Digitising the petrochemical supply chain

“Digitisation has already disrupted several industries. We wanted to assess its impact, analysing not only its challenges, but also its opportunities, to understand how digitisation can add value to the petrochemical supply chain,” recalls Caroline Ciuciu, CEO of EPCA, the European Petrochemical Association. Professor Ann Vereecke and her team, in close collaboration with EPCA, set out to find answers. A detailed report was released last month and now Caroline and Ann reflect on the findings. They are joined by Johan Devos, Sales Director Europe at EPCA member Bertschi AG and Chairman of the EPCA Supply Chain Program Committee (SCPC).

Strategic importance

“EPCA is the primary European network for the global petrochemical business community,” explains Caroline. “One of our main objectives is to support our members on key topics that underpin the sustainable development of the sector in Europe. Supply chain and logistics have become increasingly important to the strategy and management of our member companies.”

Johan nods in agreement. “In our sector, transparency and visibility of the entire supply chain are crucial. As we're operating in an ever-more globalised context, our logistics have become more complex. Now, digital technologies can play an important role not only in optimising our supply chain processes, but also in improving transparency and visibility, which have become all the more important.”

Convincing track record and approach

“When digitisation emerged on our radar as an issue worth exploring for the benefit of the EPCA community, we evaluated various academic partners, Vlerick being one of them. As it happens, we already had a long-standing relationship with the School, having worked together on several other topics, such as sustainable and resilient supply chains, and talent and technology drivers for supply chain leadership. But also, the Vlerick team takes a holistic approach to digitisation. For them it’s not only about technologies, they also look at all the other aspects that are critical to a successful digital transformation, i.e. strategy, governance, capabilities, mindset and so on. That’s why we decided to partner with Vlerick, because of the combination of this comprehensive approach and a deep knowledge and understanding of the petrochemical sector and its supply chain.”

Baseline survey

The petrochemical supply chain players are diverse, from refineries to petrochemical producers to manufacturers of smartphones, shampoos and plastic bottles, as well as traders and distributors, but also service providers active in a range of logistics services, such as shipping, transportation, warehousing and cleaning, and non-logistics services.

The team carried out a survey among the various supply chain actors to measure their digital awareness and maturity as well as their ambitions. Almost 240 managers and experts from across the petrochemical supply chain participated in this survey, providing valuable insights and baseline information. 

Driven by customers

The survey shows that the sector is still lagging when it comes to digitisation. Ann stresses this is not a criticism: “Actually, it’s rather typical of industries that are more upstream, further away from the final customer. Digitisation is mostly driven by the consumer market. Having said this, when it comes to digitisation, there’s a marked difference between petrochemical producers and the other actors. Mind you, we’ve focussed on the processes in the supply chain. So, we haven’t been looking at the automation of the production processes in the factories as such – petrochemical plants have long been automated.”

One of the most remarkable findings of the survey, according to Ann, is that both digital achievement and ambition are higher the more you move downstream in the supply chain: “They’re higher among logistics services providers, traders and distributors than among petrochemical manufacturers. The petrochemical sector clearly counts on the logistics services providers to help drive digitisation. This should come as no surprise: logistics services providers are usually active in several other sectors as well, such as retail, which is one of the more advanced in terms of digitisation.”  

Improved efficiency, safety and sustainability

“Not only did we want to get a clearer picture of the actual situation”, says Caroline, “we also wanted to identify where innovation is coming from, who these frontrunners are. That’s why we also collected no less than eleven case studies that will provide other supply chain players with food for thought and inspiration.”

Several of these case studies illustrate the successful implementation of tracking, tracing and sensing equipment. Solutions like these improve asset utilisation and enable more efficient and leaner operations, resulting in significant cost savings for the organisations in question. Their customers also benefit from them through more reliable deliveries.  And finally, they contribute to an even safer and more sustainable supply chain.

