IoT Solutions for Chemical
Help chemical industrial more flexible, Light-weight and productive with intelligent IoT solutions from Dadax.
Concentrated Industry Structure, Heavy Assets and Economies of Scale
Looked at overall, chemical industry appears fragmented, but two decades of portfolio restructuring have created a highly concentrated industry structure in many segments. That has put those chemical companies in a strong bargaining position relative to customers and suppliers. And the chemical industry has increased its productivity most over time.
But this golden era may be coming to an end. The slowdown in financial performance reflects important changes in the chemical industry’s fundamentals. The industry is finding it increasingly difficult to hold onto the benefits of its productivity-improvement efforts. Paradoxically, this is happening just when advanced analytics and digital approaches are creating a new wave of opportunities to accelerate productivity gains. Why is the industry having these difficulties? There are signs that one of the cornerstones of the industry’s performance—its concentrated industry structure—may be weakening.
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The dadaxNet IoT platform provides robust connectivity and processing that fuels massive data analysis and application, which can be turned into actionable intelligence to enhance efficiency, productivity and safety while reducing costs and overcapacity.
REIMAGINE CHEMICALS: THE CHEMICAL WORLD IN 2025
In the future, most of today’s chemical industry players will be general-purpose production industrial foundation businesses, serving slavish multiple ecosystems. They will be trapped, just like the telco infrastructure providers that provide the basic infrastructure for today’s hyper-connected world, while other tech giants reap the biggest profits.
Based on the general-purpose production foundation, a plenitude of ecosystem businesses operate within dedicated ecosystems. Both are intertwined by a third business category of platform businesses, which are potentially decentralized, automating most of the work.
The consequence for today’s chemical companies will be that their heavy assets and their diverse conglomerates focused on economies of scale and synergies will not provide them with competitive advantages — or if they do, these will not be strategically important, as the rules of the game have changed.
Therefore, instead of investing in more heavy assets or buying more companies, reimagine slicing your conglomerate into effective operating pieces (connected both vertically and horizontally) and which roles will apply to which pieces in the future. Be open and start cooperating rather than forcing competition. The future will be information- or knowledge-driven; in this world, sharing will be key.
Note: Outlined below is external research that was used as supporting material for upper data and statement.
- “What the chemical industry could look like in 2025“, Ernst & Young, Aug, 2018
- “Chemicals 2025: Will the industry be dancing to a very different tune?”, McKinsey & Company, March 2017.
- “How IoT Could Transform The Chemical Industry“, Digitalist Magazine, July 2015.
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