INDUSTRY INSIGHTThought Leadership

Embracing the digital world

GPCA talked to Mehtab Gilani of IBM GBS, who took part in a workshop on the Industrial Revolution 4.0 at the 5th GPCA’s R&I Summit in Dubai

Can you begin by briefly outlining the elements in Industry 4.0 and the scope of digitalization that are particularly relevant to the chemical industry, for example, the cloud, Internet of Things, big data… supply chain communications…

As one of the largest and most diverse business sectors in the world, the chemicals industry is a strategic supplier to virtually all segments of the economy. However, the majority of companies specialize in a select few product lines, making the chemicals industry an especially competitive, operationally unique and environmentally challenging field.

To be a disruptor in the chemicals industry, organizations must act now to prepare for a very different tomorrow and Industry 4.0 (IR4) is one element that is disrupting the industry. Whilst the scope of digitalization is broader, IR4 will have an impact on maximizing asset utilization, optimizing the supply chain and achieving operational excellence.

Chemical companies cite a combination of technologies as critical to their business strategies (see chart).

In IR4, cyber-physical systems model the chemical enterprise. Digital manufacturing uses Internet of Things (IoT) intelligence for dynamic response to product demands. Interconnectivity of machinery sensors and control systems allow real-time optimization of manufacturing and production processes, as well as supply chain networks.

These cyber-physical systems also extend to asset management for predictive maintenance, statistical evaluation, and measurements to increase asset reliability and lifespan.

GPCA I_Indistry 4 0_mehtab Gilani

Which are likely to be more important?

Digitalization and IR4 go hand in hand. As far as industry is concerned, IR4 represents both an opportunity and a responsibility, for instance through the introduction of selective machine-to-machine communication, which in turn can produce new service models within the company or through the value chain.

Industry 4.0 describes the convergence of cybernetics and information technology which permeates all areas of manufacturing, giving rise to smart, self-configuring and controlling products and production systems. Therefore, from a technical perspective, IR4 is the convergence between the Internet of Things and the Internet of Data and Services

The chemical industry has been at the forefront of connected devices long before IoT usage emerged in other industries. Measurement, monitoring and control have all been key industry features since the 1950s. Since devices have become cheaper, with more IP addresses to identify them, the volume of data has increased, leaving huge data lakes untapped.

IoT devices create structured data. This overlooks the considerable merits of unstructured data. With such vast quantities of data available, the current IoT value system is starting to run “hot” at the analysis stage and hence IR4 is being seen as an important point on the agenda of chemical companies’ board room discussions and plans.

Digital technologies are also creating unprecedented levels of industry dislocation, with new entrants fundamentally changing the economics of business. To thrive, chemical companies need to conceive and offer compelling new customer or even end consumer experiences, advance their operational efficiency, launch or integrate with new digital offerings, and build innovation ecosystems. We call this process “digital reinvention”.

Chemical leaders are not using IoT as an individual digital technology. They are combining multiple technologies across the value chain.

Where are the main benefits likely to come from in the early stages of adoption?

It is important to note that IoT is more than just connected products and devices. It is essentially the digitalization of the physical world, which unlocks unlimited potential to transform it. You can optimize asset utilization, operations and processes when combining analytics with real-time visibility, enabling the creation of new products and services and unleashing significant progress in end-user experience and business model transformation.

The proliferation of connected devices and IoT technologies is already driving significant change by connecting related industries. For example, developing IoT in agriculture helps communicate timely, accurate real-time weather forecast data related to dynamic agricultural processes like planting, harvesting and chemical applications. In another example, OnFarm uses sensors and IoT connectivity to enable farmers to optimize water, energy and inputs.

Specifically for R&D and innovation, what are the key areas for chemical companies to focus on and, again, where will the benefits be felt first?

R&D is one of the most important elements in the chemical sector value chain. Chemical businesses need to develop new ways of realizing and monetizing value. Initiatives might include spawning new business models, accelerating innovation and new product development, and developing better, more holistic ways of conducting risk assessments.

