Redefining Continuous Manufacturing in the

TMBusiness 4.0 Era

The continuous manufacturing industry has been a laggard in

digital technology adoption. However, thanks to a dynamic

external landscape and significant advancements in technology,

the industry is now poised for business growth and new revenue TMstreams. Through TCS' Business 4.0 framework, this paper

explores how firms in continuous manufacturing can embrace

digital technologies. It also looks at examples of companies

leveraging various components of this framework and throws

light on leading industry practices for adopting technology to

create new possibilities for exponential growth and sustained

profits.

Challenges in Continuous Manufacturing The continuous manufacturing industry, in which items are produced and processed

without interruption, comprises various sub-industries, including chemicals, specialty chemicals, agriculture, industrial gases, paints and coatings, forestry, pulp and paper,

paper packaging, and cement and building materials. Currently, these industry segments are under sustained pressure to grow and improve margins globally.

Boosting industry profits is a challenge as the industries are sandwiched between

upstream petrochemical, mineral, or mining businesses and downstream consumer (for example, automobile, textile, construction, and more) and industrial application

enterprises. The industry's revenue growth is impacted by the performance of downstream businesses, upstream supply dynamics, and external socio-political

changes. For instance, the chemical industry has witnessed a slowdown through low capacity utilization fueled by low demand. In September 2019, utilization dropped to

181.9% from 83.8% in September 2018 for the chemical industry . The negative growth 2 3rate of chemicals in North America and Asia-Pacific in 2019, the flat revenue growth of

forest products and building materials, and socio-political factors such as global trade

tensions between countries has led to softened product pricing, and hence, flat or diminishing revenues.

The continuous manufacturing industry has traditionally tried to address these challenges by consolidating and restructuring its portfolio, adopting volume versus

price optimization strategies, and instituting strong cost management systems. As it grappled with these hurdles, the industry is now faced with an emerging new

landscape:

n Collaborating with end-customer industries to unlock value using a solution-

centric approach.

n Globalizing operations due to the emergence of new markets and raw material

reserves to spread out production capacities.

n Investing in the research and innovation of new alternate materials and applications. This will impact top-line growth, which is heavily driven by circular economy laws.

n Staying low on cost, achieving efficiencies through automation, and improving the

use of resources.

n Increasing focus on environment and worker health and safety standards

compliance, which are driven by regulation and end-consumer awareness.

1. American Chemistry Council; Retreat In Global Chemicals Output Accelerates In September; November 2, 2019; http://www.publicnow.com/view/EDF7CDA043972987397D10E920A68184A29A1F37?2019-11-01-21:00:11+00:00-xxx206

2. American Chemistry Council; Mid-Year Outlook: U.S. Chemical Industry Expansion Continues Despite Headwinds; June 4, 2019; https://www.americanchemistry.com/Media/PressReleasesTranscripts/ACC-news-releases/US-Chemical-Industry-Expansion-Continues-Despite-Headwinds.html

3. Borderless; Moody's cuts chemical industry outlook to negative; September 18, 2019; https://www.borderless.net/news/chemical-value-chain/moodys-cuts-chemical-industry-outlook-to-negative/

Reinventing the Continuous Manufacturing IndustryEnshrined under Business 4.0, these four business behaviors—driving mass personalization,

creating exponential value, leveraging ecosystems, and embracing risk—will help

companies digitally transform themselves. Technologies such as cloud, artificial intelligence,

analytics, robotics, and more, which businesses must leverage to move to the next level and

stay competitive, are vital to enabling transformation.

How does the continuous manufacturing industry score on the Business 4.0 paradigm?

(see Figure 1).

n Driving mass personalization: To retain customers and grow market share,

companies in the continuous manufacturing industry are adopting new innovative

strategies. One strategy that has gained popularity is personalization thanks to

growing access to customer and end-consumer needs.

