EPCA DIGITALISATION Digitalisation gathers pace · including cognitive and cloud-based technol - ogies such as blockchain, Internet of Things and Industry 4.0, amongst others. The

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EPCA DIGITALISATION

Digitalisation will allow to flow of information across global supply chains

JANE GIBSON LONDON

Chemical producers are taking onboard the potential of digitalisation and investing in specific projects, largely in the supply chain and at the customer interface

Digitalisation gathers pace

company is moving ahead along four paths. “First of all, we are protecting our systems around the world by running a centralised cyber-security programme. Second, we are replacing and modernising our existing IT and OT systems, through a company-wide pro-gramme. We took the strategic decision to de-velop our own software for our core processes.

“Third, we are innovating by using new technology and by connecting our assets at the terminals, which will generate large amounts of real-time data that will allow us to improve our performance on safety, planning, maintenance and service while optimising our customers’ supply chains.

“And last but not least, we are innovating the way we work, think and lead to ensure data quality and usage and thus reap the full benefits of our digital transformation.”

AUTOMATED PROCESSESAt Dow Europe, where Peter Marshall is logis-tics director for Europe, Middle East, Africa and India, a number of digitalised processes have been applied in the supply chain and logistics area. “Many automated processes have been in place for years; for example, we have various methods for customers to enter their orders including system-to-system communications. If desired we can monitor their inventory levels and automatically replenish their stock when trigger points are reached.”

Marshall says that customer orders are con-

this way of thinking and behaving to the working world. “The chemical industry is not really a digital front runner. However, we have a long track record in the automation of our production plants based on digital twins in the underlying process simulation and dis-tributed control systems.

“Now, we are taking this to the next level. By this I mean connecting plants and equip-ment along the entire supply chain network and sharing information across firms.”

The path to digitalisation varies by company across the sector. Eelco Hoekstra, chairman of the executive board & CEO, Vopak, says the

T he great majority of us have already seen our private lives digitalised, be it through Amazon, Uber or What’s-App. The use of smart phones and

Apps and demand for individualisation and 24/7 service has changed the way we live.

The chemical sector has now set out on its own digital journey. But how far has it come and how far has it still to go?

According to Johann-Caspar Gammelin, chairman of the management board, Evonik Performance Materials, it is now time to adapt

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verted to shipments, documents are automati-cally created and transportation partners are notified digitally that they need to pick up a product and deliver to a customer. As well as this, the company has integrated logistics ser-vice providers into its operating processes, making full use of their digital capabilities and providing data into Dow’s systems.

Marshall adds, “We recently started up a mega-project with a joint venture partner in Saudi Arabia. There is a highly automated interface between our systems with an esti-mated 500,000 digital transactions per year.”

For Evonik, digitalisation helps to create more benefit-focused instead of product- centred business models. “We need to identi-fy the true needs of our customers beyond price, quality and availability, match these needs with our unique competencies and elaborate new business models along the whole value chain,” Gammelin states.

Evonik has a holistic innovation system in

place. ‘C4Connect’, a customer-focused on-line platform, combines forward-looking digi-tal activities from Evonik Performance Inter-mediates under one umbrella. This comprises a data interface with customers, an order and business management portal and an innova-tive 24/7 platform, where customers benefit from bidding options.

“To identify and understand the customer journey is currently a key topic. Our digital e-businesses are a way to facilitate business cooperatively with customers. Thus digitali-sation means more than simply introducing new technologies.”

Evonik has also established its own Digital GmbH subsidiary. It arranged this strategic partnership with IBM to benefit from the lat-est technologies and innovative projects IBM is spearheading, encompassing technologies including cognitive and cloud-based technol-ogies such as blockchain, Internet of Things and Industry 4.0, amongst others.

The partnership also allows Evonik to tap into IBM’s R&D technological breakthroughs such as quantum computing. “Watson”, for example, is a cognitive technology platform which can integrate artificial/augmented intelligence (AI) into business processes.

The impact of digitalisation varies depend-ing on where the company sits within the chemical sector, according to Deloitte Con-

EELCO HOEKSTRAChairman of the executive board & CEO, Vopak

“We spend a lot of time on digital awareness and training of the management layer”

sulting’s global sector leader chemicals & spe-cialty materials Wolfgang Falter.

