Blockchain Enabled Chemical Industry

Market Definition

Blockchain is a technology that uses cryptographic principles and acts as a distributed repository. Data is recorded in individual blocks and capturing new data and transactions is confirmed by a compliance algorithm and added to the blockchain, so the blockchain grows with each transaction. In the first step, the manufacturer of the chemical industry orders raw materials from the supplier. The chemical manufacturer determines the public blockchain address of the supplier via supplier website, direct contact with the supplier, and other various ways. The chemical manufacturer will make a transaction by sending a certain amount of currency to the supplier. Enabling blockchain in the process ensures that the supplier is the only business authorized person to use the cryptocurrency issued for trading. At the same time, the blockchain function identifies the supplier as an authorized supplier of raw materials.

Framework for Application of Blockchain in the Chemical Industry

Disruption in the supply chain is one of the major challenges faced by, and an addressable issue of the chemical industry in recent years. Market uncertainty has increased owing to pandemic incidences, differences between the nations, and the closure of trades among the countries. Integration of technology that can make transactions across the supply chain secured is a high requisite in the industry.

Moreover, the COVID-19 crisis has accelerated the shift from conventional supply chains to digital supply chains. However, many of the companies seem to be going further, by enhancing and expanding their digital channels in integrating blockchain solutions. The recent pace of B2B e-commerce adoption in the chemical industry has been relatively slower than in other industries. For an instance, chemical sales on B2B e-commerce platforms in the United States are growing faster during post covid time, compared with pre covid time.

The benefits that companies can get with the integration of blockchain are as follows:

• Information:

Many participants in a chemical supply chain can add information on raw materials and chemicals and view life cycle data. Blockchain is available to refine the supply chain data points, data development, and management by continues communicating the quantitative information to the participants across the supply chain. Blockchain focuses on software-based services for prototypes and production application integrations across the manufacturing process. To add, it also provides critical services that touch financial services, among other things. With unexplored opportunities available to various businesses and industries, and despite comparative technological advancements, blockchain capabilities are likely to attract even greater interest in the future.

• Reliability:

Blockchain data such as delivery date, expiration date, and production date cannot be changed. The RFID tag contains only the ID number/transaction number which cannot be re-writable. As the data stored within the blockchain is segmented and distributed across all nodes, technology can be used to create and store shared and constantly shared data. Whether manufacturer or distributor, companies can use blockchain to grow transparency, reliability, and credibility within the supply chain and direct industry processes. For example, a chemical manufacturer who is about to witness a faulty product resulting in expensive losses can use the blockchain to track down the faulty processor supplier more efficiently, containing the problem and reducing staff time and costs. With the blockchain solution, current manufacturers have a live dossier of employee logs and they track the flow and transaction of goods. This provides an extra level of transparency and control and will allow major producers to compete and win against the competition.

• Tracking:

Material and chemicals with unique IDs that can be traced from acquisition to distribution visibility of supply chain and value chain. Blockchain technology has the potential to dramatically change production chains, and with them, cut the middle person, streamline processes, improve overall security as well as simplify data management. However, blockchain is one of the emerging technologies that redefine the way companies do business. Technology itself, in terms of development, control, governance, and acquisition is still evolving. On the other side, as blockchain innovation and technology itself become more defined, the supply chain and service chain can begin to see real forms of transparency, accountability, and efficiency more than ever before. Manufacturers who take risks and adopt new business practices and technologies to move beyond the current situation are expected to have a better market grip in the coming days.

• Privacy:

In addition to setting up and using resources, there is regular integration and acquisition in the chemical industry. Therefore, there is a need to exchange and manage shared resources between parent and other aspects of sister companies. Blockchain technology provides the best levels of privacy as it relates to the emergence of parent companies and their exit. Also, the history of evolution can be maintained by using an unchangeable layer. This reduces the costly and unnecessary actions of people and allows for a better return on investment. 

Blockchain Enabled Chemical Industry Market Outlook: Europe

The competitive chemical industry supports the improvement of living standards and produces jobs and wealth. This stimulates innovation and development throughout the economic system. The industry is a provider of solutions to many sectors. In addition, the Europe chemical industry:

Europe recorded sales of US$565 billion in 2018 from the chemical industry, which is 17% of global chemical sales. The Europe chemical industry has provided 1.2 million direct jobs in 2019. The region has created an estimated 3.6 million indirect jobs and supported an estimated 19 million jobs across all supply chains. Furthermore, in 2018, the region has productivity of workers by 77% above the production rate generating additional trade revenue of US$ 45 billion.

