The world is witnessing a rise in the popularity of innovative and powerful materials, ushered in by the technology trends in the chemicals industry. But to be central players in this story, today’s incumbent players in the chemicals industry will need some vital prerequisites, which include restructuring of their product portfolios, rewriting business models to generate higher returns on their investment in innovation and successful exploitation of digital technologies.
After the 1980s, though, the pipeline of new products has largely dried up. However, in the next 30 years, companies in the chemical industry will focus on growth through global expansion. In fact, chemical producers were one of the first industrial companies that extensively leveraged digital technology trends by using digital controllers and sensors to optimize production and control plant operations. However, in recent times, the chemicals sector has slowed its pace of digital innovation while other sectors, such as retail, banking, and telecommunications, have taken the lead, embracing digital innovation in customer engagement and operations. But the good news is that now some chemical executives are innovating again to find new value through digital technology trends. Here are top four technology trends that are fostering innovation and change in the chemical industry:
Supercomputing eliminates the separation of transactions and analytics. This technology enables processes that can run in minutes, bringing real-time business that changes how people work and how business is optimized. Changes to businesses can now be made in one-tenth of the time, providing chemical firms with superior business agility. Transactions can be run on any device through the use of applications for business users, data can be mined at any level of granularity, and simulations and predictive analytics can be used to develop the perfect decision. The total cost of ownership can be decreased, enabling simplification and reducing failure. Companies in the chemical industry can now shift their IT spending to innovation and value creation.
Technology trends such as hyper-connectivity will make an impact on four main elements: people, business, communities, and sensors. Players in the chemical industry are experiencing new market opportunities with more people being connected to the internet and a rise in the connection between business and suppliers through digitization. New communities are being leveraged to enhance customer engagement, drive personalized experiences, and align efforts across the value chain to maximize value potential.
The chemicals industry’s migration to cloud computing may take time for companies but beginning the journey early can deliver some substantial financial benefits. Executives are still grappling with its risks, possibilities, and the cost of writing off current IT investments. However, for several companies, the transition to a hybrid cloud environment is already underway. Those that move early to embrace this future will position themselves to be tomorrow’s high-performance businesses.
With the risk of corporate spying and digital theft, there is a stronger need for chemical companies to set and execute digital strategies. Companies in the chemical industry must now stay compliant with data privacy and regulations, and value chain interactions must be secured. Access to digital information should be restricted to authorized users and there should be central authentication, regardless of device. Partnering with trusted suppliers is key; establishing trust is important as more non-core processes are outsourced. Companies should build relationships with few partners who meet highest security standards to ensure a simpler architecture.
To know more about the technology trends in the chemical industry
Innovation is considered to be the cornerstone of profitability and growth for chemical companies and a prerequisite for long-term performance in the industry. While most chemical innovation continues to be solidly rewarding and returns well above the cost of capital, there are chances of major variations in the outcomes of innovation projects. Therefore, deciding on how and where to deploy capital may be one of the most challenging tasks for executives of chemical companies. Responsible deployment of capital and the sustainable use of ongoing resources is critical to the success of mega-project development. Therefore, it’s not enough to understand past successes or failures. To plan investments that will meet the near- and mid-term goals, companies also need to be able to anticipate potential outcomes catalyzed by factors such as feedstock, technology, and regions.
How technology and market familiarity affect financial returns in the chemical industry?
Chemical engineers and other researchers are continually introducing new innovations. The development and commercialization of these new technologies, which are highly disruptive will impact capital deployment decisions. The rate of return on a project that involves innovation-investment also varies depending on the company’s level of familiarity with the market and the technology. For instance, several companies are finding new ways to support molecular valorization, the practice of enhancing the value of feedstocks, which is a key goal of disruptive technology development.
How can chemical companies improve innovation performance?
