Sector News

Digitalization is a key theme of the European Association of Chemical Distributors (FECC) Annual Congress, taking place in Sitges, Spain. Distributors, as well as their customers and suppliers in the chemical industry, are certain the digital transformation will bring major changes to the way they operate, with huge benefits for companies that can adapt. But these changes also represent big challenges.

Participants in a panel session on digitalization at the FECC congress agreed on the need for companies to convince their workforce that digitalization, if implemented correctly, will not result in job losses. “Digitalization can help us solve complex problems,” said Thorsten Lampe, managing director at Asellion (Amsterdam, Netherlands), an on-line platform that provides digital trading channels for the chemical industry. “It’s not about laying people off.” The key is to use digitalization “in a way that empowers people,” Lampe said.

Neil Carr, president/Europe, Middle East, Africa, and India and president/coatings at Dow Chemical, said one of the main challenges of digitalization is “convincing our people there will be no job losses and getting them to understand that the way we operate will fundamentally change. That’s a massive undertaking. We need people in our organization who live, breathe, and love data,” Carr said.

Digitalization had changed the way Dow works with distributors but he does not see additional direct sales to customers via digital tools as a substitute for the company’s relationships with distributors, Carr said. “There’s no question digitalization has changed our relationship with distributors, with more sales now going direct. But we still need distributors to help manage our working capital, our inventories,” he said.

Sibylle Mutschler, head of Clariant’s digitalization program, called Digital4Clariant, outlined the opportunities and challenges of digitalization for chemical companies. “We’ll be able to make better decisions with the digital tools made available. There will be better production yields using algorithms,” said Mutschler. But there are still a lot of unknowns, including how to quantify the precise benefits of digitalization in terms of sales growth, she said. “It’s an awful amount of work—that’s the main challenge today. We still don’t know the recipe,” Mutschler said.

The digital transformation will bring basic operational changes to companies such as Clariant, including greater collaboration across business units. “If we want to get the maximum benefits from digital solutions, it requires cross-functional teams to make it work,” Mutschler said. “We will have to give up our old work practices.”

Distributors can use digital tools to add to the services they provide, Mutschler said. New services could include providing information related to products and on sustainability, and supplying product samples, she said. “Distributors can take out complexity,” she said.

Axel Schmidt, chief digital officer/customers at Wacker Chemie, highlighted the huge opportunity for cost savings through digitalization, in terms of sales-force efficiency and technical service, as well as in operations. However, Schmidt confirmed that persuading Wacker’s workforce—from the senior management down—to embrace digitalization has not been easy. “Employees are part of the challenge,” he said.

Distributors must adapt to digitalization and take the opportunity to improve their service to customers, Schmidt said. “Power is shifting to the consumer, through digitalization,” he said. “Distributors will be the partners of the future if they do [digitalization] right.” The larger distributors have so far embraced digitalization more than the smaller players, Schmidt said.

By Ian Young

Source: Chemical Week