The chemical industry is at the heart of the Europe manufacturing industry as 56% of chemicals are sold to domestic users across industrial sectors. Other important links exist between agriculture and services. The Europe chemical sector has a very innovative approach and is a powerful provider of solutions to social challenges such as climate change, health, and food.

Innovative industrial cooperation is emerging between chemicals and other industries, which helps maintain manufacturing activities in Europe. For example the partnership between the agricultural industry and the chemical industry in the production of bioplastics. The chemical industry is also a strong driver of resources and energy efficiency.

During the past two years marked by the COVID-19 pandemic and the ensuing economic crisis, industry has reaffirmed its strategic role in Europe in producing the necessary health care equipment and equipment. The future of the world will be a world created by effective and sustainable chemistry, as most of the future solutions rely on chemicals. As a result, the European Commission has recognized the chemical industry for its critical role in helping the public achieve the new goals of the European Green Deal.

Moreover, the European chemical industry has a desire for climate neutrality by 2050, and this sector is uniquely positioned in the European manufacturing sector to contribute to achieving a climate-neutral society. Meanwhile, the chemical industry is expected to be competitive as the green and digital twins to remain neutral in climate, circle and digital. Strategy for Sustainability (CSS), will also affect the industry economically, but also to have a significant ripple effect on all chemical-dependent value chains.

For this change to be effective, a clear approach that includes specific timelines, milestones, and steps must be prioritized by Europe policymakers to have a positive collaboration with chemical industry manufacturers. The Chemical Industrial transformation approach must ensure the availability of competitive and low-cost renewable energy, promote the development and distribution of advanced technologies, support the development of appropriate infrastructure and facilitate access to public and private finances.

TABLE: Chemical Manufacturing Industry Economic Data, Germany, France, and Spain

Sources: Trade Statistics for International Business Development

Covid-19 Impact

The global impacts of the coronavirus disease 2019 (COVID-19) are already starting to be felt and have significantly affected the chemical industry in 2021. COVID-19 has affected the global chemical industry in many ways including by creating market disruption, directly production and supply, and its financial pressure on manufacturers across the industries including chemicals and materials. The outbreak of COVID-19 has had an impact on many areas such as all closed restaurants, airline cancellations, travel restrictions, solitary confinement, restricted house events, panic and emergencies has reached more than 40 countries, with significant declines in purchases, declines. Business confidence, stock market turmoil, uncertainty about the future, and growing panic among the people have caused the chemical industry to stagnate from the first quarter of 2020 to the fourth quarter of 2021. However, the market has marginally survived during the COVID-19 pandemic due to the rise in purchasing the consumers' goods through the online channel to prevent the spread of coronavirus. In addition, major solution providers have announced a partnership with each other to offer affordable products, which accelerate the growth of the market during the pandemic outbreak.

The coronavirus is spreading rapidly in various countries and regions, making a huge impact on people's lives economically and socially as a whole. It started as a state of human health and is now a major threat to world trade, the economy, and finances. The initial closure had led to a shortage of workers in many regions of the world, thus creating an opportunity for the chemical industry market. The COVID-19 epidemic has halted the production of many chemicals due to the closure. In addition, the number of COVID-19 cases is expected to decline soon as the COVID-19 vaccine is introduced into the market. This has led to the reopening of manufacturing companies to their full potential. This helped to help the market recover in early 2022.

After a pandemic year in 2020, the chemical industry has witnessed office workers return to work, and production capacity reached or exceeded capacity. Increased awareness about the value chain and supply chain issues coupled with raw material shortages, which made chemical companies restrained to produce usual quantities, have further boosted the demand for digital supply chains solutions including blockchain. Import shortages, border restrictions, and labor shortages were among the major factors damaging the supply chain. On top of pre-existing logistics network issues, the sector has witnessed a long-term effect of covid-19 supply chain disturbance. According to the Solvay reports, in the first 3 quarters of 2021, the cost of goods, energy, and equipment at specialty chemical makers based in Belgium Solvay is increased by US $ 232 million compared to 2020.

