For specialty chemical manufacturers, Industry 4.0 offers the promise of wide-ranging enablement more than a disruption of their business. In bridging digital systems and physical entities and processes, they can find new ways to create value for customers, become more competitive by launching digitized products and services, and optimize their processes and operations.
Most specialty chemical manufacturers already own at least some of the building blocks that make an Industry 4.0 initiative feasible. They typically rely on ERP systems to manage their operations, run complex production machinery with at least some digitized controls, and use business insight and analytical tools to better understand their markets and take control of their supply chains.
A practice, not a product
Technology vendors and analysts sometimes claim that a certain product or practice is transformative and gets companies moving toward Industry 4.0. Many newer technologies, such as the internet of things (IoT) or 3D-printing, were seen by some as rapid on-ramps to Industry 4.0 and digitally transformed production operations.
However, there is no single product or technology whose deployment by itself helps a company realize a transformative Industry 4.0 effort. Successful Industry 4.0 initiatives make more strategic, connected use of technologies the companies already use and enhance them with advanced, targeted solutions for analytics, mobility, collaboration, demand planning, and other areas of the business. What’s new about Industry 4.0 is how companies think about their customers and opportunities and how they create effective strategies for transforming the ways they deliver value and make use of their resources.
Standard guidance won’t help
How do you best prepare your organization for Industry 4.0 and the beneficial changes it might help you realize? Much of the published guidance applies the same notions that are recommended for almost any strategic undertaking – form a committee, get executive sponsors, establish objectives, study opportunities, review available technologies, make recommendations.
With all the best intentions, this tried-and-true approach can certainly ensure that Industry 4.0 initiatives idle without ever taking off. Some experts urge companies to focus only on emerging technologies and their possible benefits, which is a needless and unproductive restriction, because some well-adopted, proven technologies can serve your Industry 4.0 initiative very well.
Get back to value basics
We recommend that specialty chemical manufacturers think about their customers, processes, and products in preparing for Industry 4.0. Empowering your employees to accomplish your company’s objectives and their own professional goals should be an aspect of any Industry 4.0 planning and projects.
Most chemical manufacturers know what their unique value proposition for customers is. As you get ready for Industry 4.0, it would be helpful to validate this and define your customer value more closely. To that end, some companies simply talk to their most important and trusted customers, the ones they do business with all the time. If your relationship and the transactions within it center on the delivery of products you manufacture, it may be time to reassess what the value of these products is. Companies ask their customers questions like:
- How do our products actually meet your needs and what do they truly help you accomplish? How does that make you more competitive and profitable?
- What are the products and services you sometimes wish we had but don’t?
- What are the areas where you are looking for more resourcefulness and innovation from us?
- What would you like to improve in our current engagement model?
- If we had an effective way of sharing our industry and market expertise with you, would you take advantage of it?
Once you have a reliable, complete view of how your organization creates and delivers value today and what opportunities for increasing that value customers present, you can go on to review your business processes and take a fresh look at your products.
Resolving process challenges before acting on Industry 4.0 opportunities
Some of your business processes, along with the associated roles your contributors play, will already be in close alignment with creating the best possible customer value, and maybe there are actionable opportunities to make them more productive within your Industry 4.0 initiative. Other processes may meet operational requirements, but might not be as clearly connected to customer value creation across every stage. In lean terms, they are wasteful.
You may then want to implement some corrections even before you go ahead with your Industry 4.0 efforts, so you don’t perpetrate existing inefficiencies and productivity drains that could jeopardize the outcome of your business transformation. A close review of your business roles and processes will highlight where digitization has the most potential for enabling customer value creation.
Customer value can take many directions
The digital redesign or enhancement of the offerings of specialty chemical manufacturers also needs to be strictly customer-focused. Various approaches are already seeing success, such as those listed below.
- Some chemical production companies add digitally enabled services that help their customers better understand and respond to market and competitive trends.
- Others collaborate more closely with key customers to create new product formulations and recipes that can profitably meet consumer needs.
- Other companies by and by transition into servitization and turn into service businesses that commit to delivering the best possible value to their customers. That may entail a product as well as market analytics, supply chain management, distribution, or other services.
Chemical manufacturers often combine these practices in their Industry 4.0 strategy, targeting them to different customer segments.
Once you complete your review of the current state and the value opportunities in your customer relationships, operations, and products, it’s time to choose one or a couple of proof-of-concept projects that let you implement Industry 4.0 by digitally transforming well-defined areas of the business and applying your findings from the outcomes to a company-wide initiative.
At Sikich, we have the industry and technology insight and solutions to help you shape your Industry 4.0 strategy and use the best current software solutions to get it underway. Sikich provides several free resources to help you move into your Industry 4.0 initiative. You can now download our whitepaper, Getting past Industry 4.0 hype to take advantage of transformative opportunities for creating value.