Global Outlook 2018 - Chemicals Industry
10 Jan 2018
As we embark on a new year, it is time to look at the drivers and the trends that accelerate the chemical industry. With the growing number of changes across the world, the chemical industry has undergone significant change in terms of technology and the products. Here are the major trends which will drive the Chemical industry in 2018:
- Digitization: The huge wave of innovation will be driven by digitization. A number of advancements in the digital technology offer connectivity, an increased speed in accessing, processing and analyzing huge amount of data and granularity. Further, in memory computing, the Internet of Things, mobility, cloud, machine learning and block chain will be the game changers in the chemical industry.
- Accelerated globalization:Due to the advent of shale gas in the US and the olefins in China, the supply centers are now shifting. The demand centers are also shifting due to the rapidly growing middle class across emerging countries. There are new market entrants that drive the shrinking lifecycle and commoditization of the products.
- The circular economy:Most raw material are now getting scarce and the regulatory requirements will increase due to the impact of emission and waste on the environment. Chemical companies have to respond to this and are already extending their ecosystem with an aim to establish end to end concepts.
With these three trends, there could be a challenge to the existing strategy and they could create a perfect storm in the industry. The customer proximity, intellectual property and the technology know how could no longer secure a sustainable competitive advantage. Those companies which adopt the innovative business models at an early stage have an opportunity to act as the game changers in the industry.
Business models in the Chemical industry
In the year 2018, companies will begin to adopt strategic agility. There will be a constant need to rapidly transform the product and service portfolio in response to the changing dynamics of the market and the demands of the stakeholders. The critical success factor will be preparing for the mergers, divestitures and acquisitions in the market. Also, there will be a number of companies which will be going beyond their traditional value chains and will begin competing as an entire ecosystem. Third, there will be companies which will become more customer centric and will focus on selling the business outcomes instead of its products. Fourth, the companies will get an additional push towards the business process automation and operational excellence. Due to the feasibility of digital technologies, companies will now be able to realize concepts like touchless order fulfillment.
However, in order to enable the innovative business models to function and develop with ease, every company should have the right skills in the work force in addition to a 4th generation platform which will drive success and allow the use of technology for innovation. Technology will play a crucial role in every industry across the country and it will drive innovation and growth.
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