Ensuring a winning strategy for value chain optimization of the refining and petrochemical industries

Posted: March 24, 2020

The Refining and petrochemical industries have a projection to keep growing in the next two decades and companies that are investing in new technology today will be ahead of your competition in about 2 years. The digitalization of the value chain, also known as value chain optimization, is a complex task. Part of this complexity comes from the diversity of challenges that occurs in different areas of the value chain within each operation, as we addressed in the article Understanding the Refining and Petrochemical Value Chains to Drive Optimization.

Many companies still fail to obtain economic return from their investment in digitalization and we presented the most common challenges in the article Challenges of Achieving Value Chain Optimization in the Refining and Petrochemical Industries. With so many challenges, how can businesses ensure they have a strategic digital transformation program that will successfully result in the optimization of your value chain?  

Here are a summary of some thoughtful tips to start right - detailed in this WhitePaper - based on many years of experience with a broad number of companies, from standalone plants to major global companies. Building a solid strategy will help you break down the silos and improve your business processes, leading to better decisions and increased margins.


1. Address each and every team across the value chain

A successful value chain optimization is not achieved by adapting the entire organization towards work that is focused on maximum overall business profit. Instead, digital technologies must be used to empower each group to better achieve their individual goals. The improved information sharing and visibility will then drive more agile processes and streamlined collaboration across the enterprise, which will help maximize overall business profit margins.

2. Start small, think big

We recommend starting small. Looking at the entire value chain, verify the biggest pain points – the area in the value chain where the biggest step-change could be achieved by digitalization – and start optimizing here. But it is crucial that each smaller initiative is hand-in-hand with a well-grounded digital transformation strategy, assuring that what will be deployed now is scalable, aligned with IT strategy and easily adaptable for a broader scope.

3. Adopt leading technology

Technology changes rapidly and software can become outdated easily. When choosing any digital software it is critical to select a leading technology that is focused on user experience, that leverages the latest technological advances and most importantly, has a solid strategy of continued focus on research and development to drive further innovation. This will reduce your maintenance costs and will enable you to focus on the strategic core of your business.

4. Get rid of manual and customized

The inflection point for a successful value chain optimization is when the barrier between departments are removed, information flows more easily through the enterprise and better-informed teams make better decisions for the business. So it is key that systems are connected and data is properly managed in the business.

Avoid building connections that are heavily dependent on people’s action, because their time is limited. Make sure that process workflows are embedded in the selected technology and information flow is automated as much as possible. The systems should be straight forward and promote a new way of working in your organization through a rational, streamlined and effective manner. Technology must save people time, not the other way around.

5. Enhance your Visibility

Investing in visualization tools brings alignment among stakeholders and creates clarity on economic opportunities that were missing in the communication gaps inside an organization. Also, take advantage of analytics and advanced decision supporting tools that drive better understanding of the possibilities and in some cases provide recommended paths.

6. Culture and change management needs to be at the core

If technology is the foundation of value chain optimization, people are the core! Every strategic change must be embraced by your people and supported by the culture that has been created in your organization. Underestimating this aspect can result in a big disruption during the digital transformation journey or achievement of minimal results. Some useful tips:

  • Involve representatives of the different departments of the organization – people will feel ownership of the project, and mostly importantly, it will help you understand different perspectives and anticipate potential problems and adapt your plan
  • Depending on the size of the organization, start with a proof of concept for easier risk management and the possibility to adapt the strategy as required before rolling it out across the complete enterprise.
  • Partner with suppliers that have field proven experience in deployment of digital technologies for additional help in your journey.

To hear more from industry experts and understand how companies are achieving business processes transformation in their value chain that are creating added value, watch our Value Chain Optimization Webinar.

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