The digital transformation approach of chemical product development is characterized by:

  • The mathematical or computerized prediction of molecular properties, which removes a significant burden from lab-based experimentation.
  • The inclusion of knowledge residing in laboratory documents, internet-based articles, and academic journals that scientists use to form opinion or find solutions. Cognitive technologies such as IBM’s AI platform can be trained to scan through unstructured data and establish relationships between chemical elements, compounds and mixtures. The scientist or chemical product development team can interact with this system using natural language to extract what they need quickly and effectively.
  • The fact that the product development process is not only optimizing for chemical properties but also considering other aspects of time to market, ability to sell and ability to produce such as cost of manufacturing, profit objectives, demand forecasts, and helping ensure process change from an early stage. This integrated approach accelerates time to market and increases the probability of success once the product is introduced.
  • The speed of adaptation to changes (such as an increase in the cost of an ingredient) grows with higher automation and digitized product development.

“Digital reinvention involves creation or orchestration of unique, compelling experiences for customers and other stakeholders”

Chemical businesses need to identify, build and retain the necessary talent to create and sustain a digital organization.”

Mehtab Gilani, Associate Partner, IBM GBS

How would you characterize the understanding and adoption of digitalization in the GCC chemical sector – lacking, nascent, underway, well developed…?

Digitalization in the GCC chemical sector is gearing up. Chemical companies have started to establish data management and governance teams and processes to support their digitalization efforts. These organizations have typically employed a Chief Data Officer (CDO) or equivalent. This CDO defines, develops and implements the strategy and methods by which the organization acquires, manages, analyzes and governs data.

Companies are seeking advice around operational solutions and enterprise asset management as part of their digitalization journey with the focus of these solutions to provide insight of the asset health and plant’s processes. For production optimization GCC chemical companies are looking for integrated solutions to monitor plant performance and identify bottlenecks, inefficiencies, etc. (process flow sheets, process simulation, process optimization, diagnosis, material balance, energy balance, etc.).

What should chemical producers in the GCC region focus on first in the move to “digital reinvention”, as described by IBM?

Digital reinvention involves creation or orchestration of unique, compelling experiences for customers and other stakeholders by way of emergent business ecosystems. The most successful digitally reinvented businesses establish a platform of engagement for their customers, acting as enabler, conduit and partner.

Digital reinvention differs in concept from both digitization of individual capabilities or functions, and digital transformation. For chemical organizations, digitization involves digital automation of specific processes such as supply chain. For example, dynamic scheduling can be implemented to connect real-time customer orders with production data.

Digital reinvention follows a path that starts with digitization and progresses through digital transformation and on to digital reinvention.

Do you think they have as much to gain as producers in the more developed economies where specialty chemicals are more mainstream?

We are witnessing that chemical companies in the region are attaching greater importance to data analytics to gain insights that will bring value to their organizations in terms of operational excellence, higher revenue and lower the costs.

There is a focus in chemical companies on using technology (analytics) to identify specific problems, such as desire to put on Linear Programming (LP) optimizer on top of a simulator looking at historical performance and design parameters to automatically identify the optimal operating window that is also optimized against maintenance costs.

Industry 4.0 is helping companies on analyzing production optimization with reliability by looking into modelling philosophy – first principle engineering models vs. statistical models- which one is better than the other given their organizations specific operations and plants.

How would you (IBM) advise GCC chemical producers to embrace the Industry 4.0 agenda as a whole?

They have to start with an understanding of business imperatives, corporate strategy, and competitive landscape to fully embrace industry 4.0 agenda.

Chemical businesses need to identify, build and retain the necessary talent to create and sustain a digital organization. It will be vital to perpetuate innovation-infused cultures incorporating design thinking, agile working and fearless experimentation. Leaders will need to contextualize organizational priorities within business ecosystems, seeking both new forms of partnering and new ways to build value within new systems of engagement.