The chemical industry is growing at a rapid rate, but market expansion doesn’t necessarily mean new opportunities for all parties.
Companies in developing countries such as China, India and Saudi Arabia are making tremendous strides. The 2021 edition of the Helsinki Chemical Forum noted the speed with which the chemical industry is growing in these countries. Fewer controls in these regions make it less expensive to develop and launch products, which makes it harder for companies that adhere to more stringent regulations to compete. Unfair or not, companies do not gain market share by complaining about the business environment. In order to get ahead and stay ahead, companies must constantly be innovating.
Technology advancements such as digitalization, machine learning, and artificial intelligence (AI) are creating new areas of innovation which are propelling the chemical industry forward. These tech breakthroughs are helping smaller, newer, more agile players to enter and compete in a global market.
With the speed of both business and technology moving at such a breakneck pace, decisions must be made quickly in order to expedite innovation and get more sustainable products to market as quickly as possible. Chemical firms cannot continue to rely on age-old processes and incumbent technologies. It is common to see most of the work still conducted via complex spreadsheets and PowerPoint files, which are saved into SharePoint folders and updated manually. These outdated processes stifle innovation in three ways: there is no single version of the truth; a huge amount of work is duplicated; and there is a significant lack of collaboration.
According to Gartner, 85% of growth stalls stem from factors that are avoidable, including a breakdown in innovation management. This means investments in new products, services, and business development aren’t achieving desired returns. More alarmingly, it also means companies will quickly fall behind competitors.
The chemical businesses that are failing to move forward typically suffer from a lack of standardization and harmonization. Business leaders often have poor visibility into which projects are succeeding versus others which might be in trouble. The lack of governance and alignment between strategy and processes not only leads to missed launch dates, but hampers innovation and hinders profitable growth.
The road to continual innovation begins with a transformation of the key processes and management practices that have dominated the chemical industry in the past. Companies must be able to adapt quickly to new needs, values and market demands. This requires the ability to make good, informed decisions. Not only about what products should be approved or prioritized, but also about how to allocate budget resources to different projects and how to localize products in a way that is most effective.
Companies successfully making this transformation share three traits:
The best way to prioritize and nurture innovation is to eliminate the process barriers that impede collaboration, communication, and visibility across business units and among decision-makers. Companies that knock down these barriers are better positioned to:
Since developing new chemicals is primarily lab-based, it’s difficult to predict the behaviors of materials under new conditions. This drives a need to perform numerous lab experiments, which can be expensive and time-consuming. Improving innovation processes enables chemical businesses to aggressively compete when leadership can:
More effective innovation efforts facilitate various approaches to optimization. Chemical companies are better able to compete in a global market when they can:
Of course, actions speak much louder than words. So let’s take a real-world example. Covestro (formerly Bayer Material Science) was keenly aware of the business need for more aggressive and better-coordinated innovation processes. They understood that these kinds of innovation processes are the foundation for future growth and improved margins in an increasingly competitive global market.
Covestro rolled out Sopheon’s Accolade system to drive its innovation initiatives. Three business units, spanning three continents, now work in a single harmonized system that has resulted in faster time to market, especially for cross-regional and cross-business unit projects. The company has also realized greater efficiencies in technology, safety, quality and environmental matters.
Chemical companies need to create agility and adopt new, cloud-based innovation management technologies to optimize operational processes and improve business performance. It will result in an environment where upcoming trends are spotted early, innovative ideas and best practices are shared easily, and all stakeholders can monitor and participate in the product development process.
Sopheon's Accolade is the only process-agnostic, single innovation system that can automate and optimize everything involved with the complex product development and portfolio management processes. For more information, download the eGuide, How to succeed in the global market: The path to profitability for chemical firms.