Transforming India’s

chemical sector through

digital and analytics
December 2023
Acknowledgement
The Confederation of India Industry (CII) is proud to publish this report as a part of its seminar on “Smart
Factory for Chemicals & Petrochemicals Industry: Adoption of smart manufacturing for shaping a globally
competitive growth” on 04 December 2023, New Delhi. The report offers a perspective on the imperative and
approach for adopting Digital and analytics (DnA) for companies in the Indian Chemical Industry. It lays out
a framework that companies could adopt for embarking on digital and analytics transformations, covering
aspects such aligning and committing leadership on a business led transformation roadmap, building delivery
capabilities across talent, operating model, data and technology, and ensuring adoption and scaling across the
organization. The report also covers impact stories of digital and analytics transformation in chemical sector
that could act as inspiration for players considering transformations of their own. CII is grateful for the efforts
and contributions of the people who have made this report possible. We thank our member companies for their
support. We extend our gratitude especially to our knowledge partner, McKinsey & Company for their analytical
fact base for this report.

Transforming India’s chemical industry through digital and analytics 1

Table of Contents

India’s chemical industry is at an inflection point 3

Digital and analytics: a catalyst for change in the chemical industry 3

Digital and analytics transformation framework 5

Align and commit leadership on the value and the plan 5

Build delivery capabilities 6

Implement effective change management 8

Impact stories of successful digital and analytics transformations 10

Digital and analytics transformations: myth vs. reality 12

Conclusion 14

Transforming India’s chemical industry through digital and analytics 2

India’s chemical industry is at an inflection point
India has the potential to become the consumption and manufacturing engine of the global chemical industry.
It is witnessing rapid economic growth, has a growing middle class, and is highly competitive at a global level
due to its availability of feedstock and skilled workforce along with lower capital and operating expenses
than other chemical manufacturing hubs. India could also benefit from the shifting supply chains triggered by
evolving geopolitical scenarios and the trend to diversify from existing core manufacturing markets1.
India’s chemical sector is projected to grow 11-12% in 2021–27 and 7-10% in 2027-40 to triple its global market
share by 2040. Domestic demand is expected to rise from $170-$180 billion in 2021 to $850-1,000 billion by
20402. MSMEs, that make up 28-30% of the sector3, are likely to be key to achieving these growth projections
and fulfilling rising demand.
But the sector also faces some big challenges. Shortages of critical products and materials due to supply chain
disruptions, surging commodity prices, and the rising cost of capital are putting the industry under increasing
pressure. Many players are deferring capital expenditure because of extended payback periods. Skilled R&D
talent is scarce and hard to attract and retain. And the decarbonization imperative is heightening scrutiny
from regulators, investors, consumers and activists. These challenges put added pressure on MSMEs, who
are already likely to be capital constrained, to continuously prioritize their capital deployment to improve the
performance and resiliency of their operations.
To capture the next S-curve of productivity in the sector, chemical manufacturers cannot afford to stand still.
They must act now to remain ahead – and digital and analytics could be one of the key impact drivers.

Digital and analytics: a catalyst for change in the

chemical industry
Digital and analytics transformation is the process of developing organizational and technology-based
capabilities that enable a company to continuously improve its customer experience and lower its unit costs to
build and sustain a competitive advantage over time. E2E technology driven digital and analytics transformation
can boost EBITDA 5-10 p.p. across manufacturing, supply chain and procurement operations and counter
rising costs while creating an exciting workplace and improved customer interaction. A typical Indian micro,
small, and medium enterprise (MSME) chemical company has the potential to double its EBITDA margin (INR
5-10 Cr) through digital and analytics linked initiatives, with a few outperformers potentially unlock even more
impact (Exhibit 1).
Technology helps companies increase production output and reduce costs by improving yield, energy
efficiency, throughput, and product quality – largely without major capital expenditure. Digital and analytics
initiatives give players new insights into their production lines, revealing complex interrelationships between
material properties and process parameters. And their potential goes beyond the plant; digital tools boost
supply chain resilience by offering close-to-real-time information on shipments, inventory levels and end-
customer demand. Smart pricing models that account for variations in input and processing costs help align
sales, manufacturing, and procurement functions. Models of production networks, regional costs and operating
risks inform medium-term decisions about sourcing and manufacturing.

