The Great Enabler
Accelerated digital transformation in the chemical sector
The factory of the future is not just made of a high-tech version of brick and mortar; it exists in a digital realm. In one of the latest milestones of translating a chemical asset into a digital copy, Siemens and Bentley Systems are building the first digital twin of an integrated petrochemical complex in Indonesia. The digital replica will enable the collection, organization and visualization of data with a view to improve asset performance, optimize costs, create greater transparency and better and faster decision-making. In simple terms, it will make the facility speak, using data, to its operators. Speaking to GBR, Tobias Botzenhardt, VP and head of process automation at Siemens ASEAN called the project a “brownfield enablement” exercise, through which the analog processes, paper-based documentation, and “brick-and-mortar” facility are translated into an integrated digital framework.
Singapore’s Jurong Island is also a typical brownfield scenario with many chemical plants dating back decades and few greenfield investments. But manufacturers are starting to implement Industry 4.0 solutions, including advanced analytics and AI in their operations. Singapore’s oldest refinery will also pioneer a digital twin technology: The Pulau Bukom refinery operated by Shell began this transformation in August 2020. When completed, the digital twin will provide live information via augmented reality (AR) and virtual reality (VR). Workers will also be able to connect to the virtual plant via mobile devices, tablets and AR headsets. Besides improving operational efficiencies, reducing maintenance costs or preventing downtime, the digital twin technology will “create a new digital culture and enable quick decision-making, allowing effective real-time collaboration between experts and operators,” said Andreas Krobjilowski, general manager at Shell Jurong Island.
The Industry 4.0 Revolution has been a popular topic for chemical companies in recent years, but the pandemic has lent profundity and pace to these discussions, pushing greater adoption of AI, machine learning (ML), process automation, and other end-to-end technologies. For those early adopters of digital tools, the transition to remote working conditions was considerably smoother. Lanxess rolled out its digitalization journey “seriously” about three years ago, Vinod Agnihotri, managing director at ASEAN Asia Pacific told GBR. By 2020, the company had already begun digitalizing its global asset base and today two-thirds of its global sites are equipped with data analysis software, which allows Lanxess to benefit from predictive maintenance, efficient use of resources and capacity utilization. Agnihotri is convinced this is the only way forward: “It is high time that the industry is integrated with new technologies, stays connected, and follows the footsteps of other industries so that we are not faced with a surprise a decade later.”
The pandemic created the perfect storm for the adoption of digital tools and emphasized the importance of automation, but the industry should also be careful not to overstate transitions such as smart work as a transformation. Arun Nair, managing director at Fluke Reliability APAC, explained how the digitalization process accentuated by the pandemic occurred across two layers – at a basic one, as a mere necessity, and at a secondary one, as a revolution: “Right after the pandemic hit we saw the global spearheading and fast-tracking of digital initiatives. Industrial players had to work 10 or 20 times faster than before to shift to digital tools across two phases: at the first stage, the shift to remote work pushed massive data and assets migrations, as well as applying different technologies to oversee operations without physical presence. The second stage was to look at how these adjustments could actually benefit the business, and digitalization came to the forefront of people’s minds.”
When looking at this second stage that Nair speaks about, there are significant gaps and inconsistencies in the level of digitalization across both vertical and horizontal value chains. Some chemical companies understand digitalization and automation as a back-office development, focusing primarily on manufacturing. Also, there are big discrepancies between bulk and specialty producers, the former tending to be more automated given the repetitive nature of production processes. As a result, automation and digitalization efforts are understood differently by different players. For instance, BASF’s plastic additives plant on Jurong Island is controlled via a Distributed Control System through which everything from the dosing of raw materials to the adjustment of pressure or temperature is adjusted to pre-established settings. As a comparison, Croda, a specialty player, invested in technology used in the product application by end-customers: After acquiring technology start-up Cutritronics, Croda’s derma products come with a skincare applicator system that stimulates the skin to apply dermatologic products.
