Earlier this year Siemens Digital Industries, the Siemens business leading on the adoption of Industry 4.0 technologies in the UK, commissioned a piece of in-depth research specifically focused on chemical manufacturing.
We interviewed over 30 experts, including senior executives drawn from across the chemical industry, and asked them about the opportunities and challenges around digitalisation with the chemical sector.
What became clear was that, while there were differences of opinion about where we are now, and where we need to be in the future, there was a growing consensus about how we might get there.
Informed by the research, Siemens has developed a series of five sequential ‘building blocks’ which capture the different investment streams and actions are required to enable the chemical sector to successfully move towards Industry 4.0 in a commercially sustainable way.
The first of these building blocks is the digitalisation of the physical environment, so that equipment, plant and logistics can be controlled and automated through a single, smart dashboard.
And while many such feeds already exist in the chemical industry, interviewees agreed a robust audit is needed to identify any gaps. Further, with regards to cybersecurity, companies need to evaluate the risks - as a cloud-based ‘big data’ chain is only as strong as its weakest link.
The second building block is based around the importance of standardising all data protocols. This is so that digital data feeds can be easily combined, analysed and deployed via a common standards data pool.
Legacy systems – including even the more recent automation initiatives from the last two decades - operate via a range of protocols, standards and formats, some open and some proprietary. Therefore, once the physical environment has been digitalised as described in phase one, formats and protocols need to be standardised to allow for effective analytics.
Of course, re-engineering existing networks is potentially disruptive, costly and risky - which is why many of the chemical businesses we spoke to are looking to leave legacy systems as they are and retrofit interfaces which can gather and pool different data feeds in a common format.
The third building block is focused on investing in applications and processes enabled by the new, standardised data pool as outlined above.
What was interesting here was a commonly held view among many interviewees that to secure the investment step-up to 4.0, applications which could generate ‘reliable ROI’ were the ones which got the most buy-in internally.
Interventions which could help mitigate the financial impact of universal manufacturing issues - such as predictive maintenance which can help reduce downtime, predictive quality that can help with batch consistency, and plant monitoring which can reduce ‘fixed’ costs such as energy, throughput and logistics – were the benefits which got the most traction at board level.
We also found that chemical manufacturers were very excited about the competitive edge offered by mass customisation, virtual product development and plant design via a ‘digital twin’ approach, plus the potential offered by AI, AR and VR technologies.
The fourth block is all about companies looking outside of their own business and considering their supply chain. This we describe as the ‘flow data exchange’ where information generated by the digitalisation process is shared upstream and downstream to drive efficiencies.
On this issue chemicals manufacturers interviewed described how larger buyers can impose demands for a standardised data exchange, and that while many existing automated order ‘triggers’ between manufacturers and feedstock suppliers were in place, the value gains from linking up and sharing predictive demand data (for example at peak times) were potentially immense.
Interestingly, this particular benefit was not viewed as being primarily financial, but more as an enabler for improved competitive positioning through enhanced customer service and creating a more agile, responsive structure to meet client demands.
Another advantage of having the entire supply chain plugged in to the data flow is that of improvements to ‘track and trace’ capabilities, generating both commercial benefits and helping to meet regulatory requirements.
Beyond just safety and hazard monitoring, the ability to know exactly what ingredients you are handling, and where they come from, allows you to confidently communicate to your customer the provenance of your product.
This was seen by many as a key business driver going forward, especially as clients begin to demand more evidence of legal, ethical and environmental credentials and compliance from its supply chain.
The customer piece also informs the fifth building block in the chemical manufacturer’s digitalisation journey.
Entitled ‘Make the digital connection to customers’, this stage looks at how a disappointing digital experience will serve to undermine customer relationships, not build them.
To that end chemical businesses need to ensure they get the first four stages in place and working well before attempting to integrate the new systems with the customer’s own processes.
Furthermore, the transparency, efficiencies and optimisation ushered in by a fully integrated data-based supply chain model is set to generate more defined and performance-based contracts in the future.
Here is where digital accountability – internal and with the customer, coupled with predictive analytics, would be used to set clearer KPIs and drive competitiveness.
Such performance-based contracts were also seen as a natural development of a more service-oriented culture in an industry where customer satisfaction is becoming as important to commercial success as new product discovery.
As mentioned earlier, one of the main barriers to this exciting and dynamic Industry 4.0 vision for the chemical industry are understandable concerns around cybersecurity, and the fact that IIoT comes with risks as well as rewards
Siemens is acutely aware of this, and through the development of our own cloud-based operating system called Mindsphere (which has military grade encryption), and our global Charter of Trust initiative which we have developed with our own suppliers and our global industry partners, we are leading the world on this issue.
We also cover cybersecurity from a chemicals perspective, and our five building blocks towards digitalisation, in much more detail in our research report. For a free copy visit www.tinyurl.com/siemenschemicals