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Chemical firms are embracing the so-called Internet of Things. In doing so, these companies see new partnerships are possible.Technology improvements allow firms to partner with companies in many fields. With profit margins so thin in chemical manufacturing, these partnerships make prudent business sense.

Energy and tech firms are new potential partners, as are equipment makers. Firms with vision see possible ties with customers and subcontractors, too.

The Internet of Things (IoT) is driving these new linkages. The IoT refers to the use of sensors, computers, and wireless connections to connect physical objects to each other. By 2020, it's estimated that between 30 billion and 50 billion objects will be connected. These connected objects will automate processes, find and self-correct problems, and record and send data to central servers. All of this data can be analyzed to modify and improve products and processes.

The Internet of Things and the Chemical Industry

As the cost of sensors and storage drops, so too do the barriers to entry into the many possibilities available to the chemical industry. The technologies allow improved product security and safety. With connected products, processes and people, firms can improve performance, minimize supply chain issues, and improve product quality. Let's take a look at some of the possibilities and partnerships these smart technologies offer.

Predictive Maintenance

Downtime and unplanned maintenance are common issues in the chemical industry. Smart technology is solving those issues through the use of sensors that track quality and performance. Computers are raising or even addressing issues in real time to reduce equipment breakdowns. Equipment is more effective and maintenance is more efficient. Connected devices generate vast amounts of data. Powerful analytics programs can interpret that data to improve quality. So-called augmented reality uses 3D visualization tools to improve maintenance and service. Take, for example, the issue of batch quality. Most chemical makers can only assess a limited number of batches at a time. Big Data tools now allow for thousands of batches to be analyzed together. This metadata lets companies improve production processes, yield rates, order fill rates, and per-batch costs.

Precision Farming

Farmers today want to use chemicals in precise ways to produce higher yields. This "precision farming" requires a trusting partnership among many vested partners. Farmers need to work with agribusiness suppliers and chemical makers. Tech firms, equipment makers, and traders are also key players.

Successful precision farming requires tech platforms to handle large amounts of data. All stakeholders need to be able to access the data and collaborate in a secure virtual environment.

How does it all work? Imagine a system where sensors are constantly measuring soil quality. Data on water, nutrients and pesticides are recorded and correlated. Analytics predict weather and its impact on a crop and adjust the rates and amounts of applied materials. Yields and quality are tracked and analyzed to find optimal ratios. Overlaid pricing and expense models recommend crops with the highest possible profit margins.

The results are significant in many areas. Farmers are more profitable. More people are fed with less environmental impact. Manufacturers improve future versions of equipment, seeds, and chemicals.

Improved Logistics

Reducing friction along the logistics chain is much improved with the IoT. Sensors and RFID tags can ensure products remain quarantined or in specific locations. Contamination and attacks, either physical or cyber, can be detected faster and authorities alerted. Dispatchers can track transportation fleets in real time to predict and track deliveries.

Warehouse operations become far more efficient with these newer tools. With virtual reality, users can "see" products in real time, reducing the need for warehouse pick lists. Trackable specs and expiration dates can improve the efficiency of picking, packing and put-away work. Data analysis can reveal the best use of available space and how to coordinate with suppliers on receivables.

Reducing Energy Expenses

Energy usage and regulatory controls are significant costs for most chemical manufacturers. IoT devices can address both concerns.

Installed sensors track energy usage and predict outages. Collected data ensure and verify regulatory compliance.

Analytics identify usage patterns and inefficiencies. Firms can make better decisions about energy purchases. Conservation measures can be identified. Not only do these tools offer cost reduction, they create greener operations.

Developing a Strategy

So how do chemical firms develop a strategy that allows for these complex partnerships to deveop and persist? Here are six considerations.

Innovate: Rapid advances in mobile. cloud and Big Data technologies are bound to continue. Firms that embrace these technologies and infuse them in planning are likely to take the lead and increase market share.

Think Green: Whether your firm is B2B or B2C, IoT products can lead to greener outcomes and add marketable value to your line.

Global View: Connected supply chains, distribution, and products allow for a global operational perspective as well as global business opportunity.

Data and Analytics: With more connected products comes more data. Chemical firms need to address storage capacities and tools to crunch all those numbers. Fortunately, cloud-based storage costs continue to drop and Big Data analytic tools are becoming more robust.

Infrastructure Partners: Hardware, software, sensors, applications, telematics and mobile devices are a part of your business now. View the vendors as strategic partners. Collaborate with them on new products and procedures.

Vigilance: Threats of attack and contamination are all too real in the chemical industry. Today firms need to also consider customer data protection and privacy. One downside to IoT is the proliferation of products that can be hacked, stolen or tampered with.


Smart products provide extraordinary opportunity in the chemical industry. Firms that embrace the need to change and find vertical and horizontal partners will be well positioned. Rich data will allow for better informed decisions on operations and revenue opportunities.

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