The European petrochemical industry and its supply chain partners need to move quickly and become engaged with the process of digitisation in their sectors. There are opportunities for enhancing efficiency by the use of innovative technologies, as well as the prospect of leveraging big data, cloud computing and artificial intelligence to reconfigure the business environment.
Those were just some of the takeaways from a two-day workshop, Digitisation in the Petrochemical Supply Chain, organised by EPCA in collaboration with the Vlerick Business School, which took place in Brussels on 20th and 21st June. More than 130 delegates heard from front runners in the application of new technology and gained an impressive insight into how innovations can help companies deliver better customer service while also improving their own competitiveness.
The meeting discussed the move from mere ‘digital innovation’ to the promise of ‘digital transformation’, which will require a whole new mindset but offers the promise of a whole new way of doing business.
There are problems to be faced: where will the necessary talent come from, how will the process of change be managed, and where might new competitors come from? Companies already working in the sector need to keep their eyes and ears open if they are to continue to thrive in the digital future, which is now inevitable. In the world of big data, knowledge is the new oil and those who attended the workshop took a step to attaining that knowledge.
THE RACE FOR DIGITISATION
Europe’s petrochemical industry has plenty to do if it is to catch up with other sectors that are already riding the wave of digitisation - but the appetite to transform is high. The good news is that many companies are already making that journey but things are happening fast; those who have not started the digitisation journey need to move quickly.
That was a main learning from one - and a half day - workshop held by EPCA on 20th and 21st June this year under the title ‘Digitisation in the Petrochemical Supply Chain’. The event took place at the Brussels campus of the Vlerick Business School and followed on from work carried out by Vlerick in collaboration with EPCA in 2017 to examine how the petrochemical industry is responding to the latest technologies.
Early results from Vlerick’s survey were presented during the 2017 EPCA Annual Meeting in Berlin by Prof. Dr. Ann Vereecke, Faculty Dean at Vlerick; she also led discussions at the June workshop, where more than 130 delegates from the industry and from logistics service providers heard more detail generated by the research study Vlerick compiled after interviewing some of the digital front runners identified by its survey.
The aim of the Brussels workshop was to look in greater detail at digital maturity in the petrochemical supply chain and what concrete benefits the process of digitisation has so far delivered. More importantly, though, it was seen as a way of disseminating lessons learned by the front runners in the race to digitisation and highlighting best practices.
Digitisation has already begun disrupting the petrochemical supply chain, observed Caroline Ciuciu, Chief Executive Officer of EPCA, and the supply chain is “absolutely key” to the continuation of the petrochemical industry. Digital innovation and, ultimately, transformation will therefore play a vital part in determining what the future industry will look like and, on a more individual basis, which players will still be active in the sector.
EPCA had invited speakers from some of those front runners who were happy to share their experiences with the process of digitisation and explain where they were planning to go next. Melanie Kalmar, Corporate Vice-President, Chief Information Officer and Chief Digital Officer at The Dow Chemical Company, said that the “digital revolution” is a very important subject but its outcome will depend on how all parties work together across the whole value chain. She said that the application of automated data collection and artificial intelligence offers “unparalleled freedom” to experiment and share problems. She also stressed that digitisation is not just about technology but about the development of new services and systems for customers.
Fabio Baerwald, Manager of Digital Customer Journey at Covestro Deutschland, agreed and added that technology needs to be embedded into new business models and ecosystems. That means a need for a change to established mindsets. There is, he said, a need to be more agile and to move away from a focus on processes and focus instead on customers. The outcome of the digitisation process should not just be the ability to do the same things faster, but to provide a better experience for customers.
The main message from Leo Brand, Chief Information Officer at Royal Vopak, was that significant benefits and cost savings can be achieved through the optimisation of supply chains in the petrochemical industry by the secure, real-time exchange of data. Physical flows of product cannot become digital in themselves but, by investing in the digital twins of these physical flows, customers’ supply chains can become safer and more efficient.