1 Mckinsey.com article “India: The next chemicals manufacturing hub” published February 28, 2023: https://www.mckinsey.com/
industries/chemicals/our-insights/india-the-next-chemicals-manufacturing-hub.
2 Mckinsey.com article “India: The next chemicals manufacturing hub” published February 28, 2023: https://www.mckinsey.com/
industries/chemicals/our-insights/india-the-next-chemicals-manufacturing-hub.
3 Source: CRISIL Research, 2022.

Transforming India’s chemical industry through digital and analytics 3

Exhibit 1: Impact of digital and analytics for a typical chemical MSME

Based on FY22 Financial performance of ~350 chemical sector MSMEs. Indexed P&L for a typical chemical MSME (INR Cr)
Indexed to 100. Typical revenue is 100-105 INR Cr Unlock through DnA (INR Cr)

• 2-5% cost reduction from Yield, throughput, and quality linked production initiatives
100 • 4-8% cost reduction from procurement and supply chain initiatives

5-10% cost reduction from 3-5% cost reduction 5-10% cost reduction
energy and utility consumption from productivity from G&A productivity
60-65 optimization initiatives improvement initiatives improvement initiatives
+ 3.8-8.3
+4.1-8.8
+ 0.3-0.6 14-16
5-6 + 0.4-0.7
30 - 35 8-10
+0.5-1.0
+ 5-10
5 - 10
Revenue RM/PM Energy & Contribution Employee SG&A + EBITDA
Cost Utilities cost Margin cost Other cost Margin

In short, digital and analytics can improve operational performance indicators and environmental sustainability
metrics while increasing EBITDA. It creates impact across domains and KPIs including agility, sustainability, and
speed to market (Exhibit 2).
Exhibit 2: Impact of digital and analytics at successful WEF lighthouses4

KPI Improvements Impact range observed, % 100 Range

Factory output increase 4-140%
Productivity increase 3-400%
OEE increase 2-85%
Productivity Product cost reduction 2-70%
Operating cost reduction 1-100%
Quality cost reduction 2-100%
Indirect labour cost reduction 20-30%
Inventory reduction 5-100%
Lead time reduction 10-100%
Agility
Change-over shortening 10-100%
On-time delivery increase 1-33%
GHG emissions 8-100%
Waste reduction 4-95%
Sustainability
Water consumption reduction 5-75%
Energy efficiency 1-100%

Speed to Speed to market reduction 10-90%

market Design iteration time reduction 2-100%
Supply chain admin cost 20-40%
Logistics
Transport/warehousing cost 10-20%

Sales & Lost sales reduction 20-40%

marketing Forecast accuracy 30-70%

Customization Lot size reduction 40-100%

Source: WEF Lighthouse Network

4 The Global Lighthouse Network is a World Economic Forum initiative co-founded with McKinsey & Company. It examines the future of
operations and#26247B #00A9F4
considers how fourth #BCBBEB
industrial revolution #D9D9D9
(4IR) technologies #BFBFBF
are shaping production. #000000

Transforming India’s chemical industry through digital and analytics 4

Digital and analytics transformation framework
To succeed, digital and analytics transformations require a holistic approach5 across three dimensions
(Exhibit 3):
1. Align and commit leadership on the value and the plan by developing a business-led roadmap
2. Build delivery capabilities across talent, the operating model, technology and data to develop competitively
differentiating digital solutions
3. Implement effective change management to drive adoption across E2E business processes and scale
across the business

Exhibit 3: Holistic digital and analytics transformation approach

Alignment Business-led digital roadmap

1
on value  To align the senior leadership team on the transformation vision, value, and roadmap
and reimagining business domains to deliver outstanding customer experiences and
lower unit cost

