Europe’s Chemical Firms Seek Catalyst for Competitiveness

A somewhat diluted European chemical industry is hoping that digital technology will provide the formula it needs to regain some of its strength in the global market, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens Chemical Industry Services and Solutions report for Europe finds that for a chemical industry plagued by a potent mix of environmental concerns, diminished demand and escalating costs, technology-driven innovation and digital transformation may prove to be the best solutions. In addition to impediments on the home front, the market is under pressure from the influx of inexpensive chemical imports from China, the ISG report says.

“Europe’s chemical companies are looking to build more resilient and efficient manufacturing processes,” said Julien Escribe, partner, ISG SEMEA. “Technology and service providers in the region are responding with solutions that enhance supply chain transparency, traceability and security.”

For major players in the European chemical industry, digitalization is considered a crucial element for improving supply chain planning in response to the volatility caused by recent geopolitical disruptions and fluctuating energy prices, the ISG report says. According to the report, digital tools have also proved beneficial for tasks such as demand estimation, tracking raw materials to their sources, real-time order tracking, warehouse and port automation for sorting and safety and optimizing supply networks.

Despite facing tough market conditions that have led to layoffs and plant closings, Europe’s chemical industry maintains its strength in innovation, the ISG report says. In the coming years, that innovation will play a pivotal and potentially advantageous role, particularly with the development of new technologies in recycling, renewables, electrification and high-tech plastics, ISG says.

One of the factors that could aid in both innovation and planning is GenAI. According to the ISG report, GenAI holds the potential to support various applications in the industry, including creating new products, designing processes, optimizing current processes, improving safety measures and reducing environmental impact.

“Major players in the European chemical industry are actively exploring and implementing GenAI solutions,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Their principal goal is to enhance their operational efficiency.”