One salient point to come out of these discussions was that, when it comes to implementing potentially expensive digitisation projects, there is no obvious return on investment (ROI). Under the traditional business model that can be a problem; companies will have to change the way they think about the way they do business.
Another recurrent problem raised by all the speakers at the event is the importance of having the right talent in place. That pool of talent is finite and petrochemical companies and their logistics partners are not just competing with each other to find people – they are competing with all industrial sectors. EPCA has a role to play in helping make a digital technology career in the petrochemical industry appealing to those coming into the job market, and individual companies also need to look at making themselves more attractive.
The first day’s discussions, which included three parallel sessions looking at digital innovation, digital transformation and cyber-security, set up a series of questions. Ann Vereecke, wrapping up the day, summarised those topics and invited the audience to decide which of them should be taken forward for further discussion on the second day, with the aim of drawing on the varied expertise available to come up with some pointers for future work.
Using digital technology – voting via smartphones – the audience decided that its three priorities were:
- - Platforms – are they a threat or opportunity? How do we create trust or build standards? Is it a win/win issue or ‘winner takes all’?
- - How do we create a culture of digital innovation?
- - How do we get from ‘digital innovation’ to ‘digital transformation’ and what will the new organisation look like?
Ann Vereecke added her own topic to this list: Who should drive the change? And how do we get everyone involved?
Everyone at the workshop was certainly involved in discussing the selected topics, by way of a series of brief small-group breakout meetings that allowed debate to range widely and draw on the very different experiences of those involved. The results of those discussions delivered a long list of tasks not just for those companies involved in all aspects of the petrochemical supply chain but also for EPCA itself.
After those discussions, those who attended were left better informed, energised by the debate and with a long list of actions to take back to their companies to consider. Those were summarised by Ann Veree >A lot has changed since Vlerick and EPCA began their research study on digitisation less than 18 months previously, and a lot happened in the two days of the workshop. There is a sense of urgency in the industry now and indications that more companies are taking the issue of digitisation seriously.
- - The digitisation process involves a change of mindset. Each person has to make that change, just as each organisation will have to.
- - It will be a game of winners and losers. Companies need to keep an eye not only on their traditional competitors but also on newcomers – and we do not know yet who they might be.
- - The process of digitisation begins with a strategy. Companies need to set their own goals and be clear about what they can do that they are not doing now. This needs commitment and leadership from the top but also careful management of change. Echoing Melanie Kalmar, Ann said there is a lot that could be done, but companies need to focus on what should be done.
- - Customers will tell us what they need; each business needs to set aside a strategic budget to ensure that those needs are met.
- - Information technology (IT) and operational technology (OT) are coming together; this creates new issues, particularly in the area of cyber-security. At the moment it appears that some companies are regarding cyber-security as a separate issue, when it probably needs to be looked at as an integral part of the digitisation process.
- - There is a lack of clarity on standards in the digital realm – but is that a problem? Should someone (EPCA perhaps?) take a lead? Do we even need to standardise?
- - The big issue is talent – companies have to attract and empower digital-savvy employees and train their existing workforce.
Those discussions suggested several potential roles for EPCA. The Association could clearly play a role in attracting digital-savvy young people to the industry, which would fit well with existing efforts to promote STEM education. Some also suggested that EPCA could develop and spearhead training for the whole industry and act as an incubator of new talent. Furthermore, with its wide-ranging industry membership, EPCA is well-placed to play a role as a community to help with demystifying the process of digital transformation – a process in which this workshop represented a starting point.
Ann Vereecke’s clarion call to industry was this: Just do it! Think big but start small was her advice. Organisations will fail here or there but will win overall.
Johan Devos, Sales Director Europe at Bertschi AG and chair of the EPCA Supply Chain Programme Committee, stressed that there is no way back – industry must embrace digitisation. EPCA will continue this journey, he promised.
The full report of the EPCA Logistics and Supply Chain Workshop: “Digitisation in the Petrochemical Supply Chain” is available here.