Trust

Other case studies showed the use of portals and data platforms to share information and facilitate collaboration between various parties in the supply chain, which highlights the issue of trust, as Ann points out: “Technology is one thing, creating sufficient trust to be able to actually share data and collaborate effectively is another. But we’ve been able to include some nice examples that show it can be done.”

“Also worth mentioning perhaps is the use of blockchain,” she adds. “There’s been a lot of talk about it and it’s still in its infancy, but some organisations have already set up a pilot.”

Culture of innovation

“What also emerged from both the survey and the case studies was the importance of creating a new culture of digital innovation,” Caroline continues. “In an environment like ours this is less obvious than it seems. Successful digital innovation needs experimentation, which in turn implies a mindset different from the one we’re used to, one in which strict procedures are required to guarantee security and safety.”

Ann: “Exactly. You need room for fast failure without putting your operations at risk. Vopak and the Port of Rotterdam are particularly inspiring examples in this respect.”

Human resources

And finally, the survey as well as several case studies highlighted the people aspect. “Organisations are faced with the challenge of attracting sufficient analytical skills”, explains Ann. “But also, while their more experienced staff may lack digital capabilities, the younger and digital savvy generation often lacks sector knowledge. It’s important to play to each of their strengths.”

She goes on: “Other concerns often voiced when digitisation is discussed are that it’s dehumanising, that people will not be able to keep up and that certain jobs will disappear. Our case studies show the opposite is true. Transport and logistics company Bertschi is a case in point with its mobile app for truck drivers.”

Visibility

Johan explains how this app works: “It connects all our drivers and vehicles to our central systems, providing real-time information on the status of the shipment, the truck’s loading weight, its location, its estimated time of arrival and so on, which greatly improves the efficiency of everyone involved – planners, drivers, logistics partners and customers. Our customers have secured access to a personalised dashboard with their real-time information, so they can better plan their own processes. In short, this app provides visibility, which also adds to the security of our supply chain operations. What’s more, it fits in with our efforts to set up a paperless trail. As you know, the transport sector demands a lot of paperwork – CMRs*, cargo documents, certificates of analysis, customs clearance documents, invoices etc.. Our drivers carry a lot of documents that can get lost. By digitising these documents we’ve significantly reduced the administrative burden for both our drivers and our back-office. That, and the fact that the users were involved in the development of this app has certainly contributed to its acceptance.”

Tip of the iceberg

Johan believes the report is a good summary of what’s going on. “While according to the survey the petrochemical sector may be lagging, it’s clear that customers from our customers, i.e. manufacturers of consumer goods and retailers, are pushing for more digitisation. And the case studies show we’re on the right track. Mind you, these examples are just the tip of the iceberg. You can’t expect organisations to share all business sensitive information,” he says smiling. “At Bertschi we’re also working on other projects.”

Momentum

Caroline is also happy with how the project went: “We were impressed with the academic rigour and methodology Ann and her team brought to the table and we really appreciated how they worked with us and the other members of the SCPC in a true spirit of co-creation.” 

“We’re also extremely pleased with the enthusiasm with which our EPCA members have participated. Nearly 240 of them have taken the time to reflect, discuss with colleagues and respond. It has generated a momentum in our community, which is an achievement in itself.”

What’s next?

All are eager to continue this journey, which is why this coming June EPCA and Vlerick are organising an interactive workshop with the report as a starting point. “We’ve already received a lot of interest,” says Johan. “Digitisation is obviously a hot topic.”

Caroline concludes: “We want to maximise the benefits of the work done so far, by sharing the findings with an even bigger audience and by offering the participants the opportunity to discuss, exchange ideas and reflect on the way forward.”

* an international consignment document travelling with the goods, required for movement by road. CMR stands for Convention Relative au Contrat de Transport International de Marchandises par Route, i.e. Convention on the Contract for the International Carriage of Goods by Road.

Want to know more?
Download the full report '
Digitisation in the petrochemical supply chain' - including the eleven case studies - at the EPCA  website. 

 

EPCA workshop Digitisation in the petrochemical supply chain

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