The evolution of emerging markets is bringing change to the chemical industry, but that is only part of the picture. Indeed, there are a number of such “megatrends” that will reshape society and the industry in the next decade and a half, from dwindling resources to population shifts.
The question is, what should chemical companies do in the face of these megatrends? To help, Accenture has identified six action items that CEOs should consider as they contend with these shifts.
Join the Digital Revolution. Digital technologies—mobile, sensors, analytics, the Internet of Things (IoT), etc.—are opening the door to new opportunities. Accenture believes that digital technology is leading to the emergence of the “outcome economy,” in which companies will compete on the ability to provide outcomes, rather than products. This could mean, for example, providing seeds, fertilizer and pesticide to deliver a guaranteed yield on a given area of land, or delivering plastics that guarantee freshness in food packaging.
Build More Resilient Business Models. To enable new business models, chemical companies can broaden acquisition strategies to include peripheral and niche companies that have unique technologies, services or sales channels. They can also collaborate with organizations outside of the industry to tap into stronger marketing and customer-relationship capabilities. With an eye toward megatrend-driven change, new business models should focus on building resilience—the key to turning disruption into opportunity.
Ride the Tide of Rising Expectations. Customer loyalty is declining, so companies will need to look beyond price to differentiate themselves. Technology can certainly help. With data analytics and “social listening,” customers can anticipate what their end-customers will want in the future. Furthermore, integrating company systems with those of dealers, distributors and manufacturers to provide those partners with customized ordering and services makes it easier to do business with a given company.
Connect and Collaborate for Innovation. New products and new approaches are increasingly important to the chemical industry’s customers. To keep up, companies need to complement the traditional R&D model with one that can drive broader, faster innovation and quickly pivot to exploit new opportunities. This will require “connected innovation” that breaks down internal silos to include more areas of the organization. It will also require external connections to link up with alliance partners, universities, customers and customers’ customers.
Make Operations Wired and Data-Driven. In an Accenture/ICIS survey, nearly 90 percent of chemical industry executives said that operational excellence will be important in the coming years.1 In the supply chain, networked systems and the IoT make it possible to achieve new levels of efficiency, collaboration and flexibility. In chemical plants, an IoT sensor-enabled environment can enable companies to have real-time insight into operations to increase uptime and reliability. Among many other possibilities, companies can establish remote operation centers; use drones to conduct routine visual inspections; and deploy mobile technology to help field operators make more timely decisions.
Design the Workforce of the Future. With workforce flexibility becoming more critical, companies will have to find new approaches to managing talent. They can use comprehensive workforce management solutions that provide insights into workforce capabilities and readiness; or predictive analytics to help them make better hiring and promotion decisions. Looking ahead, increased automation based on IoT, analytics and cloud technologies will help relieve skill shortages and enable workers to focus on more value-added and personally rewarding work.
Overall, many of these action items will require chemical companies to move away from “business as usual.” The actions will not always be easy to implement—but they will help companies meet the evolving needs of tomorrow’s global markets.
For additional insights, read the Accenture Chemical Industry Vision 2016: New Realities, New Opportunities.
1 "The Digital Plant: Reaping the Rewards of Disruption,” Accenture 2015, https://www.accenture.com/us-en/insight-digital-plant-reaping-rewards-disruption.