“The word ‘transformation’ is also often misused. Implementing a few digital projects does not equate to transformation. What the market needs to think about is the vision for manufacturing in the next 3-5 years. This mid-term horizon is what calls for immediate action.”
Andreas Hauser, Managing Director, TÜV SUD Asia Pacific
In the upstream chemical sector, O&G operators are big users of automation. Swedish-Swiss digital technology multinational ABB is working with Keppel to operate South Asia’s first autonomous tugboat: “At ABB we notice a clear development towards autonomous, low manned or unmanned operations, especially in the O&G sector where assets are remote and difficult or even dangerous to access,” said Johan de Villiers, global vice president O&G, ABB.
Besides MNCs, start-ups also find a place in this space, identifying how automation can solve existing issues for O&G operators. BeeX Autonomous Systems, a startup founded by Grace Chia, develops underwater autonomous maritime vehicles used for inspections by different industries, the O&G sector being an important one. The next step for Chia is to both scale-up and continue to improve the technology, especially in terms of safety: “The ‘brain’ is the most important part for autonomous vehicles. Today we see a greater focus on improving efficiencies by endowing robots with more computing capacity that allows them to make sense of their environments. How far we can leave a vehicle run autonomously is a common concern, so we are testing the vehicle in different environments to understand its performance for edge cases,” said Chia.
“I believe a start-up must come with a disruptive innovation: if we just offer an operational improvement, there is a high chance an MNC already has some internal capacity to deal with that issue.”
Grace Chia, Co-founder, BeeX Autonomous Systems
One problem with the high level of unmanned operations in the upstream chains of the chemical industry, including for bulk chemicals producers, is that companies feel they are already automated, and therefore do not see the need to digitalize. This is one of the main adoption challenges, according to Andreas Hauser, managing director at TÜV SÜD Asia Pacific: “There is a misconception that Industry 4.0 is all about automation; however, becoming agile based on digital technologies encompasses not only the core production process, but also planning, scheduling and quality tasks integrated into the shop floor and across the enterprise and supply chain.”
Hauser’s observation also alludes to the market’s difficulty in distinguishing between automation and digitalization, especially as other terms like IIoT and Industry 4.0 are thrown into the mix. While digitalization refers to the transition from analog to digital, creating a connection between the physical asset to a centralized system or a cloud, automation refers to endowing machines with learning and doing capacities to perform tasks without human interference. Yokogawa’s slogan of “industrial automation to industrial autonomy” illustrates the definition of automated assets as “operations with human-like learning and adaptive capabilities, responding alone to situations that have not been pre-programmed in the design, while ensuring all safety-critical functions within a secure bounded domain,” as explained by Joseph Lee Ching Hua, head of co-innovation centre & general manager of Development Centre, Yokogawa Southeast Asia.
The downstream and digital platforms
If the first tier of digital implementation is at the plant level, with technologies like digital twins or widespread automation particularly used by basic chemical producers, the second tier is represented by the digitalization of the middle and front offices, including go-to-market strategies, customer and distributor interfaces, self-service platforms, and technical marketing. These developments are more relevant in the marketing of specialty chemicals and have become more important since the pandemic.
E-commerce platforms are increasingly a go-to for MNCs who want to localize or customize their reach. Croda recently launched a Chinese site for local customers while Mitsui created a separate site for its sustainable packaging solutions. Besides using these platforms to reach out to the market, chemical companies have also started to understand the value-use of digital platforms for their customers; for instance, Buckman uses a smart inventory program through which its customers can better control their inventories to optimize their feed rates and reduce costs.
For chemical traders, digital platforms can also act as a big disruptor, bringing transparency into what would otherwise be closed-doors transactions. SourceSage was founded in 2015 as a B2B chemical trading platform. Jian Min Sim, CEO and co-founder of SourceSage, said it is only natural for players in the distribution space to resist digital platforms: “These players are very comfortable with traditional models where the price is negotiated bilaterally rather than stripped open onto a platform. Distributors tend to have long-term pricing agreements with producers, so placing the product online will completely disarm some of them and drive the price down.”
