All major chemical suppliers are working on digital projects. Does that mean they are taking full advantage of digital opportunities? Read on and you’ll see why the answer is no – and learn about three things every chemical company should do in the growing digital world.
My opinion
Chemical suppliers are known for their systematic management. Most of them are led by scientists and top managers with analytical skills, and are now meeting the digital challenge in an equally thorough and systematic way. They not only launched initiatives to define how to deal with this new trend, they also formulated the objectives of digital business unit, from intelligent operation, business model design, using big data, using patrol team to find new digital technology and operation, similar to merger and Acquisition Department.
In short, the chemical industry stands out for its composure and efficiency while other industries are reacting to digital trends in a crazy subconscious way. To some extent, this attitude stems from the understanding that chemical suppliers win more than lose in digital technology. The entry threshold of this asset intensive industry is very high, and there is no risk that start-ups will drive old enterprises out of the market overnight. In addition, they are able to take advantage of the large amount of product characteristic data generated in the laboratory, especially in the formulation business. They have in-depth knowledge and a large database of chemical process performance, enabling them to apply new digital technologies and comprehensively manage customer processes. A good example of this approach is Ecolab. Ecolab no longer sells water chemicals, but cooperates with azure, Microsoft’s cloud platform, and an Internet of things service company to provide process water management based on real-time data, help customers develop to clean water and reduce operating costs. Another example is Clariant’s digital color matching service with matchmycolor and Konica Minolta. By simplifying the expensive and time-consuming process of creating color calibration data sets, they provide a direct sustainability advantage for the plastics industry.
Fast and thorough: chemical suppliers need both
In the digital world, speed has become a competitive advantage that even chemical companies cannot escape. Their success in the digital field may be limited by traditional business methods, even though digital project teams rarely lack the idea of new solutions or business models.
First of all, it has been difficult for the chemical industry to understand the real willingness of its customers to pay and obtain the full value of its products and services for many years. The company has considered the new profit model, but rarely successfully implemented. Second, they tend to enter the market slowly because they are not used to making quick decisions based on a rough understanding of business data rather than reliable business cases. In this asset heavy industry, most of the traditional business decisions have proved that these thorough decision-making process is reasonable. But as the innovative ideas of Ecolab and Clariant have proved, instead of being too cautious from the beginning, it’s better to launch the product first and then optimize it. Compared with the marketing staff, engineers seem to be more able to promote the development of enterprises. In fact, both need strong negotiation seats. Third, many chemical companies worry that once data is used on digital platforms, they will lose control of the data. This reluctance may prevent them from working with faster, more cost-effective professional digital players. Creating in-house solutions usually takes a lot of time, while using the right technology to get digital players requires speed and money.
While we note that many chemical suppliers are focused on “big money,” they tend to forget that digitization can also improve other aspects of business, especially those where speed is everything. Here we mean sales. Yes, the online sales platform can optimize customer itinerary. As long as there is an online order, it will send basic elements such as confirmation email instead of waiting until production has started. But in addition, sales orientation can be more effective and customer relationship management can be more advanced. Equip sales teams with real-time information about lead time or capacity utilization, enabling them to focus on selected products and support dynamic pricing. The CRM information of each customer’s product portfolio and profit improves the opportunities of up selling and cross selling. Of course, every chemical company has its own CRM system, but most companies have not fully exploited the potential provided by these systems.
