LONDON (ICIS)--Chemicals industry executives are starting to fully appreciate the promise offered by digitisation but the industry largely remains in the early days of fully embracing it, with pilot projects and proof of concepts proving more the norm at present than larger-scale investments.
According to a survey carried out by Accenture among 360 chemicals companies in 12 countries, 80% of respondents are increasing their investments in digital technologies for plants, in particular on plant management and product quality.
Like fintech or sustainability, digitisation is a fashionable but nebulous term that covers an array of terms, meaning that descriptions of plans to invest in digitisation could refer to anything from improved product tracking to use of neural networks and artificial intelligence in developing pre-emptive facility maintenance systems.
Gradual industry take-up
After a somewhat belated industry response to the phenomenon – pre-emptive problem diagnosis and response became mainstream in the banking sector over a decade ago – chemical industry executives have become increasingly enthusiastic about the potential it offers.
“Digital has a broad definition depending on who’s talking about it, and it has become something of a mainstream word, whereas two years ago a lot of organisations were grappling with what digital is, and now they’ve got their heads around at least aspects of it that they can use,” said Tracey Countryman, managing director and lead for Industry X.0, Accenture Resources.
“Two years ago they were highly sceptical about what it could do, but now I think they’ve started to see some real value,” she added.
A lot of these technologies were developed on a smaller scale a long time ago, Countryman said, with the recent revolution around digitisation referring more to the advent of processing power sufficient to roll out these innovations in a scalable, reliable way.
“The science is not necessarily the new part, but the ability to do it at a cost-effective way with cloud computing power and get real-time insight from it, that is what's new,” she said.
“Digital in its simplest form refers to how you are leveraging the new emerging technology, including AI, machine learning, big data, IoT [internet of things] platforms, to connect people, assets, and operations,” she added.
Like many upstream industries producing materials that filter through much of the general economy, the chemicals industry can be conservative in responding to significant new shifts in the way that sectors work, due to the health and business impacts that can result in the event of a bad call.
But the growth of digitisation tools in the resource industries began further upstream, in the even more conservative oil and gas sectors.
“If you look broadly at the industry, I think there are some spaces like mining and upstream oil and gas that have for years almost been forced to deal with this because of the locations of their assets, including platforms in remote locations,” Countryman said.
“We haven’t seen that in refining or downstream chemicals companies and I think they are starting to wake up to the fact that they can use these digital solutions to better support (remotely or onsite) operational excellence efforts,” she added.
Pilots and proof of concepts
At present, Accenture’s experience advising chemicals companies has focused predominantly on pilot projects on a single asset or aspect of the supply chain to provide a proof of concept and determine if the return is substantial enough to justify further investment, according to Countryman.
“We work with some companies that are still in the early days of developing their strategy, in terms of what the vision is, what value that offers for the company, the key use cases they’re going to go after, and the potential for the solutions to scale.
“Then you have some companies who are doing both in parallel and are proactively building what I consider to be foundational capabilities that allow them to scale multiple technologies within their operations,” she added.
The majority of respondents to Accenture’s survey described a tangible financial rationale for the rollout of digital technologies, with 31% projecting an operating profit improvement of 10-20% from upgrading manufacturing operations and 20% foreseeing gains of up to 40%.
Despite the interest in pilot projects, the broader take-up of digital solutions remains limited across the industry, even when it comes to less experimental, more widespread manifestations of the form such as cloud computing and robotics.
Less than a third of respondents in Accenture’s survey described usage of a particular new technology as broad within its operations.
The key interest for industry executives is analytics, with a third of executives focused on the form planning to invest 21-40% of digitalisation budgets.
Analytic technologies offer the opportunity to leverage all the data collected by a company on an asset over the years of its operation by placing it in a form that allows it to be collected in one place and analysed, both by humans and by analytical programmes, to improve operations.
“I think we have had an ongoing operational excellence challenge, whether that’s the reliability of an asset, a bottleneck at a facility, transparency of the supply chain or desire to get more agile across the plant network,” Countryman said.
“Companies are utilising data that has existed for years, but often siloed and untapped, to build better insights that can actually enhance the performance outcome of a facility,” she added.
Improved order book management, product quality, yield and worker safety are among the key benefits for chemicals producers, with a slight shift in emphasis depending on whether the producer specialises in commodity or specialty chemicals.
“A lot of chemicals companies have complex chemistry changes and product wheels that they're trying to run. So the key is to optimise and effectively manage the order book which drives a focus on how they plan and schedule the facilities and associated inventory positions,” said Countryman.
“I think the other is product quality… We are seeing the use of AI, real time visualisation of plant performance… and big data analytics helping to determine influencing parameters that chemical companies didn’t know about – thus working toward the ‘golden batch’,” she added.
Despite the almost universal perception among chemicals executives surveyed about the promise of digitisation, committing to wider projects and allocating the capital to make a more transformative commitment remains a stumbling block.
“You can do a small pilot, prove the value on one asset in one plant for fairly minimal amount. When it comes to the theme of investments in the industry scaling those, this is where people are having the challenge right now.”
Management teams have also been slow to respond to the problematic flipside of increased connectivity within and without the industry – the need for increased investment in cybersecurity.
With plant operations increasingly plugged into larger networks, the incidence of cyberattacks has increased, with nearly three quarters of respondents reporting more than 30 attempted breaches of plant operations in the 12-month period leading up to Accenture’s survey.
Less than 40% could identify the source of a breach and only a third were equipped to properly monitor for hack attempts on production infrastructure.
Antiquated peripheral network systems are a large cause of the issue, and of the difficulty in responding to it, according to Accenture cybersecurity lead for the chemicals and natural resources sectors, Robert Boyce.
“As chemical plants typically have legacy operational technology systems, the technology across sites is not standardised and there are gaps in their security controls, leaving them exposed,” said Boyce.
Despite the slowness of the industry to embrace new ways of operating, the shift to digitalisation is only going one way, Countryman said, and it is probably only a matter of years before what seems experimental will become standard operating procedure in the industry.
“In a few years, I think the majority of assets and people in manufacturing plants will be connected, and we will have real-time visibility of operational performance,” she said.
“Assets will be able to tell you that they are having a problem and as such, routine maintenance will become much more dynamic. The connection between customer original demand signals thorough to the time the customer receives the product will become extremely transparent.”
By Tom Brown