Focusing first on the oleochemicals and disinfectants space, SourceSage brought buyers and suppliers under one platform, but the margins proved very low for the start-up. With the pandemic having a big impact on the “middle-man,” revenues for traders dropped sharply by over 90%, according to Min Sim. But the founders of SourceSage saw this disruption as an incentive to change, and converted the B2B marketplace platform into a standalone, white-label, online store platform, securing big customers like Mitsui. The SOS (SourceSage Online Store) now offers entrepreneurs a platform to start or scale up their business online.
In the specialty and higher-value chemicals, digital platforms have a less disruptive effect. The high regulatory controls and the complex nature of these formulations leave little room for standardized trading. Therefore, digital platforms have become complementary tools for distributors. Azelis has recently launched a digital platform, now available in APAC, through which customers can access information about products, request sample quotas, or place orders: “We found this was a necessary innovation to diversify our access to the market and create another touchpoint with stakeholders. Through the digital interactive platform we can empower customers to reach out to us according to their own needs and schedule,” said Laurent Nataf, CEO & president at Azelis APAC.
For Dirk Meyer, member of the board of German life-sciences Behn-Meyer, the human touch remains an important part of the service-oriented specialty business: “During the pandemic we saw that customers still prefer having a real person on the other side of the line instead of anonymous transactions, ”he argued, convinced that digital platforms are an additional channel rather than an alternative one.”
“The chemicals industry is highly regulated and controlled, but this does not stop us from providing a better customer experience through self-service platforms and real-time information as required by customers in the near future.”
Siew Tin Lim, CEO, Jebsen & Jessen Ingredients
Logistics and maritime sector
Of course, in other cases, it is precisely the human touch that leads to mistakes, a lack of transparency and bottlenecks. Jan Harnisch, global COO at Rhenus Logistics, gives an example relevant to the logistics sector where multiple people are involved in handling a shipment, each inputs their own data, and the final information ends up being rigged with mistakes: “We cannot digitalize or have supply chain transparency with 10 versions of the truth. Digitalization has become a buzzword and five people will give five different definitions of it. When you come down to practical matters, the definition gets very thin, very quickly,” said Harnish.
Rhenus is developing a global IT system to connect all of its offices to a single master data management that will be rolled out by the end of 2021.
Seeking to answer inefficiencies found in the maritime sector, technology company ShipsFocus is the world’s first maritime dedicated venture studio, incorporating yearly between two and four Singaporean maritime start-ups typically focused on data analytics and operational tools and services. Its founder, Chye Poh Chua, set out to match supply and demand for products like chemicals onto a digital platform: “One may say the maritime industry is inefficient, but that would be incomplete because it is also very efficient: demand and supply always meet in a largely perfect competition model. The industry’s inefficiency is generally pitted against a digital backdrop,” he said.
Chua thinks the industry suffers from an “innovation and adoption conundrum,” many ideas not seeing the light of the day, mostly because the cut-throat shipping industry is demand-driven and more focused on costs. Focus on other priorities, inherent business conservatism, preference for a human interlocutor in day-to-day transactions, a lack of data accountability, the overload with meaningless data, cybersecurity fears, and a more general mistrust in non-human generated inputs also lend support to the conventional wisdom that humans are not replaceable – not fully, not soon, and not for all tasks, at least.
Chemical companies seem to understand that digital technologies need to be applied as part of a strategy masterminded by digital experts. Stolt Tankers, for instance, appointed a digital product development manager in Singapore to lead digital efforts, including the use of sensor-generated data in predictive maintenance on the ships and for weather routing (using technology to plan the most time-effective and fuel-efficient routes). Buckman also appointed its first Chief Digital Officer, as part of its accelerated transformation journey.
Image courtesy of Cristiano Firmani on Unsplash