Delivery Talent Operating Model Technology Data

2
Capabilities  To ensure that  To increase the  To allow the  To continuously
the right skills metabolic rate of organization to enrich data and
and capabilities the organization more easily use make it easy to
are in place to by bringing technology to consume across
execute and business, innovate with the organization
innovate operations and pace to improve
technology customer
together experiences
and business
operations

Change Adoption and scaling

3
Management  To maximize value capture by ensuring the adoption and enterprise scaling of digital
solutions and by tightly managing the transformation progress and risks

Source: Rewired - The McKinsey guide to outcompeting in the age of Digital and AI

1. Align and commit leadership on the value and the plan

A business-led roadmap is the blueprint for a successful digital and analytics transformation. Digital and
analytics transformations often stall because of inadequate planning and leadership alignment. Common pitfalls
are a different conceptual understanding of digital between leaders who ‘speak different languages’; focusing on
projects that do not deliver much value, or over-focusing on technology solutions at the expense of critical people
and capability needs. If the scope of a transformation is too broad then investments will be spread too thin, or the
CEO may delegate responsibility to another executive.

5 Approach framework derived from Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI by Eric Lamarre, Kate
Smaje, Rodney Zemmel, June 2023.
ALTERNATIVE
Transforming India’s chemical industry through digital and analytics 5
Based on learnings from successful digital and analytics transformations, an effective transformation
roadmap could:
• Inspire and align the top team by establishing a common digital language, learning from other industries,
developing a shared vision and agreeing on a set of commitments that match leadership’s ambitions.
• Choose the right transformation “bite size”, which is neither too small to achieve meaningful impact nor too big
and complex to deliver.
• Have business leaders define what is possible by setting ambitious but realistic transformation goals across
business domains.
• Determine the type and scale of resources needed to achieve the transformation goals.
• Build capabilities for today and the next decade to outcompete.
• Treat the digital roadmap as a contract for leadership by detailing specific plans to transform business
domains with investments and benefits and articulating a plan to build enterprise capabilities with
measurable maturity endpoints.
• Drive collaboration at the top level, across domains and functions and make sure every C-suite executive
does their part to help the company succeed on its digital and analytics transformation journey.
For MSMEs, choosing the right transformation bite size is critical to ensure buy-in across the organization
and create meaningful value that showcases the RoI potential of digital and analytics. An effective way to
do this is to take a domain-based approach, i.e., identify a few important and self-contained domains (e.g.,
manufacturing, supply chain, procurement, logistics) and rethink them completely. Then assess their value
potential and feasibility to understand which to go after first. Value potential assessment comprises a high-level
estimate of the value potential (across customer experience, financial benefits, time to value creation, synergy
with other domains etc.) based on a combination of outside-in analysis, discussions with senior leaders and
industry experts, and benchmarks from within and outside the industry. Feasibility looks at data and technology
readiness, ease of adoption and scaling.
In MSMEs, impact is more likely to be driven by domains such as process optimization, maintenance and
reliability, and procurement than by, e.g., capital productivity.

2. Build delivery capabilities

Four core capabilities are required to deliver digital solutions: talent, operating model, technology and data.
These capabilities could be either developed in-house or sourced externally through an ecosystem of partners
and providers. Understanding where a company stands against these capabilities is a prerequisite to knowing
how to improve them. MSMEs can do this by benchmarking themselves against companies that are further
along the digital and analytics transformation journey. Domains tend to be industry-specific, but capabilities can
be benchmarked against any industry, particularly those that are already digitally mature. Benchmarking can
be carried out using self-assessment surveys such as DXcel6 supported by independent expert interviews with
executives and managers across business units and functions. In addition, Go & See7 programs offer executive
teams the opportunity to visit and learn from best practice companies.
When it comes to talent, organizations typically develop capabilities in one of two ways: they create a center
of excellence (CoE) staffed by externally hired data scientists (possibly with limited knowledge of chemical
operations or commercial activities) who team up with focus area experts to develop value-creating use cases,
or they train key staff in data science so that they can develop their own use cases. For MSMEs, a CoE creates

6 CII-CDT’s Digital Transformation Maturity Framework enables a holistic assessment of the entire organization/unit/plant across
strategy, structure, governance, business processes, current IT initiatives and infrastructure, people, culture and the business results
that can be attributed to digital initiatives.
7 Go & See programs enable organizations considering a large-scale transformation program to learn from their peers and focus on
topics such as embarking on a new digital strategy, agile at scale, DnA, and reimagining customer journeys.