There is immense scope for improvement in terms of innovations for chemical companies. Here are areas where change can have a significant impact on chemical companies:
Improve innovation discipline
Most innovations, especially those that involve new technologies, require the deployment of new capital during commercialization. If performed incorrectly, this additional capital requirement can easily destroy innovation returns. Many chemical companies consider that new products must be launched from full-scale plants to meet cost targets and qualification requirements. Chemical and material innovations are most often adopted at a higher cost than other essential products. Instead of deploying large amounts of capital to build world-scale plants, companies should take a measured approach with flexible pilot plants that allow for modification of properties to meet market needs. This approach reduces overall risk in two ways: it lowers the total capital outlay and also increases the probability of adoption.
Improve market-insight capabilities
Chemical companies are often good at understanding the needs of existing customers in existing markets. However, they have proved to be weaker at generating insights about new markets. Hence, the risks of market entry for companies in the chemical industry are similar to those of developing a new technology. The focus on market insight capabilities at most chemical companies to be far lower than the focus on technology capabilities. While developing market insights is neither easy nor cheap, doing so is far quicker and less expensive than developing a technology. Investing in this area reduces risk, accelerates commercialization, and increases returns. If done well, market-insight capabilities will prove to effectively be a force multiplier for technology investment.
To know more about how to improve return on investment in the chemical industry
Revenue growth in the chemical industry is a result of higher prices and improving global economic conditions leading to enhanced demand in the end markets.
In the chemical industry, base chemicals are produced in large quantities and are generally sold to other end-use sectors or are used for the manufacture of products within the chemical industry. Base chemicals are classified into two groups namely:
- Organic base chemicals
- Inorganic base chemicals
The inorganic base chemicals include hydrogen chloride, calcium carbonate, nitric acid, sulphuric acid, and other such compounds. It also includes soaps and surfactants, fertilizers, and building materials. Organic base chemicals are either building blocks such as propene, ethene, and benzene or compounds made using these building blocks such as methanol and ethanoic acid.
Additionally, a significant growth contributor is the increase in global sales in the automotive industry, which is a major market for chemicals due to the high volume of chemical products used in the development process. However, for leading players in the chemical industry, agriculture and sustainable housing seem to be the two global megatrends helping them gain a competitive advantage.
The Business Challenge
The client– A leading player in the chemical industry specializing in the manufacture of base chemicals
Revenue– >$2.8 billion
Area of engagement– Market Assessment
Objective– To leverage market assessment to understand the market conditions and identify the potential market risks and opportunities.
A leading player in the chemical industry and an international manufacturer of base chemicals wanted to gain detailed insights on the market conditions. The client wanted to leverage the use of Infiniti ’s market assessment solution to better understand the market risks and opportunities. Their primary intention was to understand and anticipate the market situation of its operating subsidiaries in specific geographies. A decision to invest or close the subsidiary was to be based on the result. Their objectives included an assessment of the market by value and volume, state of the market, and identification of the key competitors and their performance in the market.
The base chemicals manufacturer also wanted a detailed report on the entry barriers, new opportunities, risks, and competition in the chemicals industry market space.
Results– Offered detailed insights on the global chemicals industry, which helped them make informed decisions. The market assessment solution also enabled the base chemical manufacture in developing an action plan for addressing the identified issues.
Want more information about our market assessment solutions for the base chemical manufacturers?
The market assessment experts at Infiniti carried out extensive research comprising of interviews and discussions with leading stakeholders across the chemical industry to help the client improve business efficiency. The experts at Infiniti further compiled information from a wide array of secondary sources such as paid industry databases, company presentations, and industry forums to help the client understand the competitive scenario.
The Solution and the Business Impact
With the help of Infiniti’s market assessment, the client was able to identify the market situation in specific geographic areas of their interest. Also, the base chemicals manufacturer was able to gather targeted data regarding the potential risks and opportunities in the chemical industry.