Figure 1: Business 4.0in the continuous manufacturing industry

Embrace Risk

LeverageEcosystems

MassCustomize

Create Exponential

Value

CLOUD

INTELLIGENTAUTOMATED

AGILE

Adopting agile methodologies to merge operations in response to markets

Embracing risk with M&A and related business

strategies to compete effectively

Onboarding extended value chain stakeholders/

influencers to ensure speed to market

Shifting to new growth models (from B2B to B2B2C) and adopting new concepts (store fronts and e-commerce)

Gaining competitive advantage by offering personalized products and experiences

American chemical company establishes water mitigation

plans at high water risk sites as part of 2020 goal setting

German chemical company markets a device that allows customers to personalize their cosmetics

Dutch paints and coatings firm conducts open chemistry

challenge inviting the public to respond and innovate

Finnish paper manufacturer embeds RFID-based intelligent packaging solution in its products

Adopting advanced automation techniques to make operations efficient and generate

insights

Leveraging the abundance of data in operations and end-use applications to engage customers

Optimizing costs and making data available across the value chain by moving IT infrastructure to the cloud

Employing digital technologies and reinventing business models are what will help the

continuous manufacturing industry keep up with this fast-changing market scenario. To

this end, TCS’ thought leadership framework, christened Business 4.0, can help companies identify the technologies and specific behaviors required to stay afloat and

remain profitable going ahead.

Figure 2 illustrates the strategies the continuous manufacturing industry is adopting to

offer personalized products and services.

To put the above framework in perspective, consider a global paints and coatings firm:

Personalized product: The firm allows customers to use 3D visualization software to

customize their own home décor and create and share pictures before finalizing a

purchase.

Personalized customer experience: The same firm also deployed advanced web

analytics to understand online customer behavior, which enabled it to position content

based on personal preferences on its website.

Personalized offering (product and related services): The company transformed itself

from a brick-and-mortar company to a 'click-and-mortar' business by using social media

to run campaigns and help customers make product choices.

While many industry players develop customized products for customers, 4programmable materials, as primarily researched by MIT's Self-Assembly Lab , hold

promise for packaging companies. Some programmable materials expand, contract, or

change shape under different levels of temperature. Because of their malleability,

companies can use these materials to develop intelligent packaging products that can

be adapted to specific customer needs.

Some continuous manufacturing companies are turning to automation to offer

customers personalized experiences and services. A large global chemical company

recently launched a personalized AI agent to provide its top customer real-time updates

on its product, from manufacture to movement in the supply chain.

Figure 2: Key mass personalization practices and future possibilities

Personalized Product Personalized OfferingPersonalized Customer

Experience

Emerging concept/ practice

Leading industry practice

Well-established industry practice

Empowering customers to design products using offline simulations and testing suitability in a lab or on a website

Providing customers with an end-to-end product-service package instead of just the product

Making personalized proactive offers in the product consideration phase by gathering preferences from social interactions

Co-innovating with customers to develop new personalized product prototypes

Providing insights to customers by using digital technologies

Personalizing product consideration and buying experiences for customers

Mass personalization, i.e., developing product variants catering to large groups of customers

Providing add-on services along with the product

Providing expert guidance and support on product usage and bottlenecking issues in the after-sales phase

Maturity

Strategy

4. Wired; MIT lab develops programmable shape-shifting carbon fibre; October 14, 2014; https://www.wired.co.uk/article/skylar-tibbits-exclusive-interview

n Creating exponential value: Traditionally, continuous manufacturing firms have

adopted digital technologies for incremental gains and internally focused cost

efficiencies. Eventually, many industry leaders have moved focus towards a growth

agenda, which includes developing B2B2C strategies for new business models and

taking a solution-centric approach for customers, apart from improving products and

services.

n To illustrate: A global crop protection solution provider helped farmers improve

yield and avoid crop diseases by developing an AI engine that used GIS data

inputs. The engine predicted crop disease and unfavorable conditions. This

helped the company direct its agrochemical products to regions on a proactive

basis, thereby improving profits and customer experience.

