Digital Transformation Consulting

The chemical industry faced a significant niche challenge with stagnating labor productivity, which remained flat for over a decade despite substantial investments of up to 6% of annual revenues in new plants, equipment, and digital technologies. This lack of productivity growth persisted even as other asset-intensive sectors like steel, motor vehicles, cement, utilities, mining, and oil & gas achieved three to six times higher increases through capital expenditure improvements. Moreover, the chemical sector’s revenue per full-time equivalent (FTE) increased by less than 1% annually over 15 years, indicating that lean operational efficiencies did not translate into broader productivity gains, especially in support services and corporate functions that saw minimal automation or digitization benefits.

A further niche issue was the impending talent shortage compounded by an aging workforce—approximately 30% of industry employees are aged 50 or older and will retire within a decade—and declining enrollment in critical disciplines such as engineering and business in key markets like the US and India. This shrinking talent pipeline threatened to exacerbate the productivity stagnation, as the existing workforce would not be readily replenished with the skills needed for future growth areas, notably sustainability-related products predicted to grow 70% by 2028.

To address these complex issues, tailored solutions focused on reinventing roles and reshaping the workforce through strategic work process restructuring and skill development were implemented. The approach emphasized transforming work practices to extract larger efficiencies from existing and new technologies, continuously reorganizing workforces with those capable of leveraging automation and automation-driven roles, and expanding training in new functionalities, analytics, and automation—particularly in emerging fields like data science and generative AI. This enabled the deployment of technologies such as AI and gen AI to automate routine tasks and shift employee focus toward creative and strategic activities.

Quantifiable benefits of this targeted intervention include the potential for gen AI to impact approximately 31% of working hours across the industry through automation and augmentation, with 97% of industry leaders recognizing that gen AI will positively influence their market share within three years. Moreover, by restructuring roles and investing in talent capabilities, chemical companies can better manage the retirements and skill shortages, thus positioning themselves to capitalize on the burgeoning demand for sustainable chemicals and related products. This holistic workforce and productivity revamp is deemed critical for ensuring future business continuity, growth, and the industry's ability to meet rising sustainability-related market opportunities.