According to Deloitte’s 2021 Chemical Industry Outlook, consumers increasingly value sustainability and prioritize products based on circularity and carbon footprint. At the same time, government regulations are placing increased pressure on companies to meet strict new sustainability goals. Ready or not, chemical companies need to adjust. The winners are adjusting now. The age-old linear model of ‘take, make, waste’ is not sustainable and no longer acceptable.
The financial stakes are high. Accenture has estimated that the “circular economy” value worldwide may hit an astounding $4.5 trillion by 2030. Consequently, the rush is on toward a more regenerative circular economy. But rushing forward without a plan is a fool’s errand.
Let’s take a moment to define circular economy. It’s an approach that prioritizes renewable resources and recycling, reusing raw materials many times before creating waste. Shifting innovation and new product development (NPD) priorities toward processing chemicals that fit with the circular economy includes significant changes for established chemical companies. The transition will be far more efficient with a system that supports the standardization, digitalization and availability of information to all relevant stakeholders. But let’s face it – if it were easy, everyone would have done it by now.
As McKinsey points out in a chemical industry report, “traditional value-creation pathways, such as cost-cutting efforts, have been depleted. And while many companies have chosen to focus on portfolio management, few have updated their operating models to incorporate strategies that reflect the new realities of the industry.”
Many chemical firms who need to make this transition to become more sustainable still rely on old ways of working using incumbent technologies – and this is holding them back. The majority of work is still conducted via complex spreadsheets and PowerPoints, which are saved into SharePoint folders. There’s no single source of truth, a huge amount of duplication and a lack of collaboration. The result is a fractured system, rife with outdated data. In these settings, it’s difficult to find information and to make informed decisions on any given initiative, product, or market scenario. For any chemical company pivoting toward a model of sustainability, this outdated approach should be abandoned.
Another reason to scrap the historical product management process is that challengers are coming from all angles, not just traditional competitors. Most of the smaller, nimbler companies employ a digital-first mindset. Organizations that rely on spreadsheets to manage crucial practices and cross-functional work are holding themselves back. Organizations who have already embraced digital approaches are beginning to use innovative technology advancements such as automation, machine learning, and artificial intelligence (AI) to gain a competitive advantage.
Innovate at speed, get sustainable products to market (faster)
Cloud-based solutions such as innovation management systems, material informatics solutions, data analytics and machine learning can drive new efficiencies and facilitate smarter decision making. Tools like these enable you to adapt your product portfolio based on market changes and strategic goals, such as driving towards a circular economy. They also enable you to create clear cost and performance targets, then achieve them through meticulous tracking.
To help improve enterprise performance, quickly get more sustainable products to market, and contribute towards a circular economy whilst improving growth and profitability, here are three suggestions:
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Manage strategic initiatives, including sustainability, by including all levels of the organization
The best way to prioritize and nurture innovation is to eliminate the process barriers that impede collaboration, communication and visibility across business units and among decision-makers. This extends to every level of a company. Seamless process collaboration that connects strategic intent to real-time decision making will make an enormous difference in most organizations.
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Out with the old (spreadsheets), in with the new (single innovation management system)
In order to create new, circular economy-friendly ideas faster and more efficiently, you need to reduce the number of spreadsheets and tools that critical stakeholders use. Instead of working in silos, adopt a single centralized system that provides a single source of truth and makes information and data readily accessible. This brings transparency to information and processes, enables effective knowledge reuse, ensures best practices for new product development (NPD), improves process automation and compresses the product development cycle.
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Optimize processes to achieve higher levels of innovation efficiency
Coordinated innovation efforts facilitate new ways to optimize your company’s operations. By focusing on good processes and governance, you are better positioned to compete as NPD is automated, R&D capabilities are enhanced, material informatics are continually improved and lifecycle assessment (LCA) capabilities are bolstered.
Making these kinds of core changes is enabling chemical companies to make better, data-led decisions and to see critical insights faster. Companies are able to apply new types of innovation to their processes, programs and products, which positions them to succeed with their sustainability goals.
The sustainability of the planet is as important (perhaps more so for some people) as the success of a given company’s products. Reliance on a single innovation system to guide processes and progress will help strike the proper balance.
Sopheon's Accolade is designed for the unique needs of the chemical industry. It helps companies make better decisions faster.
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