Amid economic volatility, supply chain disruptions, and added emphasis on embedding sustainability across the enterprise, the chemical industry faces intensifying challenges to growth and revenue. In response to such pressures, chemical companies are increasingly turning to SAP technologies to build resiliency into the core of their operations and create more sustainable businesses.
At this month’s ASUG Best Practices: SAP for Chemicals conference (June 20-22; at The Woodlands, in Texas; register here), SAP customers and executives will converge with industry thought leaders to network with peers and discuss “building the future of efficiency, agility, and resiliency” together, according to Matt Reymann, Global VP for Chemicals at SAP.
“Coming off the heels of SAP Sapphire, with its theme of futureproofing, it’s fitting that this chemicals community is coming together,” Reymann said. Conference attendees will gain big-picture insights into industry trends and learn how specific SAP solutions can enable their businesses, with an emphasis on exploring the value chemical enterprises are currently unlocking from SAP technology investments.
Alongside Alex Pierroutsakos, Industry Executive Advisor for Chemicals, SAP North America, and Rob Hartsough, General Manager, Services, South Market Unit SAP, Reymann will host the conference’s opening keynote session, “The Resilient Chemical Enterprise,” which will feature thought leadership from ASUG Board member Laura Tibodeau, Global Digital Innovation & Transformation Leader at Ascend Performance Materials LLC, and Jason Kennedy, Director of IT Application Product Delivery at The Mosaic Company.
Standardize and Simplify
In reflecting on the state of the chemical industry and envisioning its future, Reymann and his fellow speakers said they believe preparing one’s business to consume new innovations will, for many chemical companies, involve “getting back to basics” with ERP systems.
Pierroutsakos estimates that a third of SAP customers in the chemical industry already run SAP S/4HANA, while another third are in the midst of digital transformation and the remaining third are still operating on-premises systems such as SAP ERP Central Component (ECC).
For those behind the innovation curve, with on-premises installations that involve thousands of customizations, digital transformation should be a business imperative—and, as Hartsough explains, can drastically reduce these companies' technical debt.
“Chemicals companies need to get back to core simplicity,” Hartsough said, advising a fit-to-standard approach for chemical customers. “It’s about reducing cost and increasing productivity." Though on-premises ERP systems once required customizations, those add-ons have since been incorporated into industry standards. “If there’s any industry we cover with fit-to-standard better than anyone else, it’s this industry,” he said.
Hartsough gives the example of going to a dealership and purchasing a new car with all the greatest innovations and new technologies. “If you then take that car to a hot-rod shop and modify it, you then own the car and void the warranty,” he said. “That’s where many customers are right now.”
Becoming more agile as a business is essential to futureproofing, Reymann said. Modernizing ERP systems is a key component, allowing companies to unlock core value and leverage it across business processes, such as record-and-report, plan-to-fulfill, or order-to-cash. With ChatGPT and generative artificial intelligence disrupting one industry after another, “the fact of the matter is that companies need to invest for a future that we can’t even see,” he added. “Not only does getting to standard mean becoming faster today. It also means equipping yourself for what’s next.”
Collaboration Is Key
Building resilient supply chains and migrating businesses to SAP S/4HANA Cloud will be central topics at the conference, which also includes sessions around SAP Business Technology Platform and SAP Signavio’s business process management suite. Speakers will also seek to impart an overarching theme of “collaboration to drive sustainable outcomes,” which Reymann considers critical.
“Whether it's collaboration within the industry, between customers and partners and suppliers, or from a software perspective, how we partner with our customers and system implementers to drive business value, working together to define value and ensure joint accountability is essential,” Reymann said.
“From an industry standpoint, innovating for society at large and becoming more resilient, collaboration across the value chain is important,” he added “You’ll hear discussion of SAP Business Network, and you’ll hear from companies like Ingevity Corporation on track-and-trace, for example. Collaboration will be vital to solving the industry’s pressing challenges. It’s fitting that Eastman Chemicals will be our closing keynote, as that’s a company heavily invested in the circular economy.”
According to Pierroutsakos, risk mitigation is crucial for chemical companies pursuing digital transformation, and “de-risking” such processes is another priority topic at the conference. Pierroutsakos notes that the shift from on-premises to cloud ERP systems has in many ways redefined the relationship between SAP and its customers, ensuring that SAP has a more active and collaborative role in ensuring the success of customers’ implementations over time. “It’s not just about selling software anymore,” he said. “We’re partnering with our customers as they go through their cloud implementations.”
Hartsough agreed that cloud migration has changed the game for many SAP customers and can do the same for chemical companies. “What works well in all these other industries are quicker, less complex implementations where SAP has a seat at the table without necessarily owning it,” he explained. “We’re more invested in the outcome of the business case a given customer signed up for, what got deployed, and we don’t go away after deployment. We’re there to make sure they’re consuming everything they purchased.”
Sustainability is ‘Inherent’
Embedding sustainability within business practices is another form of necessary collaboration for the chemical industry, said Pierroutsakos. Within its suite of products and their integrations with cloud ERP, SAP has ensured that such initiatives can be a natural outgrowth of driving efficiency across the enterprise.
Beyond emphasizing ESG reporting through products like SAP Sustainability Footprint Management, SAP has “made sustainability inherent within our ERP solutions,” he said. In focusing on providing customers with supply chain visibility and easier routes for sustainability reporting, SAP has embedded sustainability within standard business processes, enabling carbon capture and visibility of scope-1, 2, and 3 emissions.
“When you’re buying fewer raw materials or buying raw materials from a supplier that is doing all the right things, that part of the process of checking your supplier, perhaps using EcoVadis, is part of the procure-to-pay process,” Pierroutsakos added. “Though it’s not part of a dedicated sustainability process, sustainability is omnipresent across the processes we engage with.”