Digital4Clariant - SPIRE | Sustainable Process Industry ... · PDF fileSibylle Mutschler, Digital4Clariant, Pratteln, 20.09.2017 Overview Clariant Digital dynamics and co-creation

Sibylle Mutschler

Digital4Clariant

Pratteln

20.09.2017

Digital4Clariant

SEIZING THE

OPPORTUNITIES OF THE

DIGITAL TRANSFORMATION

IN THE PROCESS

INDUSTRIES

Sibylle Mutschler, Digital4Clariant, Pratteln, 20.09.2017

Digital4Clariant - SPIRE Conference – members only 2

Exploration of disruptive innovation

by using novel methods

grounded in co-creation and design thinking


Overview Clariant

Digital dynamics and co-creation

Agile and design thinking

Back-up

Agenda



Clariant at a glance


Business AreasNet result 2016 (CHF m)

from continuing operations

Sales 2016 (CHF m)

from continuing operations

5847 263 4

17442EBITDA 2016 (CHF m)

before exceptionals

15.2%887EBITDA margin 2016

before exceptionals

140 in 53companies countries Employees 2016

A GLOBALLY LEADING COMPANY IN SPECIALTY CHEMICALS


Clariant’s workstreams reflect major digital opportunities seen currently – digital is seen as clear growth opportunity


New digital business model

development

Workstream 1

Digital@Operations

Workstream 2

Big Data and Analytics

Workstream 3

Cyber security

Workstream 4

Legal and regulatory framework

Workstream 5

Program

Workstream 6


Overview Clariant



Back-up

Agenda



When talking about transformation it is important to understand which dynamics are changing

Source: IHS 2011; Clariant team analysis; Value chain is exemplary and illustrative only. Industry dynamics vary a lot depending on type of chemical value chain

Products

▪ Aromatics

▪ Acetic acid

▪ Polyphosphoric

acid

▪ Chlor-alkali

▪ Arylides

▪ Naphtolon

▪ Pyrazolones

▪ Chloranil

▪ Specialty amines

▪ Azo pigments

▪ Phthalocyanine

▪ Quinacridone

▪ Perylene reds

▪ Solid preparations

▪ Liquid colorants

▪ Pigment paste

▪ Masterbatches

▪ Printing inks

▪ Decorative paints

▪ Automotive coatings

▪ Packaging and fibers

▪ Detergents

So

me

pla

ye

rs

Industry

dynamics

▪ Market driven by

access to basic

raw materials

▪ Fine chemicals

producers serving

different end

markets

▪ Capacity additions

mainly in Asia

▪ Small investments

by local players

▪ Strong growth in

emerging markets

Raw materialsEnd customer

formulationsIntermediates

Pigments

Pigment powdersPigment prepara-

tions

Minor

Major

Value chain focus

Until recently: Understanding chemical value chains and their dynamics most relevant


The industry thinks beyond the chemical raw material and product


“Big data is becoming as important as chemistry for us”

Stefan OschmannChairmann of Executive

Board & CEO

Source: public statement


“BASF applies big data in catalyst research -

We reached a factor of 3 reduction in cycle times from

customer request to the first promising product proposal”

Dr. Frithjof NetzerSenior Vice President

BASF 4.0

Sees the potential of high-speed processes benefitting the customers



Linda Clement-Holmes CIO of Procter & Gamble

And is faced with customers deciding in a data-driven way

At P&G, predictive analytics formed a vital component of all significant decisions which had

a bearing on sales and margins

We are about to have MORE data, and MORE compute, than any

time in history. We have worthy problems. We WILL have

worthwhile answers.



Disruption? Clariant observes that the dynamics in our value chains changeDigitalization can connect different players and even the final consumer

Manuf.

RetailConsumer

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed


Raw

materials

End customer

formulationsIntermediates Chemical products

Pla

yers

Example: Croda and Cutitronics

With e. g. digital start-up


This happens at all steps in the value chain – even classical joint development agreements get a digital component

Manuf.

RetailConsumer

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed


Raw

materials

End customer


Pla

yers


Players in data services value chains, tech value chains enter the chemical ecosystem maybe even as competitors - making partnering and co-creation more complex

Manuf.

RetailConsumer

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed

Cost

Efficiency

Speed


Raw

materials

End customer


Pla

yers


Overview Clariant



Back-up

Agenda



The corporate dilemma

18 Digital4Clariant - SPIRE Conference – members only



12 km from Muttenz Old pump factory Agile Sprints

Team set-up within four weeks Off-site 3-5 days a week Immersion boards decide

12 km from Muttenz Old pump factory

Evaluating one of

more than 17

customer visits

Sprints

Sorting ideas

solving customer

frictions

Checking proposal

to pitch an idea to

so-called

immersion board


Project manager

and design

thinking expert

IT Business

partner

Innovation Master

Black Belt

Head of

Digital4Clariant

BU Global

Marketing

Manager

12 km from Muttenz Old pump factory

BU Application

Development

Manager

Sprints



Give people a work environment to think in a different way

Small, but powerful teams

Embrace collaboration

Test assumptions early

Have the agility of a start-up: sprints

One page business plan

Minimalist prototypes

Pitch ideas: the shark tank

Allow people to take risks

Cope with failure



Working and deciding in sprints

Relieves from the burden of the large upfront corporate commitment

Gradually increases the maturity of an idea

Allows to manage the risk of failure

We recommend it!

