ANALYSIS 29
create sustainable plastics and chemicals will drive the use of bio-based and recycled resources. At the same time, climate change will hurt the economics of large- scale, centralized refineries and traditional production processes. “These factors will push the chemicals industry into a production paradigm that is smaller-scale, more distributed, local, and flexible,” explains Schiavo. “Techniques like chemical recycling and fermentation will be the major beneficiaries of this shift, as well as business models that enable more flexibility.” These technologies align with growing consumer demand for materials and products that are more sustainable and personalized. The explosion of digital technologies
has made it possible to collect more data on the physical operations of the chemicals industry than ever before. At the same time, digital sales platforms are enabling far more transparency into the flows of goods and money, as well as the buying behaviors for customers in the industry. The most notable impacts of digital transformation will be in business models. New tools and data will be crucial to enabling service-based and outcome-driven business models. This will help the chemicals industry maintain growth in the face of lowered consumption and deliver customized products to smaller and smaller market niches. Digital sales platforms
will erode these differences between commodity and specialty chemicals businesses by making it easier to bring a degree of customization even to commodity materials while lowering the cost. “This will cause a new split in the
industry between premium chemical companies and budget chemical companies,” adds Schiavo. “Premium chemical companies will integrate new digital tools with traditional specialty chemical services – such as formulation development and manufacturing assistance
– as well as becoming deeply involved in product development with their customers. Budget chemical companies will sell high- quality specialty materials at rock-bottom prices, but only offer online and automated support. Companies in formulation-driven segments like personal care, paint, adhesives, and plastics are at the highest risk as formulation development will be largely automated over the next two decades.” Chemical companies need to begin
planning their response now to avoid being caught flat-footed.
PC
October 2020
PERSONAL CARE NORTH AMERICA
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