In another instance, a chemical company, leveraged data to address late order

deliveries. Facing order losses and near-shutdown of operations for one of its top

customers, the company developed a multi-functional command center to

provide a 360-degree view of orders. Using AI-led predictive analytics, the center

could identify order failures ahead of time, which significantly improved on time

in full (OTIF).

Consider Avery Dennison, which manufactures adhesive materials, display

graphics, and packaging materials. It developed an intelligent labelling solution

that not only allowed customer products to be traced but also provided data on 5the product and its packaging .

Finnish firm Stora Enso developed RFID-enabled packaging for its customers, 6which monitors the food product and the surrounding environment . It also

launched a new business line—paper-based RFID tags.

Figure 3 summarizes the practices and possibilities pertaining to this Business 4.0 behavior.

Figure 3: Key exponential behavior practices and future possibilities

Differentiation through products Differentiated capabilities and services

Emerging concept/practice

Developing innovative products based on years of co-research done in new developing areas

Launching transformational services primarily for the entire industry segment using digital technology

Co-innovating new products to satisfy specific customer needs or industry challenges

Incremental services leveraging digital technologies to enable new capabilities and generate a 'wow' factor for preferred customers

Developing a product variant that covers the entire market in general (reactive approach)

Add-on services based on a company’s core competency

Leading industrypractice

Well-established industry practice

MaturityStrategy

5. Avery Dennison, Label and Packaging Materials; Intelligent Labels; https://label.averydennison.com/eu/en/home/products/intelligent-labels.html

6. Stora Enso; Intelligent packaging; https://www.storaenso.com/en/products/intelligent-packaging

n Leveraging ecosystems: To stay relevant in turbulent market conditions, companies

are adopting new business models by leveraging the expertise of stakeholders across

ecosystems.

n Concept-driven ecosystems: The shared economy concept came to life within

continuous manufacturing with AgriExchanges, an e-marketplace where farmers

(grain sellers) and buyers could interact with each other. However, these e-

marketplaces operated locally within countries and the local governments

controlled them. The shared economy concept can have broader use cases in

this industry around raw materials, talent, and so on, but the overall industry

would require major restructuring and change of vision to realize this.

Crowdsourcing, another concept of the shared economy, is popular with some

continuous manufacturing industry leaders such as Akzo Nobel, BASF, and DSM. n Value-driven ecosystems: Currently, co-innovation in continuous

manufacturing is limited to partnerships with customers, but some have gone a

step further. Akzo Nobel has formed partnerships with academia and the general

public to innovate on products. Top players in the cement industry have

launched end-to-end home building services by bringing all relevant providers

on a single platform, moving from a 'product' seller to a 'service' provider. Many

industry players collaborate with technology companies to innovate, and this

has developed into an effective ecosystem of platform vendors, app developers,

integrators, and service providers. For example, agricultural industry players have

been providing precision farming services, and packaging players such as Stora

Enso and Avery Dennison have deployed intelligent packaging services

using IoT.

Figure 4 summarizes the practices and possibilities pertaining to this Business 4.0 behavior.

New concept driven ecosystems Value driven ecosystems

Next-generation practice (theoretical)

Shared economy concepts for sharing raw materials, equipment, talent, and other use cases involving larger ecosystems

Connecting with adjacent industry ecosystems to provide an end-to-end solution to customers instead of just the product

Technology partnerships to quickly scale new capabilities and growth areas

E-marketplaces in agriculture which are limited to local countries

§ Crowdsourcing with the general public, including end consumers, academia, and non-customers to solve general industry and product problems

§ Crowdfunding for small innovative projects

§ Co-innovation centers with customers to develop specific products and services

§ APIfication to share information with third parties to unlock new revenue streams and gain competitive edge

Emerging concept/ practice

Leading industrypractice

Well-established industry practice

MaturityStrategy

Figure 4: Key ecosystem related practices and future possibilities

n Embracing risk: Continuous manufacturing companies face considerable financial risk

amidst pressures to thrive in a fluctuating demand environment. Besides this, due to

asset-intensive and remote operations, continuous manufacturing companies face

high risks of worker health and safety hazards. To transform, companies are adapting,

rather than being averse, to risk. Here's how:

n Financial risk: A building materials and packaging company experienced a

monthly variance in its spend reports of more than $50 million per month.