Transforming India’s chemical industry through digital and analytics 6

impact faster and is more practical. Training people in-house may deliver more value but requires more time
and resources, making it more suitable for large businesses. MSMEs need to take a pragmatic approach to
developing talent based on make vs buy vs hire decisions. They need to decide which skills will set them apart
and keep these in-house, filling any gaps through external providers.
In terms of operating model capabilities, to drive real impact, a CoE can work in an agile way and interact
frequently with the business (Exhibit 4).

Exhibit 4: CoE structure and role

CoE Lead: Bridge between CoE and

business units

Business
Owners

Data
Engineers
Delivery
Strategy
Manager
Data
Scientists

Business impact

Business
Owners

Role of the CoE

Co-locates with Trains people on-the-job, Spreads ideas and

business functions, in in addition to seminars innovative practices to
flexible working spaces the entire organization

Supports multiple Prioritizes cases where Spreads cultural change

problems for each value is created, and
function outcome is measurable

The CoE team would need specific skills to rapidly identify, develop, execute, and sustain use cases (Exhibit 5).

Transforming India’s chemical industry through digital and analytics 7

Exhibit 5: Skills required in the CoE

DnA Lead DnA Sponsor

Identify the opportunities - Senior leadership team
define and prioritize the member–continuously
problems to be solved champion analytics and
through use cases ensure necessary funding
and commitment from
Define Data leaders
Identify the
Architecture
opportunity

Data Engineers
Assess data, define the
solution space and
establish hosting
Assess and environment
sustain impact
Execute Model
Development
Data Scientists
Ingest data, develop
model, generate business
Delivery Managers recommendations, and
Assess, communicate, create visualization
and sustain impact output

MSMEs can build data and technological capabilities by setting up a fit-for-purpose data and technology
infrastructure based on their digital strategy and roadmap, i.e., focus on capturing and processing only the data
needed for high value priority use cases rather than building a perfect data platform or data lakes across their
entire operation. They also do not need 100% technological readiness to start their transformation journey.
Data and technology infrastructure also need not be build from scratch; MSMEs can leverage technology and
vendor ecosystems to quickly deploy a few off-the-shelf, productized solutions that fit their overall roadmap

3. Implement effective change management

All too often, digital solutions do not have the impact anticipated. Companies typically invest in the initial solution
development but can chronically underinvest in adoption and scaling because they fail to address technical,
process and human issues in sufficient detail. As a rule of thumb, every rupee spent to develop a digital solution
requires at least another one rupee to cover change management initiatives, e.g., process changes, user training
etc. Adoption and scaling have four critical elements: continuous prioritization of domains; change management;
impact and performance tracking; and developing the execution speed and skills needed to scale.
MSMEs would need to generate and showcase high-impact use cases early in the transformation to obtain
the support of internal and external stakeholders. To achieve early impact, they could start their transformation
through select high value use cases across priority domains (e.g.: manufacturing, procurement etc.) which could
act as a self-funding source for their overall transformation. The use cases or solutions implemented could then
be “assetized” in form of a digital and analytics implementation playbook and the funds generated then could be
continuously prioritized for deployment in areas of high impact potential to sustain the transformation momentum.

#26247B #00A9F4 #BCBBEB #D9D9D9 #BFBFBF #000000

Transforming India’s chemical industry through digital and analytics 8

Effective change management is also critical to change mindsets and behaviors. MSMEs can take inspiration
from the actions of successful WEF lighthouses when it comes to preparing their organization for digital and
analytics transformations (Exhibit 6).

