The global chemical industry has certainly not had an easy ride over the last few years. Not only has it, like the rest of us, been dealing with the impact of Covid, but it’s also feeling increasing pressure from regulators, investors and consumers alike about the industry’s environmental impact.
The environmental causes were there before the pandemic, but the global health crisis took its toll on the industry. The pandemic saw supply chain resilience and agility become an even higher priority for chemicals companies, with disruptions to transportation and production revealing the vulnerability of complex global supply chains.
The growing need for agility in chemical manufacturing
To succeed in a time of uncertainty and rapid change, operations need to stay agile. Chemical manufacturers may look to adjust portfolios, aim to extend value chains, keep operations flexible, or even offload assets. All these big strategic decisions need to be fed by data, and many organisations are upping investment in digital transformation, such as an ERP system suited to chemical manufacturers, to support these movements.
Driving this is the need to identify the differentiated capabilities that will help to win the market, rather than chasing the same growth as competitors. And that requires adjusting strategic planning. Instead of the traditional three- to five-year strategy, they’ll need to look at the ten-year horizon – while at the same time staying nimble enough to take shorter strategic sprints.
To make the right decisions, it’s key for chemical manufacturers to understand the value they can create downstream, both financial and non-financial. And that means being on top of not just operations, but also regulation – their agility depends on it.
Effectively managing this evolving industry requires data – and lots of it
As the public, customers and lawmakers continue to raise the issue of plastics and the environment, it’s expected that more regulations will appear together with more pressure on the industry to reduce, recycle and innovate to address the problem. And this is just one area of regulation – there are geopolitical crises to consider, as well as increasingly complex cross-border trading markets and consumer demand for supply chain visibility.
Good traceability practices can tell the story from the beginning of production to the moment goods are delivered to consumer-facing storefronts, creating trust between businesses and their customers. Traceability enables companies to be transparent about sourcing materials, production processes and logistics. Using these methods reduce risk, protects revenue and improves brand reputation and value and increases profitability and sustainability.
More regulations mean more data needs to be accurately captured and stored – for example, from operational processes, for use in the event of a quality audit or recall – and this means integrating traceability data across the business and investing in new technologies to integrate a traditionally siloed workplace.
Precise recipe management through a chemical manufacturing ERP
Chemical manufacturers know how important it is to get the recipe precise; one slip or wrong input can spell disaster. Likewise, not having the right data to inform decisions or manage production can create a knock-on effect across the chain. This is why many are investing in new or upgraded chemical manufacturing-specific Enterprise Resource Planning (ERP) systems – integrating data silos across the business provides improved visibility to not just survive in this market but thrive.
The right ERP system should bring together all critical data, reducing the inefficiencies in running separate systems for the laboratory, supply chain, manufacturing and financials – to assist with everything from inventory management to tracking.
ERP systems can help to enable quick and agile business decision-making. These solutions generally lead to reductions in the cost of operations, enable virtualisation and higher visibility of processes and operations, and can provide the data for better justification of digital transformation.
ERP’s role in the digital transformation of the chemical industry
There remains immense, but relatively unexplored, potential for advanced data analytics and digital technologies to transform the chemical industry. Today, digital tools and technologies present an economically feasible solution for extracting more efficiencies from incumbent processes and designing novel products and processes. Due to the convergence of accelerating improvements,
such as advances in sensors, cognitive computing and analytics, market analysts expect significant progress in three areas this year: data availability, data processing, engineering and materials research.
Chemical manufacturers are increasingly realising that digital transformation is about implementing more and better technologies to better align culture, people, structure and tasks. Companies focusing on more asset-heavy parts of the sector will also need to leverage data and market insights, looking at supply/demand balances, capacity situations and global pricing trends.
Chemical companies must continuously change to keep ahead of the competition, reduce silos, improve connectivity and respond rapidly to a changing world.
Check out our guide ‘Chemicals without chaos‘ to discover how you can leverage a specialised chemical manufacturing ERP system like Sage X3 to excel in a highly regulated, competitive market.