4th industrial revolution for chemicals inevitable

Transformational over time, but maybe not a revolution, at least not yet, according to what appeared to be the consensus view among panellists at the 51st European Petrochemical Association (EPCA) meeting in Berlin, Germany on 2 October.

DowDuPont Materials Division chief operating officer Jim Fitterling, Clariant CEO Hariolf Kottman,and Financial Times economics commentator Martin Wolf acknowledged the ways in which the so-called 4th industrial revolution (Industry 4.0), particularly increased digitalisation, will impact business.

We are talking about business process redesign but, this time, at a much more fundamental level. More data, advanced analytics and possibly disruptive new entrants somewhere – we don’t know where – along the supply chain, promise a great deal and threaten a lot.

The interface between advanced data analytics and the technologies that are being spun off from Industry 4.0 will undoubtedly affect chemicals and the ways in which chemical companies and supply chains are run.

DowDuPont’s Fitterling talked about a ribbon running through the organisation. Advanced data and other Industry 4.0 capabilities will not – they cannot – be imposed top down through the company. They will crop up in various areas and business functions. All the EPCA panellists acknowledged that the changes likely to be wrought on industry and commerce – and elsewhere – will be profound.

Fitterling stressed the way in which the triple bottom line approach of the industry would be enhanced. Clariant’s Kottman talked of fundamental change for the industry over time.

Companies are finding their way through a maze of possibilities. These have to be assessed in terms of costs and opportunity, coupled with the realisation that change is being wrought not just among manufacturers but along their supply chains and through to their customers. Value propositions will change, in some instances, rapidly.

Wolf suggested that we are at the very, very early stage of this transformation. “We will find at the end that everything has changed,” he said.

There is a lot of value to be created from enhanced management of inventory and the supply chain. Fitterling suggested supply chain savings could be of the order of 10%. An enhanced interface with the customer is the greatest opportunity, Kottmann said, while also his greatest concern. Companies are challenged on many fronts by Industry 4.0 but the attraction is the step change in performance and value creation.