
Recent developments in batch processing, real time automated data processing technology and cloud data storage are offering a wide range of solutions to help improve the production techniques. For example: The latest process automation systems (PAS) aid the plant operators in automated monitoring of performance values and quality of outputs. These systems track data from sensors located at various areas around the plant. These sensors collect data about pressure settings, temperatures and flows. It allows the plant operators to store and analyze this data in order to make right decisions and proper planning at each stage of the production process.
4. Internet of Things:
Internet of things has enabled connectivity between equipments and smart devices, allowing manufacturers to locate gaps in the manufacturing process in real time. However, only a small number of chemical business owners are truly aware about Internet of Things and what it means to their business. Some of them are big players in the industry that are early adopters of IoT.
Given the increasing demand and rising competition, manufacturers need smart systems to transform their chemical processing operations through optimizing the production techniques. For example: smart systems with embedded software and analytics enable the monitoring of chemical reactors. It helps indicate about their condition and performance, allowing managers to anticipate possible faults and maintenance required in future.
The insightful data collected and processed by these smart systems is analyzed and interpreted by the business owners/managers. It helps them to make intelligent decisions such as changing operating conditions to improve quality and achieve optimum level of production, etc.
5. Mobile Applications:
Proactive chemical manufacturers are harnessing the power of mobility solutions combined with Internet of things. Recent developments in mobile solutions are going hand in hand with IoT. Thus, mobile application platforms are serving as a connectivity tool and are covering several other needs of chemical manufacturers.
Throughout the process of business operations, mobile technologies are being used to keep the four M’s of business viz. Manpower, Machinery, Material and Market connected. By integrating mobile applications with the existing systems, managers can get real time access anytime anywhere and control the entire production department remotely. Companies can also use mobile solutions to monitor other areas of the business organization like different stages of procurement and supply chain process and the sales department.
6. Cyber Security altering the Chemical Industry:
With the advent of “Internet of things”, smart devices, equipments and machinery have become vulnerable to threats from trespassers. Businesses are required to assess cyber vulnerabilities and carry out security measures by giving training and guidance to plant operators and technical experts on the ever-emerging threats.
In the absence of a strong firewall program, control systems that have embedded software and internet connectivity can be targeted by hackers. Companies, which give remote system access to suppliers and maintenance experts to allow them to connect remotely are also at high risk. Such companies are required to introduce a strict user management procedure by allowing restricted access to each user, limited to carrying out his job properly. This is because when a user account is hacked, it will not result in loss of all the important information and only specific user related information will be leaked.
7. Adapting to the Disruptive Technology:
Today, a disruptive technology has the power to sink even the leading industry players. A lion’s share of chemical businesses are absorbed in current profitable markets, to make the most out of industry growth. They need to prepare and pay attention to the potential upcoming threats caused by disruptive innovations in both chemicals & technology. Every business needs to carry out SWOT analysis on a regular basis to make sure that no opportunity and threat brought by a disruptive innovation goes overlooked. Classifying the ever occurring disruptions in industry as either Strength, weakness, threat or opportunity helps to align the right strategy with goals and take preventive steps in advance.
8. Green Chemistry:
With “Green Chemistry” increasingly being appreciated across the board, chemical manufacturers must reconsider their new product strategies. Keeping in mind the sustainability and ecosystem friendliness, they should work towards eliminating the negative impact of chemical substances on the environment. For example, the rapid evolution in technology and chemical sciences has enabled researchers to utilize the widely abundant carbon dioxide for generating electricity on demand, producing fuels, industrial chemicals and other substances.
9. Modifying the Product Mix:
A proper product mix helps improve the effectiveness and safety of the product. Thus, product mix decisions should be carried out carefully. Manufacturers always need to make sure that product modification is consistent with customer needs across different markets. Nevertheless, increasing the product mix may not necessarily be a step towards success every time. Sometimes certain categories of product mix are not sold out well. In this situation, manufacturers can consider reducing the depth or width of their product mix.
To conclude, the chemical industry like all other industries should keep up with latest innovations, in order to be ready to face challenges from new companies entering the market. Most importantly, they are required to stay updated with digital technologies that are likely to bring disruptions in the industry in upcoming times. It is posing a big threat to traditional businesses that are not adapting to the needs of industry.
