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Tuesday, April 16, 2024

Digitalization and new business model of chemical industry

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Will digitization change the way chemicals are sold and distributed, thereby changing the way value flows? Will we see a shift from product sales to services and solutions sales? Will attackers emerge as non intermediate producers from their customers, as we see in B2C platforms in other industries? Different parts of the chemical industry have different answers to these questions General statement, while crop protection chemicals and some special chemical fields have the risk of business model damage and some potential chemical dealers think that they are actors in the future and may be interrupted, petrochemical products may have less impact.

First, the business model of keeping in touch with the products in use may provide a large number of opportunities in some areas of the chemical industry, for example, by monitoring systems for chemical applications in industrial processes. Catalyst is an example of great interest. Process catalyst manufacturers are increasingly turning to the “performance based compensation” model instead of just selling products. Maintaining connectivity with the catalyst in use allows catalyst manufacturers to optimize their customers’ production processes and provides an opportunity to build a huge and valuable knowledge base that can be used to improve catalyst use on their customer base and charge for services. In some areas of special chemical industry, many of these models have been developed for more than ten years, and the application of these models may be accelerated when combined with digital technology. But these methods don’t apply to all chemical industries: the main focus is on a particular chemical to do a particular job, such as a catalyst or water treatment chemical.

Second, it seems that opportunities for intellectual property based business models to generate licensing or consulting fees are emerging. In this model, a company can charge a fee for providing guidance on how to best use its products, or it can license the production of proprietary molecules to another manufacturer. But so far, these examples seem to be isolated and have not yet been confirmed.

Third, the service model dominated by data and analysis is emerging in the target areas. In the field of agriculture, a company can combine geological, meteorological and geospatial data with knowledge of seeds, fertilizers and crop protection compounds, and it can seek compensation based on the yield or profit gained by growers, rather than selling these inputs. Other chemical industry departments with strong B2C components in their business systems may face similar development.

On the other hand, some models that have received a lot of attention in other industries are unlikely to have an impact on most of the chemical industry. As a channel to connect the third party, building platform has been established in many industries. But in a chemical industry environment, this can be difficult to achieve because of the limited number of suppliers, the fact that potential customers know their names, and the fact that many chemical producers have know-how that they are not willing to share. However, this kind of model is more likely to gain a foothold in more decentralized areas of the chemical industry, because many manufacturers are very interested in new channels because of their low plant utilization and the urgent need to transfer products to increase sales revenue.

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