Chemical Blog

Digitalisation and the industrial IoT revolution – why should you care?

Chemical processes have been optimised and improved since the earliest industrialisation in the 18th century. Each time a new plant is built or an existing facility is updated, more efficient digital devices are installed as part of this process of continuous improvement and drive towards ever greater efficiency. So why are major chemical producers such as BASF and Evonik suddenly announcing investments of $100’s millions in digitalisation?

Henrik Hahn, who coordinates digitalisation activities for Evonik in his role as Chief Digital Officer (CDO), said, “By the year 2020, we aim to see around € 100 million going into development and testing of digital technologies and the development of digital skills. It’s not just about data and technology, but especially about new business models, solutions, services for customers, and training qualified staff.”

According to Alex West, Principal Analyst – Smart Manufacturing at IHS, the use of digital technologies is influencing many different industries to support a range of applications and business needs, from improving efficiency and factory throughput, to saving on energy consumption and waste. As an example, Siemens’ Digital Factory division employed IIoT (Industrial Internet of Things) solutions to provide end-to-end automation of their factory in Amberg, Germany. The factory was originally built in 1989 to produce Programmable Logic Controllers (PLCs). During the digitisation process and upgrade of the plant, it installed 1000’s of scanners and sensors and now analyse around 50 million pieces of process information every day in order to monitor and optimise their production system. After integrating software systems, retraining employees to operate the new digital plant and installing cybersecurity systems to protect their data, it was able to reduce costs by 25%, reduce time to market by up to 50% and offer 24 hour delivery lead-times. The production facility had 500 defects per million (dpm) back in 1989, it now has a mere 11 dpm.

In the power generation sector, the North American Duke Energy began a centralised program across the company to use new technology to address increasing reliability demands and optimise the activities of their workforce, initiated in 2010. Duke Energy wanted to replace its traditional route-based data collection with technology capable of automating data collection, supporting identification of problems, allowing them to spend time on higher value tasks and do their jobs regardless of location. Duke Energy began to look at the use of elements of IIoT and big data analytics to help it meet some of these challenges.

Over four years, Duke Energy has avoided costs of 130% of the capital budget spent to avoid the higher costs associated with failures. Since the systems are analysing data constantly, operator rounds can be greatly reduced while the frequency of data collection can be dramatically increased. Data no longer needs to be collected every month; it can be collected several times per day resulting in many terabytes of data per week and allowing issues to be discovered and tracked on a more frequent, consistent basis. As a result analysts were able to spend 80% of their time on analysis, rather than on data collection; thus the analysis is more robust.

One challenge faced by many companies integrating IIoT technologies is getting employees, many of whom have spent their entire careers practicing route-based data collection, to change to these new methods and to trust the technology and its information. Even now, with IIoT technologies in place, it is still common to hear of specialists receiving a warning based on the data, and then following up by manually checking equipment with handheld devices. Consequently, it is important for companies to invest in improving and simplifying the visualisation of the data. Other common challenges faced are finding ways to get the OT (Operational Technology) and IT (Information Technology) departments to cooperate, when in some cases they have their own, and sometimes competing, priorities (and budgets). Having senior executive sponsorship of the project is beneficial in ensuring both successful collaboration as well as on-going funding for these projects.

Jenalea Howell, Director for IoT at IHS Markit expects to see some 1.8 billion IoT devices shipped into the industrial automation segment by 2020, which is more than 2.5 times more devices than in 2017, and spending on industrial robots within the plastics and rubber industry is expected to grow by over 60% in the same time period. Given the achievable benefits through digitalisation, it is easy to understand why so many companies across so many different industries are making such considerable investments in new technologies and business practices to implement fully digitalised operations.

Companies like Evonik see themselves at the forefront of digitalisation within the Chemical Industry and are working to introduce mobile apps that offer access to online product information, which can potentially be extended to introduce online order processing and remove the need for paper processing. They have also announced partnerships with logistics companies to minimise supply chain risks and costs. Likewise, BASF have been deepening relationships with providers of enterprise solutions such as SAP to optimise their sites, plants and processes. Ultimately, they are moving closer to full digitalisation, bringing their customers closer to the factory and by connecting with their feedstock suppliers, they aim to achieve operational excellence, reduce supply risks, control inventory levels and increase profitability through cost reduction. The appointment of Chief Digital Officers within the industry also demonstrates the commitment and desire to fully benefit from the digitalisation process as well as coordinating the integration of all divisions within the organisation.

Across all industries and applications, it is actually expected that the total number of connected IoT devices will increase from nearly 27 billion in 2017 to over 125 billion devices in 2030. The emerging IoT movement is impacting virtually all stages of industry and nearly all market areas, from raw materials to production to distribution and even the consumption of final goods. Such growth opens opportunities for new specialty plastics and materials to meet emerging market demands for IoT devices. Not only will each of these devices require housings to protect from the environments in which they are placed, but any wirelessly connected device has a requirement to allow signals to be transmitted for communication purposes and at the same time protect other sensitive equipment from interference. The casing materials used will therefore become a fully integrated part of the end product design, which is already very apparent in the mobile handset industry. This results in a need for far greater co-operation and communication across the value chain, from the system design engineers to the chemical engineers developing the plastics, resins and additives used in the final product.

An organisation needs to have an understanding of not only their own markets, but also to be aware of developments and technical trends within adjacent market sectors and throughout their complete value chain in order to really benefit from digitalisation. Internally, all company departments need to accept new working practices and business models in order to make best use of a fully digitalised and connected infrastructure. Digitalisation and the use of IIoT technologies not only offers optimised processes and cost savings to individual chemical organisations, but also opens opportunities for new market developments and increased business. IHS Markit has been researching developments within the chemical industry as well as monitoring the technology markets that, together, build the components necessary to create a more efficient chemical industry ecosystem. We have supported companies evaluating the adoption of IIoT solutions through examples of technology implementations across industries and for different projects and applications, as well as providing best practices. It’s time to plan for a digitalised future, today.

Mike Hopkins is Associate Director, Technology Consulting at IHS Markit
Dr. Karine Boccara is Director, Chemical Consulting at IHS Markit

Posted 13 November 2017

About The Author

Associate Director, Technology Consulting

Mike Hopkins works within the Technology, Media and Telecoms division of IHS Markit and is responsible for providing technology insights across many market sectors and applications. He initially developed communications devices an electronics engineer before applying his market knowledge throughout the semiconductor industry.