The commercial value of digitization for chemical companies

What are the sources of digital business value of chemicals? We see several different areas:

New growth

New organic growth begins when chemical companies consider how digitization will affect all aspects of the value chain, from raw materials to end consumers. To understand the potential, the best companies build cross functional teams with members from marketing and sales, R & D and product development, as well as downstream marketing experts. These talents need to find promising opportunities in the whole industry, find out how to capture them, and translate the discovery into new products or services, or new value propositions of existing products.

However, seizing any opportunity requires an in-depth understanding of the needs of end users, so the best teams interview and observe them to understand what they have done with the product or technology and what improvements and innovations they want to see. For example, new opportunities brought about by digital technological advances such as 3D printing have prompted material companies to launch innovative products. For example, on the one hand, the new polymer has structural stability, which can replace metal plates and prosthetics in bone surgery; on the other hand, color polylactic acid can meet the aesthetic needs of customers.

Interrupting the existing quotation often brings the risk of being demolished, so the leaders of chemical companies must carefully evaluate the change of value pool before taking action.

Better access to customers

The performance of multi-channel business has always been better than that of single channel business. However, so far, few chemical companies have adopted online sales channels; most companies still serve customers mainly through their direct sales teams and distribution partners. Our latest research on B2B customer decision journey shows that customers in the chemical, energy and other materials industries continue to view personal interaction as key to certain purposes, such as identifying suppliers or researching new products. 80% of buyers find it helpful to talk face to face when they get a brand new product or service. On other occasions, however, the number changes dramatically; only 15% of buyers find it helpful when they order exactly the same product or service as last time. With the improvement of digital maturity of the market, more and more digital methods are needed to supplement personal interaction.

BASF is a good example. It hopes to expand its footprint in China by solving its attractive SME problem. SMEs account for 99% of the total number of Chinese enterprises and 60% of GDP. Due to the relatively small scale of customers and diversified demands, it is challenging for this segment to make profits. So in 2015, BASF decided to open an e-store in Alibaba and win over a large number of Chinese small and medium-sized enterprises that are already using the Alibaba platform, which also helps it to serve customers with minimal complexity, keep its cost of sales low and manage its portfolio easily.

Chemical companies can also learn from industries that have reached a similar level of digital maturity. For example, Baosteel, a Chinese manufacturer, launched e-commerce channels for its basic products as early as 2000. Over time, it complements this service by adding services such as logistics and financing to its digital portfolio. Baosteel reformed its online business model in 2013, re launched its online store two years later and merged it with other online platforms. Baosteel now has deals with competitors and its own steel products.

The move clearly meets market demand: the channel more than tripled between 2013 and 2015, with 60% of sales coming from other companies. In addition, Baosteel collects and processes data through its huge data analysis engine, producing valuable pricing and market insight. The company now generates about $800 million a year from its online activities.

Data driven decision making

Even in the era of big data, a lot of decisions are made by top leaders by intuition. Business teams, from top managers to front-line employees, can significantly improve their decision-making if they use advanced analysis engines to mine data and insights that can help companies grow and expand profits.

To improve the productivity of the sales team, a leading chemical distributor used a machine learning application to determine the impact of working with product experts on sales.

Article source: https://article-realm.com/article/Finance/9526-The-commercial-value-of-digitization-for-chemical-companies.html