Exhibit 6: Six common actions that WEF lighthouses have taken to prepare
their organization for digital and analytics transformation.

From To
Empowering front-line workers Top-down driven innovation Bottom-up collaboration driven
to innovate by using innovation
technology and data

Proactively building Basic job-related skill development and Customized reskilling and talent
capabilities, both technical and one size fits all talent management development programs in partnership
soft, and managing talent system driven by internal knowledge with external agencies
development (e.g., universities and other companies)

Adjusting the organizational Siloed IT and production organizations Cross functional teams focusing on
structure to enable digital and digital deployment.
analytics transformation

Implementing new ways Solutions being developed Development of a fit-for-purpose

of working such as agile independently and delivered to product through an agile team that
methodologies and increased production/operations for testing involves production/operations early
transparency at end of development in minimum viable product (MVP)
development, though sprint review

Augmenting day-to-day Manual and repetitive tasks involving Automation and cobots, digital tools for
assembly and operational tasks paper SOPs and operator experience real time help, and automated machine
through automation and driven operations setting and parameter optimization
technology

Increasing levels of problem- Heuristics-based decision making Data driven decision making based
solving and collaboration on relying on incomplete data on real time centralized data
the front line

Source: WEF Lighthouse Network

To enable scale, MSMEs could build a strong execution engine. A transformation office (TO) is a highly
effective way to track performance and build the execution speed and capabilities needed to scale. The TO
defines roles and responsibilities and ensures the right people are in the right place by hiring or developing
talent. It establishes a governance cadence, tracks progress across workstreams, and sets meeting agendas.
It embeds new digital toolsets and ways of working. And it defines measurable KPIs to ensure that the company
captures value.
MSMEs can use their CoEs as TOs by training internal resources (e.g., continuous improvement champions/
teams), using a digital and analytics implementation playbook based on lessons learned from successful
pilot initiatives, and bringing in external experts to fill any gaps. The performance management structure for
such teams needs to be updated to reflect the additional deliverables required by the digital and analytics
transformation.

Transforming India’s chemical industry through digital and analytics 9

Impact stories of successful digital and analytics transformations
Leading Indian chemical player Leading Indian multinational
pharmaceutical player
Unlocked US$10+ million in EBITDA in two years by
implementing 15+ use cases. Unlocked 56% higher factory output, 30%
lower production lead time, 10% reduction
Context: in manufacturing cost, and 43% reduction in
In 2021, the company launched a digital and analytics customer complaints through 40+ use cases
transformation to become a data-driven organization, deployed over 4 years.
improve critical business KPIs across production,
Context:
safety, quality and maintenance; build a robust data
and technology infrastructure to support scaling; and The company was facing challenges in form
develop in-house data science capabilities. of price erosion, fragmented yet stringent
regulatory requirements, unprecedented
Business-led roadmap as the first step to a demand/supply volatility, increasing manpower
successful digital and analytics transformation: costs, low productivity and high degree of errors
The company identified that the first step for a and quality deviations leading to lost sales.
successful digital and analytics transformation was They decided to embark on digital and analytics
to align leadership on the value and the plan by transformation to overcome above challenges
developing a business-led roadmap. They conducted and unlock performance.
a 10-week blueprinting exercise to create their
Reimagining business domains to
transformation roadmap resulting in a roadmap that
create organizational impact:
identified 65+ use cases, called for set up of a digital
and analytics CoE, and defined the data and tech The company identified manufacturing,
architecture required to implement 15+ priority use warehousing, and QA/QC as key domains and
cases at one manufacturing site in the first phase of decided to reimagine them completely by carrying
the transformation. The blueprinting exercise brought out end-to-end process redesign and digitalization
together executives across the company leadership, to deploy a digitally enabled “plant of the future”
including heads of manufacturing, IT and digital and with interconnected systems and real-time
analytics, in one forum ensuring leadership buy-in for performance management.
the transformation process.
They implemented 40+ digital and analytics use
cases spanning 6 major 4IR technologies including
Leveraging internal talent and external hiring
high value use cases such as multi-constrained
for creation of digital and analytics CoE:
dynamic schedule optimization for scheduling
The company, guided by their transformation roadmap, production orders that alone led to 10% increase in
created a digital and analytics CoE to build delivery OEE, and 46% reduction in logistics cost.
capabilities. The CoE was mandated to deliver the
Other high value use cases across manufacturing,
program in phases over 1.5 years and appointed 50+
warehousing, and QA/QC included AA models
staff with 12+ skillsets including data science and
to improve process robustness and yield, at
engineering, cloud, MLOps, Visualization etc., in a
minimum energy usage and costs, real time digital
phase manner based on value delivery timelines. The
performance monitoring, Automated storage,
CoE was built using a combination of internal talent and
and retrieval system (ASRS) for finished goods,
external hires. External hiring for the CoE was done
Dynamic QC test scheduler using Digital Twin, and
from leading industry players as well as from top-tier
Performance dashboards to track safety, health and
campuses across India. They also launched a digital
sustainability related KPIs.
and analytics academy for internal capability building to
empower leaders, and employees to own and sustain
impact from D&A transformation. They trained 25+
digital and analytics translators and 10+ data scientist
through a combination of classroom learning programs
and offline courses curated as per specific roles.