“In feedstock-near petrochemicals and base chemicals it is more about process efficiency and asset effectiveness. Smart cost reduction to increase productivity, safety, quality and reduce risks is the task. Automated processes, predic-tive-preventive maintenance and turnarounds, integrated business planning and network opti-misation and AR/VR-support, contractor man-agement and e-services are the hot topics.”

He adds, however, that for customer-orient-ed chemicals it is more about profitable growth, new operating and business models. “E-commerce/omni-channels, intelligent re-search and development and new levels of customer centricity through e-services are more the issue here.”

GREATER EFFICIENCIESMarshall reveals that for Dow, offering digital order entry options to its customers has had one of the biggest impacts. He points out that it brings the customer greater efficiencies and gives them another good reason to do busi-ness with Dow.

Marshall also believes that logistics digitali-sation has enabled a high degree of automa-tion leading to reduced error rates and higher productivity. He adds, “A critical success fac-tor is that we have one common global operat-ing system so that all business units in every corner of the globe have common processes and can easily benefit from new technology. This is relatively unique given our scale and complexity.”

For Vopak, Hoekstra remarks that the exchange of data in the supply chains is very important. “Vopak has a clear objective to play a key strategic role in making supply

chains more efficient for our customers. Se-cure, real-time exchange of data helps our customers to optimise and save costs.

“If I look at our part of the supply chain, we will be able to improve the efficiency and transparency of the ‘arrival-to-departure’ of our customers’ products. We decided to develop our own systems for this crucial process. The first results and feedback we have received from involved customers are very positive.”

At Evonik meanwhile, Gammelin says it has determined two major findings. “First, from a customer perspective, digitalisation en-riches our relationship with customers and al-lows us to offer more than products. It also allows more contact points and sales channels and we get a better understanding of their needs. They, meanwhile, understand our products and services better and ultimately customer satisfaction and loyalty increases.”

Second, from an internal perspective, Gam-melin argues that digitalisation enhances the

collaboration across the borders of its units to make use of “swarm intelligence”. “We’d like our employees to be more open-minded and try out new forms of cooperation. So we encourage ‘outside-the-box’ thinking and acting.

“Great ideas could not only come from experienced workers, but also from ‘the young

IN JUNE This year, EPCA held a “Digitisation in the Petro-chemical Supply Chain” work-shop. EPCA invited speakers from digital industry “front runners” who shared their experiences and explained their next steps.

Key topics covered on the first day included digital innova-tion, digital transformation and cyber-security. Following on from this, an attendee vote at the end of the first day revealed that the topics the participants wanted to discuss further were:■ Platforms – are they a threat or opportunity? How do we

create trust or build stand-ards? Is it a win/win issue or “winner takes all”?■ How do we create a culture of digital innovation?■ How do we get from “digital innovation” to “digital transfor-mation” and what will the new organisation look like?

It became clear during the workshop that digitisation has already become a disruptive factor in the petrochemical supply chain, although it is unclear how the process of change will now be managed. Key takeaways from the work-shop and discussions included

the need to act now and grasp innovative technologies, as well as take the opportunity of leveraging big data, cloud com-puting and artificial intelli-gence to reconfigure the business environment.

Potential roles for EPCA were also suggested, for exam-ple helping to attract digital talent or developing and spear-heading training for the whole industry and acting as an incu-bator of new talent.

It was also suggested that EPCA could help to demystify the process of digital trans-formation. ■

WORKSHOP JANE GIBSON LONDON

EPCA HOLDS INFORMATION-SHARING WORKSHOP

PETER MARSHALLLogistics director, Europe, Middle East, Africa and India, Dow Europe

“A critical success factor is that we have one common global operating system”

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creatives’. We want our people to focus once again on being chemists, experimenting, tinkering and trying out new things.”

Hoekstra argues that when implementing digitalisation, having the right people is always key. “Our team that is implementing digitalisation relies on a core group of our own developers; however, we also spend a lot of time on digital awareness and training of the management layer.

“Besides that, we are bringing the knowl-edge and experience of IT/OT and the busi-ness together. Employees from the IT depart-ment continue their careers in other departments, such as marketing or produc-tion. At the same time, we are trying to bring in IT staff without an IT background to retrain the IT department. Bringing business and IT closer together is a prerequisite for smooth digital transformation.”

