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The Periodic Table of Digital Innovations for the Chemical Industry
We are frequently asked by clients at chemical and material companies what major digital innovations are poised to affect their industry – and of course, there are many. We have highlighted four of the most critical digital trends and discussed their impact on the industry's business model, but a more comprehensive listing and classification of digital innovations can help organize thinking and efforts – so we've taken inspiration from one of the most successful classification schemes of all time, the periodic table, to provide one. If there can be a "periodic table of beer," a "periodic table of social media analytics," and even a "periodic table of New York City trash," why not a periodic table of digital innovations for the chemical industry?
Many of the digital innovations companies should monitor are not unique to the chemical industry but are part of the general digital transformation of industry, notably operational improvements captured in the first two "groups."
- First, many digital innovations boost process efficiency, including many lynchpins of "Industry 4.0" or the industrial internet of things (IIoT). Here, chemical firms can take advantage, as many manufacturing peers have, of innovations that enable predictive maintenance, such as Precognize's machine learning work with BASF, and process optimization, such as Nutonian's AI-based work with Dow, can further improve efficiency. Augmented reality can help make workers more efficient at a variety of tasks, as in pump manufacturer Leybold's work with Re'Flekt on AR headsets to guide technicians. Digital innovations can even support worker safety, as in Rio Tinto's use of SmartCap Technologies to minimize fatigue-related incidents.
- Second, there's a wide and growing set of uses for AI and other digital technologies in internal administration and enterprise functions, from hiring to fraud prevention, as well as more innovation-related functions like knowledge management and IP analysis. For more here, see the report "Strategic Directions for Enterprise Artificial Intelligence."
Subsequent "groups" touch more on chemical-specific innovations:
- Digital tools for product development are proliferating and are poised to have a significant impact on the industry. The burgeoning field of material informatics can help significantly accelerate material innovations, as in Citrine Informatics' work with Alcoa and others. The related area of digitally enabled materials discovery includes work like Wildcat Discovery Technologies developing new battery materials. Meanwhile, even with known materials, using algorithms can speed the process of developing custom formulations, as Uncountable has done with Cooper Standard. Finally, chemical companies should use and integrate their materials into tools for digital part design like nTopology's generative design tools.
- In the category of novel production innovations, synthetic biology can offer a new type of digitally driven production platform. Meanwhile, the field of 3D printing needs no introduction and is already a major area of focus for innovation teams at large chemical companies from DSM to Mitsubishi Chemical.
The larger rightmost group of sales & logistics provides a rich vein of digital opportunities. Many opportunities are relatively established, like e-commerce, which Dow Corning has done with its Xiameter brand since 2002, and vendor-managed inventory, which stretches back to the 1990s and has become a staple for firms like feed additive supplier Novus. A natural extension of these efforts will be growing use of chatbots for sales and customer support, supported by developers like Artificial Solutions.
Digital innovations can also support demand forecasting to enable better planning in sales and logistics – Akzo Nobel has worked with E2open to cut excess inventory. Taking this one step further, dynamic pricing can directly support growth – firms tend not to advertise their efforts as openly here, but one anonymous specialty chemical firm in a McKinsey study boosted price increases from 1% to a range of 3% to 5%. Innovations in blockchain can help securely track inventory and supply chains, as well as enabling smart contracts like the one Skuchain organized for Brighann Cotton.
Finally, and perhaps most intriguingly, there are a variety of ways in which digital innovations can enable new business models in chemicals and materials. One way is by enabling companies to provide technical services, as Diversey does in providing remote monitoring and services to go along with its cleaning chemicals as part of its "Internet of Clean" initiative. Another service offering can be decision support – BASF's acquisition of AI weather forecasting startup ZedX to provide its customers precise guidance on when to apply its herbicides is a case in point. Digital can also enable custom choice, like Henkel's SalonLab platform for customizing hair care products to each consumer's own hair.
Pay-per-use models can also allow firms to monetize their offerings differently, as in Kemira's use of sensors and remote monitoring to charge customers based on cubic meters of water treated instead of kilograms of chemicals purchased. Similarly, pay for service allows companies to leverage their application knowledge, as Yara has done with soil sensors and analytics than can actually allow farmers to minimize usage of its fertilizer, effectively disrupting its own business. Lastly, collecting and providing customer data (appropriately aggregated and anonymized) can be another valuable offering, as the Farmers Business Network does for various agrochemicals.
There's clearly a wide variety of digital innovations that chemical companies need to evaluate and making choices about where to focus by aligning tech choices with business goals is critical. We expect to expand this "periodic table" as technology develops and more use cases emerge – let us know if there are innovations you would like to see added as well.
- Recent Report: From B2C to B2B: Identifying Digital Business Models for Physical Industries (for Lux members only)
- Recent case study: Case study: Kemira adapts digital strategies to grow its water chemicals business (for Lux members only)
- Recent Insight: Digitalization in biosciences research and the potential for business model innovation (for Lux members only)
- Register for our upcoming webinar: Accelerating Materials Innovation in an Era of Financial Engineering