Leveraging market assessment also offered detailed insights on market growth, opportunities, trends, risks and key players in the market. This engagement also provided information on the economic, competitive, and political environment affecting the base chemicals firm. The market assessment engagement also helped the client to improve their overall organizational performance by enhancing their business strategies.
The rising demand for base chemicals lays the foundation for the growth of the chemical industry firms and subsequent industrial value creation. The global market for base chemicals is expected to grow further owing to the high demand from end-user industries such as soaps and detergents, fertilizers, textiles, and pulp & paper.
Moreover, factors such as intellectual property, customer and feedstock proximity, and technology know-how no longer help secure a sustainable competitive advantage. Players who are early adopters of innovative business models have the unique opportunity to act as game-changers in the global basic chemicals manufacturing space.
Chemical industry challenges
- Commoditization of specialty chemicals– The financial performance of specialty chemicals companies has stagnated as many chemicals have become commodities. Also, leading players with broad specialty portfolios are in the undesirable position of having to refine their business models to reflect this sharp drop in pricing power.
- Constant changes in innovation– With rapid technological advancements, the end-users’ demand for faster launch, less expensive products, and efficiency has increased. Therefore, chemical industry players must focus on inventing new entities and business models to enhance the product management strategies.
To successfully implement market assessment solutions in their business processes, base chemicals manufacturers need to understand that market intelligence is the foundation of collective intelligence. Moreover, it is essential to have a logical and structured action plan complete with KPIs and project success indicators that offer a clear direction and instill confidence when implementing an action plan.
A must-read case study for strategy specialists and decision makers looking to develop an understanding of the base chemicals industry.
Agrochemicals have been extensively used in modern farming to enhance crop yield, increase plant growth, neutralize the soil, and protect crops against pests. Farmers use various kind of agrochemicals including herbicides, insecticides, fungicides, and seed treatment chemicals to optimize their agricultural output. The global consumption of agrochemical is on a rise as arable land is shrinking due to rapid industrialization and population expansion. Although the market is experiencing rapid growth, the agrochemical market has its own set of challenges. The use of certain agrochemicals has been associated with environmental and ecological damages. For instance, excessive use of fertilizers can contaminate the groundwater with nitrate, making it unfit for human or livestock consumption. So, what are others challenges in the agrochemical industry?
The global agrochemical industry is governed by many national and international laws, which are increasing the cost of developing new products. Since manufacturers have to consider numerous regulations, there is a delay in the introduction of new products in the market. Additionally, different countries will have varying requirements. As a result, overseas companies need to submit technical grade registrations with the full dossier. Such processes further increase the complexities for overseas suppliers that have to conduct additional tests and studies to obtain approval for selling the agrochemical within the region.
Rising popularity of pest-resistant GM crops
The advances in genetic science have enabled crops to develop resistance to pests. These crops will be toxic to certain insects but safe for humans. As a result, such BT crops do not need agrochemicals and pesticides for it to grow. Pest-resistant GM-maize crops are widely used in the US and is further used in industrial-scale biofuel. The development and growth of such crops can pose a threat to the growth of the global agrochemicals market as they would not be required to be applied to BT crops.
Adverse agrochemicals affect
The prolonged use of agrochemicals is known to have adverse effects on human life, animal life, and general soil health. Some of the diseases such as autism, Alzheimer’s, asthma, and diabetes are known caused by the use of agrochemicals. In most cases, agrochemicals get collected in surface run-offs and groundwater and can move towards the non-targeted area. Such instances can negatively impact the health and safety of residents. Consequently, several regions have started imposing restrictions on the excessive use of agrochemicals and mandated stringent laws, thus, hindering the market growth
The growth of biological sector
Agrochemicals, from its inception, have been looked at with negativity by the general consumers. The harmful chemicals used in pesticides have been the biggest concern which might be dangerous for human consumption. As a result, consumers are switching to organic food, which is driving the growth of the biopesticides sector. The advent of microbial seed treatments on crops, such as corn, soybean, and cotton, are the major factors driving the growth of the biopesticides market. The growth of the biopesticides market will negatively affect the sales of agrochemicals.
