Chemical manufacturers, please step up your digital efforts

Digital platforms create new opportunities for chemical manufacturers to reach millions of customers and can add 3 percent or more additional EBITDA. It is an enigma wrapped in a mystery inside a riddle that chemical manufacturers are not taking full advantage of digitalization. Given the ubiquitous role of their industry and its relevance to customers’ standard requirements, their engagement with buyers and potential buyers is their lifeline.

B2B buyers in the chemical industry are increasingly purchasing products through digital platforms. An international McKinsey survey reports that 55 percent of petrochemical buyers would adopt digital channels. The percentage is higher for specialty chemicals, with 82 percent of customers willing to adopt digital platforms.

The handful of chemical players transitioning to digital platforms has an edge in market share, earnings, and profitable growth over their tardy rivals. The McKinsey study shows that making the right decisions in digitalization can increase revenues by 3 percent or more. By ‘earnings’, we mean the total earnings before interest, taxes, depreciation, and amortization (EBITDA).

Online digital platforms have the world at a click. Chemical manufacturers must grab this unprecedented advantage, build efficient and value-adding platforms, and establish new online interactions with customers.

Laggards are likely to fail

It has taken the chemical industry longer than average to drive digital transformation. As with every sector, COVID-19 pushed the chemical industry to join the bandwagon.

Even reluctant players recognized the urgency for digital transformation after facing changes in remote and hybrid work practices, fractured – and sometimes broken – supply chains, and changing customer demands.

Different manufacturers are at various stages in digital maturity, with varying motivating factors. Overall, the chemical manufacturing industry has a digital maturity profile of 42.2% and needs rapid improvement.

Several chemical manufacturing plants are having difficulty scaling up from the pilot stage. In 35 percent of chemical plants, digital transformation is a work in progress, while 30 percent are still running pilots, and another 30 percent plan to do so soon. Across the industry, 41 percent are in a rollout mode.

The gaps between more digitally mature plants that are already employing digital transformation tactics for more advanced use cases and those still in their infancy are widening. Therefore, Gartner predicts that a significant gap will develop between chemical plants that are digital leaders and those that lag, adding that the latter is likely to fail.

Asian-Pacific chemical plants are more advanced, recognizing strategic opportunities from digitalization, while European and North American plants focus only on operational improvements. Only thought leaders from this area believe digitization will improve market and customer access, whereas others cite cost reduction as its primary benefit.

Existing digital platforms of chemical manufacturers

Several buyers still require more services than are available through single manufacturer-transactional platforms, so these platforms cannot transform the industry. WorldAccount by BASF and XIAMETER by Dow Silicones (formerly Dow Corning) are examples of this platform.

It is also not feasible to use an open-transactional platform. It has been several years since the chemical industry offered an ERP-to-ERP1 solution through Elemica. Although this model can achieve significant transactional efficiency, it requires substantial investment and planning on the part of users. As a result, it is primarily attractive to large companies only.

Many players are still developing single manufacturer-knowledge-oriented platforms, such as makers of personal care and coating ingredients. This platform digitizes information previously provided by experienced sales representatives and technicians.

It could be possible to provide high-quality service to small and medium-sized customers at a marginal cost if this platform is implemented. Among the things this platform can do is offer formulation development services, a complete portfolio of products, and detailed information on product specifications and applications, among others.

How digital platform helps buyers

Human labor is good, and we have benefitted from it for centuries, but mechanical processes came and made life easy. Then came the digital systems, and suddenly instead of standing in line for an hour for someone to count your bills, the machines did it in a minute, and life became easier. It is an unstoppable momentum; either get with it or get left behind.

Improved customer experience boosts profits and increases loyalty. Take the issue of reordering processes. Customers are often forced to call chemical companies’ sales representatives to reorder the exact products they have ordered for years. How efficient is that? Digitization is a panacea, and customers will be eternally grateful to the company that relieved them of this needless burden.

It is essential to have digital platforms in areas of the value chain that lack transparency, such as supply and pricing, or substantial inefficiencies, such as transaction executions and product supply planning. It will be beneficial to use platforms in specialty-chemical segments such as advanced paints and coatings, food, and engineering plastics, which require combining chemicals to meet application needs.


It is an enigma wrapped in a mystery inside a riddle that chemical manufacturers are not taking full advantage of digitalization. Given the ubiquitous role of their industry and its relevance to customers’ standard requirements, their engagement with buyers and potential buyers is their lifeline. The sooner they conquer the digital domain, the more they improve their prospects.

About the author

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Get more insights like these in your inbox hot off the presses >

Subscribe to our blog

0 lists selected