Transforming India’s chemical industry through digital and analytics 10

Leading Indian paper and packaging player Indian MSME specialty chemical player
Unlocked 4 p.p. EBITDA improvement through at MSME company in the specialty chemicals sectors is
scale deployment of 50+ models across 25+ use investing digital and analytics with an aim to unlock its
cases in 12 months. next S-curve of growth by creating safe, data-driven
world class manufacturing facilities that could compete
Context: on the global stage.
The company embarked on digital and analytics
Context:
transformation with an aim to unlock next jump
in productivity and enhance and sustain their The company manufacturers 50+ products across
competitive advantage. 5+ sites and is embarking on a digital and analytics
journey to increase outputs, improve safety, improve
Pragmatic approach to technology labor productivity, reduce cost of production, and
for delivering impact: optimize working capital.
The company took a very pragmatic and low-cost
Assessing and aligning value
approach to building their technology capabilities.
of digital and analytics with key
They focused on having a reliable data source at
stakeholders in the organization:
the beginning of their transformation journey and
upgraded their data & tech stack gradually, slowly The company leadership was aware of the potential
ramping up data connectivity and access. that digital and analytics could have for improving
business performance through data driven operations.
Initially, they relied on available data sources such
They aimed to create an environment where data is
as DCS/PLC/HMI/Lab data and collected data
readily available and is being leveraged regularly to
every month from these sources and maintained
improve operational performance and plant safety.
a backup of the same. They created data stitching
To create a roadmap for achieving their digital
tools to convert data into useful form and leveraged
ambitions, the company embarked on an assessment
closed loop models coded into DCS/PLC.
program partnering with an external agency that
They ramped up gradually and added a historian
evaluated the company across 16 I4.0/ digital and
and an analytics layer on top. Data historian
analytics dimensions covering 3 manufacturing units
allowed for live access to any data within the plant
and 2-3 key products. The assessment allowed the
ecosystem, made data stitching very simple and
company to understand their current digital maturity
enabled Machine learning models to be deployed
across facilities and domains, benchmark themselves
with ease on live data.
to best-in-class industry peers and identify a
They also had dedicated resources identified roadmap covering key areas of improvement and their
for building Data & Tech stack and researching associated value/impact on critical KPIs. The company
on new I4.0 technologies who built Data & Tech ran the assessment across both their newer, more
stack through partnering with external technology technologically advanced manufacturing facilities and
ecosystem incl. experts and technology vendors. their older legacy units to identify gaps and create a
They piloted solution in critical plants, gradually roadmap to bridge the gaps in digital maturity between
expanding to multiple plants to ease use case their new and legacy facilities.
delivery before full scale deployment of data and
The company also ensured that all stakeholders who
tech solution across the entire plant.
would be directly impacted by digital and analytics
This approach allowed them to unlock 8% increase are actively engaged in the assessment program.
in pulp production, 10% reduction in costs, and By involving the relevant stakeholders early in their
70% reduction in quality defects in the first 12 transformation journey, the company ensured that their
months of their digital journey. digital and analytics roadmap was business led, took
cognizance of their operational context, and ensured
stakeholder buy-in across the organization on the
impact potential.

