The "Big Bang" period of growth in the chemical industry resulting from the North American shale gas boom will likely be followed by a "Big Crunch." When this happens, chemical companies that embraced new, digital technologies to improve plant operations will have a competitive advantage.

1. Surviving the “Big Crunch”
with insight-enabled decisions
inside the plant gate
June 2, 2015
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2. 2
Objectives
Copyright © 2015 Accenture All rights reserved.
Review Accenture/ICIS survey results to understand how Chemical
executives are preparing for the “Big Crunch” that often comes on the
heels of a Big Bang
Preview specific actions that organizations are/should take to address OT
gaps and drive Digital Plant improvements
Underscore the important role that Operational Technology (OT) will
play in better positioning businesses and assets for the “Big Crunch”
Highlight industry factors that are indicative of a "Big Bang Disruption”
for global chemical companies

3. 3
The North American chemical industry appears to have solid
fundamentals – with rising operating rates and profitability.
Investing in new technologies now will position organizations to be more
reliable, efficient and safer later.
Copyright © 2015 Accenture All rights reserved.
50
55
60
65
70
75
80
US chemicals capacity
utilization, %
Source: US Bureau of Census, ICIS Consulting, Accenture Note: Based on data from 30 chemical companies headquartered in North America
US Ethylene capacity is
expected to increase by
+40% by 2020
50
60
70
80
90
100
110
120
130
140
3Q08=100
North American chemical
company profit index

4. 4
Despite higher utilization rates, many segments are also
experiencing greater reliability issues & subsequent lost production.
Unplanned lost production for US ethylene (% of capacity)
Copyright © 2015 Accenture All rights reserved.
Source: Mark W. Woods, Ethylene Strategies International, LP; 832-233-9593
0%
2%
4%
6%
8%
10%
12%
Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15
• In an effort to capture margin
and push higher utilization rates,
many organizations are deferring
key maintenance activities
• Unfortunately immature maintenance
and reliability practices result in
reactive behavior
• Excessive sweating of the assets
can lead costly unplanned
shutdowns, higher operating losses
and even disastrous consequences

5. 5
Survey results intuitively show that 88% of the respondents recognize
the criticality of operational performance, but only 27% are making
leading investments in drive improvement.
How critical is better operational
performance in your segments?
What is your investment strategy
in driving improvements
Copyright © 2015 Accenture All rights reserved.
55%
27%
18%
Focus on incremental
improvement in proven
technology and process
controls/automation
Push industry leading
advancements in technology
and process
controls/automation to make
a "step change"
improvement
Maintain "status quo" to
minimize risk start-up risk
44%
44%
10%
2%
Extremely important -
Necessary for survival
Important - Necessary to
be a leader in the
industry
Somewhat important -
Necessary to be an
average performer
Not important
Source: Accenture/ICIS survey, Spring 2015

6. 6
There are challenges to achieving the step change
improvements in operations enabled by technology.
Challenges affecting Operational Technology:
Copyright © 2015 Accenture All rights reserved.
Lack of investment
Recent IT spending has been
directed at the enterprise layer
Fractured Vendors
Consisting of a series of niche
providers that focus on single
capability elements, not end-to-
end solutions
Governance
Operational Technology
has historically not been under
the IT domain
Immaturity
Victim of immature life cycle
management and support
processes
Architecture
Plagued by antiquated point-to-
point interfaces resulting in poor
integration and data management
Disparate and Disconnected
Menagerie of applications
resulting from repetitive
acquisitions and divestments

7. 7
However, the chemical industry believes there is significant
opportunity from operational improvement.
The estimated impact of operational ‘perfection’ on company’s
bottom line
Copyright © 2015 Accenture All rights reserved.
3%
21%
32%
21%
24%
Less than 1% earnings improvement
1% to 3% earnings improvement
4% to 7% earnings improvement
8% to 10% earnings improvement
Greater than 10% earnings improvement
Average 7.65%
*Based weighted average of 7.7% improvement of earnings level; Calculated based on global industry sales of $5.2 trillion with average operating margins of 12%.
.
$50
billion*

8. So What's Next…
8Copyright © 2015 Accenture All rights reserved.
Build a big-picture strategic
view on OT– in coordination
with new investments and MES
upgrades
Push organizational and
operating model changes down
the “IT Stack” to drive
increased process maturity
and governance
Industrialize support and life
cycle management processes
Drive tactical improvements to
provide short-term
performance gains

9. Digital Plant
Digital Foundation
Control
Tower
Digital
Workers
Digital Asset
Management
Digital
Operations
Talent Development
& Learning
ISA-95 Lvl 2:
Automation
Systems
ISA-95 Lvl 1:
Device I/O
& Controls
ISA-95 Lvl 3:
Manufacturing
Ops & Control
Engineering
Collaboration
OEM/MRO
Suppliers
Whse &
ShippingContract
MFG
Contract
MFG
9
The Digital Chemical Plant is coming.
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Digital
Supply Chain
Feedstock
Supply
Digital
Supply Chain
Sister Sites
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Offsite Pkg

10. Read more:
The Digital Plant: Reaping the Rewards of Disruption
http://www.accenture.com/us-en/Pages/insight-digital-plant-
reaping-rewards-disruption.aspx
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