According to Deloitte’s Falter, one major obstacle to digitalisation is data integration

between level 4 (Enterprise Resource Planning, ERP) and level 2 (programmable logic control, PLC/distributed control system, DCS, and su-pervisory control and data acquisition, SCADA). “Level 4 being under IT-ownership and level 2 being under measuring, control and regulation (MSR)/master control terminal (MCT) ownership makes it also organisationally more difficult to get the right data integration.”

He adds that the incentive systems of peo-ple along the chain are not properly laid out to support a successful implementation – so it is often the internal issues that block the good ideas and approaches. He also lists more gen-eral obstacles including lack of digital talents/ workforce training, having homogeneous data standards, fear in the organisation to be digi-talised away, cyber-attacks on proprietary, sensitive data and data ownership issues.

In terms of the next step in digitisation for Dow, Marshall says, “We are focused on cus-tomer experience and employee experience, meaning that we want to use digital technolo-gies to make it even easier for customers to do business with us and streamline our process-es to eliminate defects and rework.

“To this end, we are implementing logistics visibility for every mode of transport so that we can locate each shipment at any point in time and proactively manage customer ser-vice. We’d also like to automate as much of

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the shipping documentation process as pos-sible – we are participating in a pilot project together with Maersk and IBM using block-chain technology.”

On the digital horizon for Vopak is the fur-ther implementation of industrial Internet of Things, with almost every machine or installa-tion complete with sensors, connectivity and possibly also with its own computing power.

BLOCKCHAIN POTENTIAL“The large amount of extra data that this gener-ates creates opportunities for offering new ser-vices. Blockchain technology will create oppor-tunities to optimise supply chains. Besides that our experiences with, for example, using drones to detect energy losses, or robots to clean tanks, or industrial Internet of Things in energy man-agement, are being used and look very promis-ing for scaling out across our global network.”

At Evonik, Gammelin expects to see the big-gest impact of digitalisation in the optimisation of sales channels, the optimisation of the inter-nal production network/Verbund and the opti-misation of the supply chain with external par-ties – where he also sees blockchain technology playing an important role.

Marshall expects to see digitalisation have an impact across all areas of the industry. “We see increased use of robotics to improve mainte-nance procedures, our shipping teams are using Toughpads (iPad type devices suitable for industry use) to complete checklists when they

load trucks, our sales and marketing team are using new technology to disrupt existing value chains and accelerate the innovation process”.

As with any journey, the digital journey starts with a first step. Falter says, “Think about what digital can do for you. Define the purpose and do not start searching. Get ready, learn, win-fail fast, implement and scale.”

Marshall advises companies to get fit for the digital future or risk becoming obsolete. He also suggests that they develop a holistic digital strategy and that they take a serious look at the EPCA study on digitalisation in the petrochemical supply chain.

Hoekstra is also pleased to see EPCA support-ing the topic by enabling in-depth and open dis-cussions amongst its members (see page 15).

“Both the opportunities given by digitalisa-tion and awareness and attitude towards digi-talisation by the industry have improved over the last year. We especially notice this in our meetings with our customers, this topic is now really on the agenda, and it’s good to experience that we can be a support for our customers.”

Hoekstra argues that companies need to ensure that digitalisation is not only a topic for the IT department but include it in the strategic agenda of the company, invest in digital aware-ness of management and integrate it as much as possible with your business.”

Marshall believes that attitudes are shifting within the industry and sees much more attention to digital in the last couple of years.

Gammelin agrees but adds that implemen-tation takes time. “We’ve been talking about reinventing our business operations since the beginning of 2016. Now, after two years, we’re noticing that our ways of thinking and behaviour patterns are changing. We’re see-ing our colleagues take on more responsibil-ity and also demand more leeway and scope for creativity.” ■

JOHANN-CASPAR GAMMELINChairman of the management board, Evonik Performance Materials

“We need to identify the true needs of our customers beyond price, quality and availability”

WOLFGANG FALTERPartner, Deloitte

“Think about what digital can do for you... Get ready, learn, win-fail fast, implement and scale”

Dow is participating in a pilot project with Maersk and IBM using blockchain technology

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