Burdened by an aging workforce, the chemical industry is facing a serious brain drain – and this is creating a host of problems related to HR and compliance.
Manufacturing Automation reports that more than 20% of the chemical industry’s workforce will approach retirement in the next three to five years. If this aging-workforce problem is not resolved within this timeframe, chemical companies’ profitability will suffer significantly.
Per the American Chemical Council, this could mean more unplanned disruptions, more hiring and training costs, and more efforts to maintain safety. Increasing the need for expanding the workforce is shale gas utilization, which is changing the U.S. from a high-cost producer to one of the lowest-cost global producers. ACC president and CEO Cal Dooley says, “it’s vital that we be able to attract and retain a talented workforce that helps us to continue to drive economic expansion, innovation, and global competitiveness.”
To compensate, chemical companies are using more contractors and service providers to supplement the diminishing workforce, which increases compliance risks. Chemical companies that adopt digital solutions are well positioned to mitigate these risks, especially in the areas of product development, processes, and business modeling.
Clearly, digital technology has vast implications for the chemical industry because it can help simplify complex processes. Today, core business elements are connecting to each other like never before. Platforms link products, equipment, and employees. Suppliers and customers connect to chemical firms. These connected systems offer new opportunities for collaboration. Processes improve at a faster rate. Productivity grows across the company.
A new frontier
Computing advances offer solutions not possible only a few years ago. Predictive maintenance schedules and quality control are now a reality. Supply-chain efficiency and market-driven pricing are easier to put in place. New profit centers are emerging.
In addition, cloud computing offers vast storage capacity at affordable rates. These structures broaden information sharing and simplify analysis and reporting.
The Internet of Things (IoT) is another factor to consider. The IoT connects products, equipment, and other devices together with sensors, software, and wireless technology. These devices detect, store, and report data on a massive scale. In essence, your “things” are now smart and connected.
Chemical work, redefined
These improvements allow meaningful changes to the way chemical firms work. In addition, digital solutions play a major role in solving the aging-workforce issue by reducing the workload and ensuring companies comply with regulations. For forward-looking companies, technology changes the nature of work in ways including:
Floor operations: Smart, connected machines improve accuracy and safety on the shop floor. Operations are more precise with the use of machines connected to database systems. Predictive systems control or support operational instructions. Self-learning systems interact with machinery and business processes.
Digital back offices: Many support functions are evolving or now digitized. Procurement and invoicing are no longer siloed activities. This new digital space integrates inventory management, accounting (e.g., invoice reconciliation), and human resources. Analytics tools take digitized data from processes in real time. Insights and reporting are immediately available. Employees are presented with more information and can make decisions faster. Technologies like machine learning become commercially viable options to augment people’s ability through data.
Accuracy, security, and compliance
To understand how digital growth relates to compliance, let’s look at one example where contractors and compliance meet. Chemical labeling systems often cause major headaches. Labeling systems vary in many ways. Differences in process and format can change by department and region.
These variables challenge consistency and control standards across a company, but enterprise-wide systems offer a solution. Such systems ensure consistency, compliance, and security. As guidelines change, there’s an urgent need to change and manage label data fast. With smart technology, firms can share data and changes with remote contractors and suppliers.
These systems allow all locations to manage changes and reduce downtime. Business processes scaled across the globe ensure consistency across the enterprise.
Version-control systems and documentation are important regulatory issues. Firms need systems to chart approvals, workflow, and revision history. These modern systems connect data from all sources.
Firms today share data with contractors worldwide. This integration of corporate and partner data requires accurate label printing. Central printing oversight offers global supply chain consistency. Manual and redundant label data entry disappears.
Labeling systems now can share business rules with contractors and suppliers. With leaner workforces, these systems reduce delays caused by global variances.
Differences in regulations are a challenge to compliance. Different image requirements, formats, and language complicate the issue. As a solution, single-source systems incorporate these variables centrally. Different format and printer standards are tracked at the firm level. Labor is free to work in other areas.
Shared data is another advantage. Automation allows data to be linked from different systems. Now safety and quality control info is tied to performance. Inventory and supply chain data links to orders and sales.
Contract employees can sign off on regulatory mandates in remote locations and affirm procedures. Smart devices prevent tampering and alert contractors of safety issues in real time.
Fleet of foot
Digital advances in fleet and stock management also improve compliance, even with fewer employees on the payroll. Systems and sensors can better match demand with supply. External market intelligence can be factored into the forecasting process.
Transportation systems become more agile. The ability to respond to customer needs increases and new markets emerge globally.
Fewer personnel costs
One other consideration is the use of basic mobile and social media tech. Leveraging these tools lets contractors and staff communicate directly. An engaged workforce can collaborate in new ways. Integrated platforms offer the right information at the right time. The right people see it. The right decisions are made.
Cloud-based content management systems streamline training. Enterprise compliance tools reduce risk and boost performance. Cloud-based talent management systems track rising stars. Hiring and training costs drop for new hires and contractors.
With an aging workforce and new employees coming onboard, accidents and other workplace incidents are expected to increase. The U.S. government estimates that by 2024, older workers will account for 25% of the labor market. The recent economic recession combined with longer life expectancy and changes to retirement and pension plans have increased the average retirement age to 67.
Aging – and the physical changes associated with it – “could potentially make a workplace injury into a much more serious injury or a potentially fatal injury,” says Ken Scott, an epidemiologist with the Denver Public Health Department.
Including workers in the digital corporation via wearable sensors is now a reality. Knowing when there has been an incident (e.g., a fall or an exposure to an environmental hazard) instantly allows for a faster response. With the additional data being gathered, predictive algorithms and machine learning can identify safety concerns and help a company be proactive in reducing safety risks and severity. Since older workers take longer to recover from an injury, speeding the response and reducing severity benefit both the worker and the company through reduced lost work time and related costs.
What it means
In short, the connected chemical company lets employees everywhere connect. This strengthens compliance through shared datasets and consistent processes.
Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Chemicals. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?