Chemical Manufacturing: How to Embrace Digital Transformation

Written by: 
Kimberly Mertlich
Posted on: 
March 18, 2020

Embracing change in the chemical manufacturing industry is just what is needed to keep up in such a volatile and dynamic environment. With so many challenges facing the industry, how do manufacturers stay productive? Below are challenges facing the industry today and how manufacturers can embrace digital transformation.

Fluctuating raw materials and prices

Manufactures live in a dynamic environment with fluctuating price changes, tariffs and exchange rates. Crucial to success is the ability to maintain contract negotiations and quick price changes to avoid pressure on margins. Cutting formula costs to increase efficiencies is constantly evolving, especially as consumer demands and preferences for ingredients, sustainability and the desire for total transparency increase. Research from Bain Insights indicates improving pricing capabilities is important and top performers price in two different ways; dynamically and according to value.

Value Pricing

Cost-plus pricing only reflects a partial understanding of the value of products where value pricing takes a greater effort to understand consumers business and how their products provide value. This allows better price decisions because it’s clear what consumers are willing to pay for, allowing leaders to set the correct target price for each category.

Dynamic Pricing

Reacting quickly to the market allows you to take full advantage of upswings, downturns and forecasting prices before they occur helps top performers price for today, not yesterday.

Data management, compliance requirements and quality control

Government and other regulatory compliance requirements are imposed on chemical manufacturing companies making data management crucial, especially in the event of a recall. Similar to many companies, manufacturers have already invested in IT systems and infrastructure but are failing to take full advantage. Advanced analytics tools including predictive maintenance, throughput analytics and value maximizing modeling can really help take your operations to the next level.

How to embrace the digital transformation?

Digitalization is expected to enhance EBITDA margins by up to 9% in the industry. Leveraging the correct technologies play an important role.

  • The Internet of Things (IoT) can be used to capture data through sensors. A great example of how a chemical manufacturer can embrace IoT is the use of sensors to monitor temperatures, humidity, shock or light which then can integrate with other software systems that create alerts if something is off.
  • Using the Cloud. It’s difficult to find companies who have not switched to cloud based platforms these days and it creates easy access for suppliers, customers or carriers.
  • Analytics for everything. For customer satisfaction, product quality, production speed, supply data. With accurate information, more strategic business decisions can be made and increase opportunities for innovative ideas.
  • Machine learning to maintain operational equipment
  • Blockchain technology to better track asset transactions. The supply chain cannot fully embrace blockchain yet but you can learn more about where and how it may be able to play into the global supply chain in the future.

Yard Management Solutions for Chemical Manufacturers

Yard management is just one area of the supply chain where chemical manufacturers can embrace and implement a portion of their digital transformation strategy. The software is easy to use but advanced in it’s capabilities and organizational structure. Visibility is the key benefit from a yard management software. With automated alerts and simple data collection and storage, a yard management systems increases productivity in team members, in the yard, at the dock and keeps everyone on schedule.

Below are just some areas where chemical manufacturers realized a yard system benefited their operations:

  • Better production line up-time as a result of increased visibility and pre-planning
  • Real-time visibility of all trailers and containers
  • Reduced fuel consumption of yard tractors
  • Ability to plan and organize dock schedules ahead of time
  • The use of cloud-based platform enables anywhere, anytime access
  • Reduced detention and demurrage fees
  • Reduced data errors
  • Flexibility
  • Improved carrier efficiencies
  • Reports and analytics identify areas of opportunity and improvements
  • Integrations with almost any system, big or small (TMS, WMS, MRP)

The yard is the last mile in your supply chain and one of the most important. A yard management system plays a critical role and with the ability to integrate easily with other systems, make sure this one is in your digital strategy list.