High R&D costs
Developing a typical agrochemical molecule takes an average time of nine years with average spending of $180 million. During the same time, the market may witness newer innovations, or the competitors may come up with better chemicals. As a result, manufacturers in the agrochemical industry are struggling to cope with such high R&D costs.
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The current state of the chemical industry is highly competitive and complex. Therefore, to thrive in the market, chemical companies face the dire need to meet the demands of clients. Progressive chemical companies are increasingly relying on sales management software or customer relationship management (CRM) software to streamline their operations to meet the changing trends in the industry. Sales management tools help sales teams in chemical companies to maintain their efficiency and dependability in case of the fast-paced flow of demand. However, owing to the fact that each company’s approach and needs might be different, choosing the right software could prove to be a tricky task. Some of the things that firms must consider before deciding on the software to use are:
- Will it be accessible to the company’s agents when they report offsite or onsite?
- Will it blend seamlessly with the current sales operation?
- Will it come with easy to comprehend functions?
- Will the software provider cater to the complaints if any trouble with their product is encountered?
Here are some of the top sales management software for chemical companies to use:
Infusionsoft has 16 years of expertise in supporting small-scale businesses through the assistance of experts who have been successful in the sales industry.This software helps chemical companies analyze business leads by optimizing the engagement with the audience, improve business’ conversion rates to cater to clients directly, and ensures better fluency in e-commerce with a seamless online shopping experience 24/7. Furthermore, this sales management software also guides the company through the sales follow-up process and maximizes the time to focus on other tasks vital to the company’s operations.
NetSuite accommodates the needs of various business sizes, industries, roles, and software. They have a client base of over 40,000. This CRM software powered by Oracle provides its clients a real-time, 360-degree view of their customers. The software assists its users in gathering and analyzing leads until these turn into actual opportunities for the company to grow. Besides the traditional functions of a CRM, this CRM also provides companies with quotations, order management, commissions, sales forecasting, and integrated e-commerce capabilities.
Salesforce Work is a sales management software that guarantees chemical companies efficient service and effective marketing. The cloud services in this software dedicates its services, maximizing the company’s business ROI. Also, this software aids the day-to-day functioning of the firm by giving them the opportunity to work with specialists and consultants to act as corporate advisors; and, educates the workforce by training them and certifying them as experts in the sales industry.
TeamWox is ideal for chemical companies that are small to medium in size. It is committed to providing organizations the transparency it needs to improve employee productivity and reduce your company’s costs. They also offer a vast array of services such as human resource management, task management, documents management, IP PBX phone system, and voice communication.
As simple as the name itself, Base provides users simplified navigation through its interface. The best part of this software is that it works efficiently on different platforms (Mobiles, laptops, tablets). This app can help chemical companies in the faster implementation of data, seamless tracking of the team’s activity, data syncing in real time, and also gives insights based on the data it collates.
To know more about sales management software that chemical companies can use
The climate change phenomenon has been lingering around for a long time. Specific human activities have contributed to the increasing concerns of climate change, which is often referred to as global warming. The release of greenhouse gases has caused the average global temperature to rise by about 1°C since 1880. It may not seem a lot, but it has caused the Antarctic ice sheets to melt, and raise the sea level by about 12 inches in the last 50 years. The citizens of today need to be more cautious with greenhouse emissions and chemical wastages to control global warming. So how can chemical engineering contribute to the environment and save the world from climate change?
One of the easiest way to control emissions is to do more with the same amount of input. A majority of the energy produced today is wasted in the form of heat, water, or other emissions. The chemical sector being the most energy-intensive needs to take initiatives to improve energy efficiency. Chemical engineering can figure out ways to improve the overall efficiency within the chemical industry.