While the on-premise procurement system could not meet its growing data

requirements, they also had no visibility into transaction-level variance data. To

solve this, the firm deployed a cloud-based multi-device procurement analytics

solution that offered visibility on key metrics of business function performance.

The overall solution led to soft savings of $100,000 per supplier, per year.

n Health and safety risks: A large chemical company deployed an IoT-based

integrated fleet management solution for its inbound logistics drivers. It

provided visibility into fleet locations and driver response to road safety rules.

Similarly, a global agricultural player used IoT to minimize collisions between

moving vehicles and human workers, thus meeting their end objective of 'zero

fatality'.

To summarize, at the core of all the four Business 4.0 behaviors lies data, which is the

epicenter of new products, solutions, and business models (see Figure 5). While data has

always been available across a company's value chain, technology has now made it

possible to harness it in real time, allowing for better and informed decisions. Moreover,

connected ecosystems are exposing organizations to larger data sets. Data abundance

forms the basis on which an intelligent organization can combat industry challenges and

unlock immense business value through new growth levers.

Figure 5: Illustrations of how Business 4.0is adopted in continuous manufacturing

Analytics driving new insights

Partners for complimentary offerings

Transforming business models

Data cleanse (anonymized for

compliance)

Chemical company offers real-time updates on shipment parameters in cases of anomalies Paints and coating

company sets up 2-million color database

Cement manufacturer develops home building solution (retail and services)

Packaging and labeling company uses interactive packaging solution to offer content to customers

A specialty chemical company’s automotive refinish solutions division uses AI to match car colors based on customer preferences

A paper company deploys intelligent packaging using RFID tags

A chemical company’s new portal offers personalized end-user experience

A paper company develops cutting-edge technology in procurement and supply chain operations

Turning data to value: Predicting replenishment for customers by an industrial gas company

New market segment: A specialty chemicals player explores business opportunities in battery materials

Scale up

Technology Pillar 3:Agile

Technology Pillar 4:

Automated

Technology Pillar 2:

Intelligent

Technology Pillar 1:Cloud

Behavior 4:Creating Exponential Value $

Behavior 2:Embracing Risk

Behavior 1:Leveraging Ecosystem

Behavior 3:Driving Mass Personalization

The Next Paradigm ShiftOrganizations in continuous manufacturing must constantly re-invent, fail early, and fail fast

to stay ahead. The following 'must-dos' will help them achieve this:

n An overarching transformation strategy that unravels new technology-led businesses.

n A leadership that delivers strong and consistent messages.

n Agile practices that boost innovation on products and ideas.

nTMA Machine First approach to automate business processes.

With the adoption of new revenue models based on the Business 4.0 framework, TCS sees a

new 'avatar' of industry value chain emerging to keep pace with dynamic external

conditions. Referred to as the 3S value chain, it comprises the following:

n Synergetic: Multiple business functions collaborate to achieve high profitability with

automation and robotics.

n Smart: Firms derive intelligence from data using data science and AI-based analytics.

This will ensure first-mover advantage in the market.

n Self-optimizing: Companies use data to automatically optimize their functions and

operations, resulting in faster speed-to-market.

Manasi AgarwalManasi Agarwal leads the Continuous Manufacturing Industry Practice at TCS. She is

responsible for enabling growth and transformation initiatives for clients through

design thinking-led innovation, new business services, strategic initiatives, and thought

leadership. She has over 17 years of experience in the continuous manufacturing

industry encompassing digital strategy formulation, value re-engineering projects,

business analysis, energy management and sustainability services, core manufacturing

operations, and process technical services.

About the Author

All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. Copyright © 2020 Tata Consultancy Services Limited

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