Shall we go beyond our companies? Beyond our industries?



Challenges which might be of interest in the context of cooperation with design-thinking teams


Cyber security and security innovation

Cross-company data transfer from

and to (legacy) systems

Digital skill-building concepts

Digitalization, supply chain,

sustainability

Looking forward to discussion!

Co-innovation teams of non-

competing companies


Disclaimer


This presentation contains certain statements that

are neither reported financial results nor other

historical information.

This presentation also includes forward-looking

statements. Because these forward-looking

statements are subject to risks and uncertainties,

actual future results may differ materially from those

expressed in or implied by the statements.

Many of these risks and uncertainties relate to

factors that are beyond Clariant’s ability to control or

estimate precisely, such as future market conditions,

currency fluctuations, the behavior of other market

participants, the actions of governmental regulators

and other risk factors such as: the timing and

strength of new product offerings; pricing strategies

of competitors; the Company’s ability to continue to

receive adequate products from its vendors on

acceptable terms, or at all, and to continue to obtain

sufficient financing to meet its liquidity needs; and

changes in the political, social and regulatory

framework in which the Company operates or in

economic or technological trends or conditions,

including currency fluctuations, inflation and

consumer confidence, on a global, regional or

national basis.

Readers are cautioned not to place undue reliance

on these forward-looking statements, which speak

only as of the date of this document.

Clariant does not undertake any obligation to

publicly release any revisions to these forward-

looking statements to reflect events or

circumstances after the date of these materials.


Overview Clariant



Back-up

Agenda



We can see the chemical value chains and the whole chemical system as we know it change


Consumer

goods

Agriculture

Specialty

chemicals

Base

chemicals

Potential areas could be

Personalized products and services in direct contact with retailers

and end consumers (e.g. laundry, cosmetics)

Disintermediation by sophisticated attackers to support farmers in

making better usage of inputs (e.g. seeds, fertilizer, machinery)

Expansion of current product business into service and solution

business (e.g. catalysts, process chemicals)

Few suppliers with relatively high industry utilization

make any form of disintermediation very unlikely


Current China Focus


In China digital efforts are

still very top-down and

mainly driven by global

MNC’s. Benefits of

digitalization are not yet

realized, only anticipated.

Government issued “Intelligent Manufacturing Development Plan (2016-2020)”,

encouraging (petro)chemical industry to develop Intelligent Manufacturing

Chemical companies listed in the demonstration list issued by MIIT (Ministry of

Industry and Information Technology) in 2015 and 2016 are:

o Sinopec (Sinopec Jungian and Sinopec Zhenghai)

o Wengfu Group (phosphates)

o Sinofert (fertilizer)

o Anhui Jiangnan Chemical (explosives)

o Luxi (fertilizer)

o Shandong Dongyue (fluorine chemical)

o China Coal Shaanxi Yulin Energy Chemical Co., Ltd. (coal chemicals)

o Xinjiang Tianye (chlor-alkali)


Patents: General Digitalization Overview – Global vs. China


“Digital” Patent Filings in the Chemical Industry 2010-2015 (global applications referring to all digital topics)

0 50 100 150 200

Sinopec

DuPont

Bayer

Dow

BASF

Monsanto

DSM

Akzo

Sabic

Reliance

Additional Insights

Out of all Chinese chemical industry players,

Sinopec seems to be the strongest player in China’s

digital development.

In China, only Huawei files more patents than

Sinopec

Source: Netherlands Office for Science & Technology (NOST) in China; https://www.ip-watch.org; He-Ro Analysis


Spotlight: Some improvement dimensions in operations


Plant smartification Integrated product development

Smart warehouse

Data driven quality control

Predictive maintenance

High resolution supply chain

Digital plant logistics

Advanced robots

Digital factory design

Cloud based industrial services

Automated replenishment

Production steering

Assistant systems

Additive manufacturing


Many companies including Clariant have built-up resources and set-up org structures to capture the opportunities of digitalization

Digital embedded into

BUs/functions

• Digital activities

integrated into existing

businesses/functions

• Development of distinct

BU-specific digital

strategies and

independent execution

Decentralized model

BU BU BU

D1 D D

Digital centralized in Center

of Excellence

• Central definition of

digital strategy and

steering of digital

transformation

• Execution driven by COE

in collaboration with

BUs/functions

Centralized model

BU BU BU CDO2

Digital anchored at multiple

points within the

organization

• Allocation of digital

activities driven by

different objectives

• Central steering of digital

transformation with BU-

specific efforts where

appropriate

Hybrid model

BU BU BU

D D D

CDO DE3

Digital separated from core

businesses

• Digital activities managed

as a stand-alone

business

• Protected breeding

ground for disruptive

activities

Excubator model

BU BU BU DE

1 D = Digital team; 2 CDO = Chief Digital Officer / Digital council / Digital center of competence3 DE = Digital Excubator; Source: Clariant

Wh

at

it m

ea

ns

Ex

am

ple

s



And a new job world is emerging illustrating the transformational character


Source: LinkedIn June 2017

Operations

Big data & analytics

Digital Business development/marketing

Customer experience design

Legal

HR digital workplace

Digital Transformation

Documents

Digital4Clariant - SPIRE | Sustainable Process Industry ... · PDF fileSibylle Mutschler, Digital4Clariant, Pratteln, 20.09.2017 Overview Clariant Digital dynamics and co-creation