The chemical industry currently has a large carbon footprint, which is negatively impacting climate change. A straightforward way to reduce such carbon footprint is the use of renewable energy in the form of solar, wind, and water. However, the problems with such renewables is the matter of cost-efficiency as such technologies have an enormous upfront cost. Chemical engineering can solve such problems of cost efficiency by working on ways to produce low-cost renewable energy sources. For instance, using spray-on solar cells can improve its ability to capture and retain more energy than usual.
Nuclear energy is also considered to be a renewable source of energy and has been contributing towards decarbonizing the global energy economy. Its ability to provide power on a continuous basis without emitting greenhouse gases is proving vital in controlling climate change. Chemical engineering plays a vital role to ensure smooth operation of a nuclear power plant as they ensure efficient plant design, standards of safety, and higher environmental performance.
Energy storage and grid management
There’s a lot of factors to consider in the process of efficient power distribution. The process starts right from energy generation and extends till storage and distribution. In case of solar and wind energy, peak performance occurs at certain times, and such energy should be stored in batteries. Improving the efficiency of such batteries can translate to improved power management. The chemical engineering sector is making progress in the development of efficient batteries, which waste less energy during conversion and has higher storage capacity.
Although it looks innocent, the food and agriculture sector is one of the largest contributors towards greenhouse gas emissions. The emissions come from livestock such as cows, rice production, and agricultural soil. Livestock accounts for the majority of the emissions, with the release of methane and nitrous oxide in the atmosphere. Chemical engineering can come to the rescue by designing fertilizer in a low-energy way, reusing food waste, and making food production more efficient.
As the world gets depleted of their fossil fuel reserves, scientists start looking for alternatives, of which biotechnology seems very promising. However, certain challenges need to be overcome to produce energy from food crops like maize and sugarcane. To save the world from climate change, we need to turn towards chemical engineers to develop efficient technologies and make bioenergy production cost effective.
For more information on how chemical engineering can save the world from climate change, chemical engineers, and greenhouse gas emissions:
Chemicals are usually looked upon with an evil eye in the modern world. People are worried about environmental safety and health issues that are brought about by harmful chemicals. In addition to that, chemical companies themselves are struggling when it comes to the safe disposal of toxic substances and leakages. It comes as no surprise that people all over the world prefer organic goods in a bid to avoid such harmful chemicals. However, the truth is that chemicals are omnipresent, and cannot be avoided, as it essential in the manufacturing of infrastructure, electronic devices, household items, and even the food we consume. As a result, the concept of green chemistry has emerged to soften the impact of harmful chemicals on the environment and human health. Green chemistry or sustainable chemistry focuses on designing products and processes that minimize the generation or use of hazardous substances. It is different from environmental chemistry as it focuses more on technology to prevent pollution and reduce the consumption of non-renewable resources.
Marketers often come up with hundreds of marketing ideas for FMCG or any consumer-facing brands. The same managers will often struggle to bring about many such ideas when it comes to B2B marketing. Such limitations are caused by the finite number of channels available for promotions and advertisements. Marketing gets even tougher when it comes to the chemical industry due to stringent regulations, product diversity, and globalization. However, marketing strategy is essential for chemical companies for their survival and global expansion. Product differentiation can be hard to achieve as all chemicals are usually made up of same components, and their content is usually mentioned in the packaging itself. Consequently, players in the chemical industry have to look at a innovative marketing strategy to compete in the regional as well as global market.
Branding is a critical part of the marketing strategy for not only consumer goods, but also in B2B communication. Although consumer brands spend millions of dollar in developing brand awareness, marketing industrial products doesn’t need the same kind of commitment. Customers in the chemical industry are ready to switch brands if they get the chemically equivalent product. Chemical companies need to fight hard to create a unique brand-name in the market. Delivering quality product consistently and providing support and consultancy can help build a reputable brand name. As a result, branding is highly dependent on pricing and performance of the supplier. This is the reason why buyers aren’t hesitant to purchase from established brands such as BASF SE, DuPont, and Dow Chemicals.
