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Manufacturing Technology Insights | Tuesday, March 31, 2020
The COVID-19 pandemic underscored the need for digital transformation for chemicals plants, and the divide between digitally mature organizations and those still battling to acquire the requisite expertise and comprehend the benefits of digitalization are expanding all the time.
FREMONT, CA: The chemical business has been slower to embrace digital transformation than the average industry, while it is far from last. As with any vertical industry, COVID-19 has significantly accelerated the digitization of chemical plants.
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Adjusting to remote and hybrid work patterns, managing with a fractured—and occasionally broken—supply chain, and responding to changing consumer needs compelled even the most recalcitrant factories to understand the critical nature of digital transformation.
According to a KPMG survey, 96 percent of manufacturing CEOs stated their companies' digital transformation has accelerated, and 48 percent claimed it has progressed by a couple of years. According to a recent study conducted by the Manufacturing Leadership Council (MLC), 82 percent of respondents felt that the epidemic had "generated a new sense of urgency" for investing in new technologies and digitalization.
For the last decade or two, incremental innovation and digital transformation have been the norm, but now digitalization is accelerating. The pandemic shook customer demand, supply chain operations, employee interactions, and maintenance routines while increasing demands for sustainability, personalization, and efficiency.
The importance of digital transformation has increased in recent years. Chemical businesses anticipate investing an average of 5 percent of their annual revenue in digital operations solutions over the next five years, with 75 percent anticipating significant digitalization by 2026. The manufacturing sector has a digital maturity profile of 39 percent, although the chemicals sector is somewhat ahead at 42.2 percent.
There are, however, indications that chemical facilities are having difficulty scaling up from the pilot stage. 35 percent of chemical facilities are implementing digital transformation strategies, 30 percent are conducting pilots, and 30 percent are preparing to do so. According to the broader industry average, 41 percent are in the implementation phase.
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The divide between more digitally mature plants that are already using advanced digital transformation techniques and others still in the early phases is widening. Gartner cautions that a significant range is growing between digitally advanced chemical plants and those that lag, with the latter likely to collapse.
Regionally, facilities in Asia-Pacific have moved further, recognizing the strategic implications of digitization, while those in Europe and North America continue to focus exclusively on operational improvements. Only thought leaders in this field stated that the critical benefit of digitization is increased market and customer access. At the same time, plants in other regions of the world indicated that the primary use is cost reduction.
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