Blockchain integration, and credibility among the participants, have provided tools and techniques for implementation to provide efficient supply chain management solutions even during COVID-19 times. Maintain the efficiency of the production process despite staff layoffs having been identified including emergency plant staffing plans to ensure continuous operation. Take part in risk analysis and supply chain disruptions, especially for third-party vendors through data points generated by blockchain. Blockchain software processes large amounts of data in a matter of minutes with the help of automatically generated data at each node of the supply chain to provide comprehensive business-based information. Blockchain is already changing the face of the chemical supply industry. Businesses, customers, and governments all benefit from the effective management of the supply chain. Digital integration of chemical sales management makes decision-making easier and faster through data, increases efficiency, and improves the use of human resources without fraudulence. Also, blockchain has helped businesses make better quality through authenticated raw material sourcing during COVID-19 times. As a result of covid, the adoption of blockchain for the chemical industry has greatly increased to face to next disruptive situation.

Blockchain Enabled Chemical Industry - Recent Developments and Case Studies

Companies are launching new products and expanding their presence, as blockchain-enabled chemical supply chain management is a major disruptive technology that has the potential to change chemical manufacturing activities across the world. 

In April 2020, Solvay S.A. has implemented blockchain technology to track its products across the value chain, in a bid to facilitate recycling and develop a sustainable economy.

As part of the European Union-sponsored Chemchain project, the company has participated in a Proof of Concept project completed by mid-2021. Currently, the global chemical industry spends an estimated € 9.5 billion a year on information about 150,000 chemical materials sold worldwide. Instead, the current system is still plagued with difficulties, information gaps as well as privacy and trust issues. The purpose of the Chemchain platform is to build a trusted, expanded and universally accepted blockchain infrastructure to store, exchange, build and track chemical-related information near the supply chain from feedstock manufacturer to end-user. Belgian building materials and chemical company Solvay has also conducted experiments on the Chemchain blockchain site to track a range of product offerings. Chemchain was created by the team behind the chemical control stage. Solvay has both revenue and market capitalization of more than US$ 12 billion). It is estimated that 80% of companies meet the growing demand for data on product chemistry. In addition, the new requirements and expectations of socially responsible companies force chemical companies to be more proactive in managing and providing information and investing in sustainable production methods. In Europe alone, around US$ 11.5 billion is spent annually by the chemical industry to comply with regulations, according to ChemChain. ChemChain blockchain technology helps to adapt to control and adapt to changing needs. Data can be easily uploaded and monitored, and consumers can trust the source of the information. Additionally, all data from the producers to consumers is ultimately managed in one place in a single platform which can be accessed through permissioned token, making the process more efficient for research to ensure that the ongoing progress sought by Solvay continues without unnecessary interference. Data is collected by providing digital tokens representing the amount of material produced when a chemical is produced. Tokens are passed around the supply chain and many tokens from different chemicals will accumulate along the way. Management of information, usage, and exposure information are also collected at each step of the supply chain. A particularly interesting feature of the program between Solvay and ChemChain is that it develops around the economy. In addition, Solvay aims to have 15% of its products from renewable or recycled services by 2030. The company is investing in a series of recycled products and wants to use blockchain technology to retrieve products from such products and be used successfully.

March 2021, Dow polyurethanes, a subsidiary of Dow Inc, has launched a blockchain project to assess and evaluate the feasibility of the technology to support the flexible bubble rotation. The pilot uses a Chemchain-built blockchain platform to transfer securely verified product information within the RENUVA recycling system. RENUVA is a blockchain platform designed to be used by the chemical industry to transfer chemical information to product-specific products.

Using the blockchain platform the Dow company will produce digital assets that contain critical information embedded in the chemical composition of its solutions. These materials can be combined with final polyurethane-based products to ensure that the content is visible at all stages in the product life cycle. Recyclers can easily access this information and point out the most appr opriate action for disposal or recycling of mattress end of life.

June 2021, Stahl, the active promoter of responsible chemistry, has taken the important step of allowing the emergence of a supply chain to the end by actively engaging with partners on the readiness and use of the blockchain.

