For our very first edition of "Digital Leaders View" Dialog Series, we had the pleasure to talk to Irene Dávalos Cánovas, Director, Digital and Sustainability at DKSH Business Unit Performance Materials. Irene shared her insights on how digitalization impacted the chemical industry at client level, supplier level and how she envisions this environment in a 5 years timeframe. Read on to discover Irene's perspective.
How do you see customer behavior changing with digitalization?
As consumers, we have become increasingly particular about our needs, especially due to digitalization and its rapid acceleration brought about by the COVID-19 pandemic. We look for transparency, simplicity, and agility and demand an excellent customer experience from our service providers.
Our customers, both formulators and buyers, in the specialty chemicals industry often have even greater demands as they search for new products online. Following the proliferation of competitive chemical marketplaces and distributor portals in recent years, customer expectations for access to products with convenience have risen sharply. Customers like to self-serve and expect complete transparency in product technical information and documentation, as well as the ability to quickly and easily request samples and quotations.
However, in a business-to-business environment, decision-making can be a lengthy and complex process. Our customers additionally prefer to connect with a technical expert who can accompany them on the journey from opportunity to purchase. They look for a partner who engages with them and acts quickly, providing regulatory advice, technical guidance, and formulation services, all while exceeding their expectations and becoming an indispensable part of their innovation process.
In addition, as the world's sustainability agenda accelerates and end-customer demands shift to more responsible products, manufacturers are looking for partners who can deliver the right sustainable solutions.
What are the most important digital changes that you see on the suppliers’ side?
Suppliers of specialty chemicals have matured in their understanding that they must be proactive in going where their customers are, and that customer habits and expectations are ever-changing. As a result, suppliers and distributors are investing in promoting their portfolios through a variety of digital channels such as chemical marketplaces, search engine marketing (SEM, e.g., Google), email marketing, and search engine optimization (SEO, e.g., Google positioning). Many of these suppliers have also invested in and made significant progress in developing customer portals that enhance service functions and, in some cases, online order processing.
With these actions in motion, digital marketing is enabling specialty chemicals suppliers and distributors to reach new customers and more effectively promote their products by creating engaging content and targeting specific audiences. Online marketplaces are also making it easier for suppliers to connect with buyers, expand their customer base, and diversify their revenue streams.
The most significant change, however, is the digitalization and automation of their internal processes, platform development, and data governance within an integrated ecosystem. Suppliers are concentrating their digital efforts and investing in operational efficiency, customer intelligence and business excellence.
Without a digital and data framework, companies may find that they do not grow as effectively as they otherwise could with a solid digital set-up. Suppliers and distributors must invest in advanced technologies and become data-driven to remain competitive.
While stable operations are essential for providing high-quality service and a positive customer experience, the truth is that most businesses can still do better in designing and implementing cost-effective operations. Using digital solutions, as well as artificial intelligence (AI), to improve operations and supply chain management can unlock a lot of potential value.
This approach also perfectly aligns with the requirement to push suppliers’ environmental strategies forward. Most chemical suppliers have already announced their pledges to move toward Net Zero carbon emissions. Transparency in emissions data and the implementation of a carbon management system provide the foundation to establish reasonable goals, implement environmentally friendly technologies, and enhance production procedures, all with the end goal of fulfilling their pledge.
What will the digital landscape look like 5 years from now?
First, I anticipate further consolidation of digital marketplaces, with only a few remaining as the standard for specific and niche industry segments or applications, with a few solutions reigning supreme in the chemical industry for automating and enhancing order processing across all companies' ERPs (Enterprise Resource Planning). Overall, digitally initiated and digitally transacted business in the chemical industry will continue to grow rapidly over the next five years.
We can also expect that all major logistics companies will operate in fully digitalized ecosystems and introduce blockchain technology to improve supply chain transparency and security. This means that distributors will be able to tell customers not only where their order is and when it will arrive but also give them a detailed, secured report including any carbon emissions generated.
Most importantly, we will continue to see more and more opportunities to automate customer services and use AI technologies to improve steps along the customer journey. Some examples include the further use of bots to respond to complex customer queries or manage inventory levels; or solutions built on LLMs (Large Language Models), like the viral ChatGPT, which would be able to recommend materials for new formulations or create targeted marketing content that will resonate with customers.
Suppliers and distributors will want to become indispensable to customers by using digital means to go beyond basic transactions and provide an experience that helps to solve a much broader set of challenges. Rather than providing options, the new approach will be predicated on discovering the needs of the formulator and buyer. The emphasis may not be as much on the products themselves but on anticipating, and continually improving, the right experience for customers.
Nonetheless, even if technology takes on some of the needs of our customers in the near future, human interactions, partnerships, and buyer confidence will still be vital for businesses in our industry. In five years, we may interact with our partners through virtual meeting rooms in the metaverse. We may see virtual reality being used for technical training and possibly even to give people a taste of the lab environment and developments. Technology and virtual reality devices must become more accessible and comfortable for users, enabling a better way to connect with colleagues and business partners while, at the same time, contributing to the reduction of travel-related carbon emissions.
All-in-all, the digital transformation continues to rule the agenda of the specialty chemicals industry while chemical companies seek to increase efficiency, reduce costs, and meet the ever-changing needs of their customers.
Irene Dávalos Cánovas
Irene Dávalos Cánovas is the Director, Digital and Sustainability at DKSH Business Unit Performance Materials. Irene has over 15 years of experience in digital transformation, marketing, operations, analytics, data management and leadership within multinational companies.