Transforming India’s chemical industry through digital and analytics 11

5 key learnings outlined by players with successful digital and analytics transformations:

1. Digital solutions should be value-focused, not technology focused. There must be partnership between
business and technology to solve business needs. Think of a digital and analytics transformation across all
pillars and not an IT, operations, or data science project.

2. Combination of both domain and digital and analytics expertise is required to crack the problem. There is no
need for massive external recruitments, many capabilities can be built within existing organization.

3. Data availability is not an unsurmountable issue. Build a "Fit-for-Purpose" data-technology architecture

instead of attempting for expensive "best in class" deployments.

4. Change management is extremely critical for adoption of new solutions or new ways of working. Involve front
line operators (end-users) early in the process to gain buy-in and facilitate change management.

5. Think of implementation right from the start as implementation is where it gets hard. Rigorously monitor
implementation status and drive a transformation office with daily, weekly, and monthly touchpoints.

Digital and analytics transformations: myth vs. reality 8

Digital and analytics is top-of-mind for companies across all sectors, with 90% of CEOs believing that it will
transform their industry. Yet only ~17% of CEOs have sponsored and launched digital and analytics initiatives.
What is holding them back? Surveys and experience working with manufacturers across the globe show that
there is still a lot of misunderstanding about what digital and analytics is and how it works. The myths are far
from reality.

Digital and analytics is only about data collection and dashboards

Digital and analytics transformations rethink how to increase, improve and accelerate value creation end-to-
end. They create value by optimizing processes, deploying new technologies such as AI/ML, natural language
processing, visual analytics, and moving beyond descriptive analytics (dashboards) to prescriptive and predictive
analytics (AI/ML models). A full understanding of the business and its pain points is required to enable a
company to invest in digital and analytics where it matters.

Digital and analytics will displace workers

The new technologies used in digital and analytics transformations can create jobs and eliminate repetitive tasks,
enabling the workforce to learn new skills. However, companies need to retrain their people and invest in new
capabilities, e.g., data scientists, data engineers/architects, technology leaders, digital and analytics translators,
and product owners. Some companies are partnering with post-secondary educational institutions to develop
training programs and new ways of working.
Instead of hiring pure data scientists, Tata Steel Europe trains its domain experts in data science at its Advanced
Analytics Academy. At its IJmuiden plant in the Netherlands, Tata built the digital skills of its site team to improve
productivity, cost and quality.

Digital and analytics requires greenfield sites

Digital and analytics transformation does require new equipment – but this does not always mean brand-new,
“greenfield” sites capable of fully automated “lights out” manufacturing. Digital and analytics creates a lot of value

8 All case examples in this section are taken from Mckinsey.com article “Industrial IoT generates real value—if businesses overcome six
myths” published June, 2022: https://www.mckinsey.com/capabilities/operations/our-insights/industrial-iot-generates-real-value-if-
businesses-overcome-six-myths, unless stated otherwise.

Transforming India’s chemical industry through digital and analytics 12

by improving brownfield sites and by connecting and optimizing existing infrastructure and augmenting it with
new, e.g., sensors, apps, and connectivity to collect and convert data into insights.
Procter & Gamble leveraged digital and analytics to reduce rework and complaints by 50%, lower the incidence
of scrap generation and quality inspections, and cut throughput time by 24 hours at its 150-year-old Rakona plant
in the Czech Republic. It rolled out an in-process quality-control system in its legacy systems to address issues in
manual sampling and subsequent delays in product releases. Sensors now monitor product characteristics and
produce data to help operators determine batch quality for release or stop the line if a deviation occurs.