Since chemicals are a complex commodity, there’s a lot of information that needs to be conveyed to a prospective customer before finalizing a sale. Mass marketing mediums don’t work well as it can only communicate a limited amount of information. Consequently, a strong sales team is required to persuade the client to purchase by presenting company’s superior product portfolio. It is essential that all members of the sales team are on the same page with each one of them trying to promote the same key product delivering similar messages. The role of a salesperson is more consultative in nature as they try to suggest the right product that will fit customers needs. Additionally, providing samples and demonstration can increase the possibility of sales.
Offering multiple service levels
Although most chemical components will have similar pricing across all suppliers, the price varies because of additional service provided by the supplier. In a bid to exhibit pricing competitiveness, chemical companies can offer multiple service levels at different price points rather than bundling the same service across all products. For instance, companies can include only essential services with their standard products and use automation to lower costs.
There’s a saying that’s gaining prominence in the world of digital marketing which goes, “Your business does not exist if it’s not there on search.” Today, a vast majority of new players and companies who are looking to expand rely on Google and other search engines to identify capable suppliers. They do their groundwork in terms of product offering, pricing, and other services. Thereby, becomes essential for chemical companies to have a functional website with a good search ranking and all the relevant information which are required by the customer. They can also bolster their online presence using search engine marketing (SEM) and native and display advertisements. A mix of traditional and online marketing often delivers impressive results. Additionally, social media can also be leveraged to generate brand awareness. Recently, many companies have utilized YouTube videos to share their B2B success stories and convey their product capabilities.
For more information on innovative marketing strategy in the chemical industry and brand awareness:
In today’s rapid business scenario, a company’s lack of agility will significantly affect their ability to be competitive. The chemical industry being highly volatile, requires the players in this sector to evolve and adapt themselves to the changing market conditions constantly. To help them achieve this, chemical manufacturers must have a reliable IT infrastructure and ERP system that can analyze operational data, support critical business functions, and ensure improved organizational transparency. With the rising competition on one side and mounting challenges on the other, the only option left with the chemical manufacturers to survive in the market is to covert these challenges into opportunities. Let us have a look at the key challenges that are faced by chemical manufacturers:
Unanticipated variations in commodity prices
Going by the trend a decade ago, the energy costs appeared to be on an upward climb, but the recent years have witnessed the emergence of cheaper forms of energy. This would have been a sigh of relief for energy manufacturers if only the benefits of lower energy prices were distributed evenly on a country-by-country basis. Therefore, chemical companies are required to have a robust ERP system that will help them respond to fluctuations in energy prices quickly.
Increased number of recalls and quality audits
Chemical manufacturers are exposed to a variety of government and other regulatory compliance. Therefore, it is essential for them to maintain strict quality management and detailed product information. Chemical manufacturers are also required to capture data from operational processes accurately so that in case of any recalls they can be prepared for it. To equip themselves for quality audit, the chemical companies must integrate traceability data across the business and should be made accessible to various stakeholders such as supplier and customers during the quality audit process.
Managing manufacturing and operational data
The needs and demands of different stakeholders to chemical companies may be different. E.g., while shareholders look for profit and revenue, customers want more for lesser money, and the regulators respond to safety and environmental concerns. By managing their operational and manufacturing data efficiently, chemical manufacturers can ensure success in responding to the requirement of various stakeholders in their value-chain.
Cutting down formula costs to create new efficiencies
The availability of raw materials to chemical companies are affected by factors such as the seasonality, cost of purchase, and maintenance constraints, etc. But at the same time, chemical manufacturers have to ensure that they procure the right materials with the required specifications to comply with the standards of the formulations. Chemical companies must work smarter to achieve the right resource mix and formula optimization at the minimum cost so that they can satisfy both their internal and external stakeholders.