Stahl has partnered with an independent chemical distributor named KRAHN Chemie, to ensure and certify the origin of raw materials. Following the internal driver of the Finboot blockchain-based tracking system, Stahl is now presenting concept evidence with KRAHN Chemie and is integrated into the blockchain traceability area. This step enables the tracking of key raw materials throughout the supply chain, from the source to the finished product. Over the next 12 to 24 months, Stahl will work closely with many providers and partners to advance blockchain maturity, create more nodes in the network, and deliver greater supply chain light.

April 2021, Mitsui Chemicals, Inc. and IBM Japan, Ltd. have launched blockchain a platform together around blockchain resources. technology. The aim is to ensure an obstacle that must be removed from the path to achieving a renewable economy.

As the resource distribution platform is organized by Mitsui Chemicals and IBM Japan, the aim is to ensure traction throughout the life cycle of resources, from immature materials such as monomers and polymers to the production, marketing, and use of products. The same principle applies to the recycling process thereafter, when used products are recycled, disassembled, processed, and filtered into raw materials that can be reused to make new products. In addition, the forum is intended to visualize things such as the production processes of raw materials recycled, testing methods, visual structures, and quality-related data, thus facilitating the smooth flow of goods. As the demand for plastic continues to rise worldwide, the problems caused by plastic waste are becoming more and more apparent making more powerful calls than ever before for the public to switch to a recycling economy. However, in order to use recycled materials, those involved need to be able to ensure compliance, such as being able to determine the materials used. Using blockchain technology in this tracking system will help to make supply chains more visible. It will also allow various stakeholders to ensure neutrality and fairness of work, making it possible to increase business transactions and audits and to assist those affected to avoid paperwork.

Future Outlook

The provision of Blockchain technology is a basic opportunity for successful gains and new ways to build trust in the supply chain of the chemical industry. For companies in the chemical industry, the ability to understand and effectively use blockchain technology will be an essential requirement for building competitive supply chains.

Blockchain technology can be used to encrypt and record supply chain data from close proximity to a chemical supply chain in the form of fraudulent evidence. Chemicals can be tracked reliably in their physical routes. Data generated during the movement of goods are stored in a distributed range of storage equipment. Network data storage allows unique identification of real-time data making it impossible or expensive for fake transit data. The use of blockchain technology offers significant benefits to supply chain managers in the chemical industry. The benefits of blockchain technology begin to apply throughout the supply chain and product life cycle. Ideally, effective profits should be obtained not only from imports or exports but also from production, sales or legal acquisition events. Having a reliable and secure website for supply chain operations is very important in business areas that are characterized by low levels of trust and high retail prices. The application to prevent cobalt detection in troubled regions demonstrates the significant impact blockchain technology can have.

Blockchain is a peer-to-peer distribution program that eliminates the need for a central management organization such as a bank. A program is a series of data blocks that are linked together in a task bridge. Its open-source, inaccessible configuration opens the way to an unparalleled level of reflection across. Each record is distributed over millions of computers worldwide and verified with accuracy. In the chemical industry, for an instance, blockchain can be applied to trace chemical products under the production process and thus ensure product quality to customers from raw materials to production to goods to the customer that can be tracked continuously.

In addition, setting up and using resources with regular integration and acquisition plays a major role in the chemical industry. Therefore, there is a need to exchange and manage shared resources between parent and other aspects of sister companies. Blockchain technology provides the best levels of privacy as it relates to the emergence of parent companies and their exit. Also, the history of evolution can be maintained by using an unchangeable layer. This reduces the cost and unnecessary actions of people and allows for a better return on hard work.

The transformation of products from petroleum chemicals to basic chemicals to speciality chemicals to distributors to OEM manufacturers is a very long journey that goes through cycles of buying, selling, making and delivering bulk. As with the chemical industry, this poses a major challenge regarding the visibility of the end in all categories. Different participants in the supply chain can begin to participate in blockchain solutions if their operations are modelled transparently. This makes the supply chains more efficient and tolerant of risk by allowing the end to end.

In the near future, there may be one blockchain shared between various industries. Having a single system, unlike various companies and industries, makes it easier and more accessible to the public and offers greater clarity and security for the blockchain.

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