You need to be 100% ready to go digital

Many companies spend too much time planning. Setting up a digital TO to oversee pilots and guide the
organization through a “fail fast, succeed big” process accelerates implementation. The TO is the execution
engine to achieve scale through proven methodologies, best practices, and a holistic vision. Agile methods of
working enable companies to move in sprints, iterate fast and learn from their failures.
Petkim embarked on its digital and analytics transformation journey with just one digital and analytics use case
that delivered substantial value. It proved the merit of digital and analytics and mobilized the organization to
pursue it at scale9.

Continuous improvement through digital and analytics is expensive

Traditional methodologies are often too incremental to deal with the challenges and threats manufacturers face
in the global digital economy. Digital and analytics transformations use big data, real-time insights and agile ways
of thinking and working to improve operations continuously. WEF lighthouses show that the savings unlocked by
digital and analytics initiatives far outweigh the costs; optimizing rather than replacing existing infrastructure can
achieve 2-4x RoI compared to 10-50% for capex initiatives. As transformations evolve and escalate, savings and
bottom-line impact grow.
A global electronics manufacturer made a limited investment in digital and analytics to obtain a holistic view of
operations across dozens of production facilities and more than 25,000 employees. Replacing the production
planning system would have been a massive, time-consuming and costly undertaking. Instead, the company
installed sensors on its production lines to capture critical real-time data, such as equipment efficiency and line
productivity. An IIoT platform processes the data, serving as a remote performance dashboard and providing
real-time access across all facilities. This transparency enabled the manufacturer to bring all its facilities up to the
same level of productivity—and raise productivity by 10+% in the first year.

Digital and analytics is not feasible in emerging economies

Conversely, companies in developing regions are often well positioned to implement digital and analytics
because they are less encumbered with brownfield facilities and legacy systems – as witnessed by WEF
lighthouses in emerging economies. Of the 29 new lighthouses added to the WEF Global Lighthouse Network in
2022, 23 are in emerging economies – China (13), India (5), Brazil (2), Thailand, Philippines and Turkey (1 each) –
and 22 are in Asia10.
Tata Steel set up a greenfield plant in Kalinganagar, India, to run at full capacity in far less time than the
industry standard. It invested in digital and analytics solutions and to develop the capabilities of its relatively
inexperienced team. Applying advanced analytics at scale has enhanced plant performance by improving raw
material usage, uptime, and quality.

9 Mckinsey.com article “How the petrochemicals industry can benefit from advanced analytics” published May, 2022. https://www.
mckinsey.com/industries/chemicals/our-insights/how-the-petrochemicals-industry-can-benefit-from-advanced-analytics.
10 WEF whitepaper “Global Lighthouse Network: Shaping the Next Chapter of the Fourth Industrial Revolution” published Jan, 2023.
https://www.weforum.org/publications/global-lighthouse-network-shaping-the-next-chapter-of-the-fourth-industrial-revolution.

Transforming India’s chemical industry through digital and analytics 13

Conclusion
India’s chemical sector is poised for rapid growth over the next decade and MSMEs are likely to drive it.
To capture this growth, the sector must act now to resolve critical challenges around cost of production, supply
chain, skilled labor and sustainability.
Digital and analytics could unlock the next S-curve of productivity for MSMEs by enabling them to tackle some
of these challenges and creating impact across the value chain. It isn’t easy to embark on a digital and analytics
transformation journey, be it due to the level of awareness, concerns about the capital needs or the current skills
in the organization. But those players who have bet on digital and analytics have achieved real impact and offer a
transformation blueprint for others in the industry.
The blueprint comprises an end-to-end approach to digital and analytics transformation that includes creating
a business-led roadmap around which leadership is aligned, taking a ‘bite-sized’ approach across high-value
domains such as manufacturing and procurement, taking a pragmatic approach to building delivery capabilities
across talent, organization, data and technology, and ensuring adoption and scaling by deploying the right
change management and governance structure based on existing resources.

Transforming India’s chemical industry through digital and analytics 14

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Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi
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Disclaimer
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Transforming India’s chemical industry through digital and analytics 15

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