Location: Innovation IEG > Management Innovation > Innovation of Chemical Enterprises

Innovation of Chemical Enterprises

Innovation and Continuous Improvement of Chemical Enterprises
Current Situation of Manufacturing Industry: under the circumstances of China’s rapid economic development, traditional chemical industry is facing the bottleneck of product innovation. Compared with the choice to face new market and develop new products with high profits, chemical enterprises prefer to introduce and absorb advanced technologies. To pursue higher profits of traditional products, many enterprises invest a large amount of money in purchasing high-efficiency and high-productivity equipment and carry out rapid expansion. Due t o the lack of accurate prediction and macro expectation of market, supply-demand imbalance and excess production emerged in many fields. As a result of excess production capacity, many enterprises have to hold down prices in the fiercely competitive market with limited scale. Because of excess inventories, insufficient working capitals and increased repayment pressure and labor cost, many enterprises run into serious shortage of working capitals and decreased profit margins and fall into larger predicaments. Together with the limitation of systems, high educated technical talents are in serious drain. 

Method of solving the problem: innovation and continuous improvement
Innovation is to provide differentiated products and technologies. Choose the new market and emerging market where we can gain highest returns and company will be influenced furthest as the objects of investment, give priority to transferring resources to high-profit products in Blue Ocean. 

In 2008, four ministries and commissions (Ministry of Science and Technology, Ministry of Education, National Development and Reform Commission, China Association for Science and Technology) issued jointly the Several Opinions on Strengthening Innovation Methodologies, encouraging all provinces to develop innovation activities widely. 

Take Dow Corning as an example. The company has the best performance in global chemical industry, while innovation plays an important role in its development. It is a silicon resin manufacturer, established jointly by Dow Chemical and Corning. By providing original solutions and new applications to customers, meeting customers’ demand for creativity, customization and technical support, developing unique and distinctive products and fulfilling the needs of electronics, construction, health and personal care and other important industries, the company has gained large profits and its sales revenue has increased from 3.37 billion dollars in 2004 to 6 billion dollars in 2010. 

There are many methodologies for innovation, including DFSS, design thinking, technology roadmap, TRIZ, etc. These methodologies can inspire the innovative awareness of technology R&D personnel.  

2. Continuous improvement, paying attention to current business process by Lean Production and Six Sigma continuous improvement methods and acquiring customers by quick response, excellent quality and lower prices. Therefore, it is necessary to eliminate various waste and lower manufacturing cost, so as to build the real competitiveness of enterprise. Lean Six Sigma has been carried out in China for more than ten years and has achieved outstanding results in both manufacturing industry and service industry. Take China National Chemical Corporation as an example. Through continuous improvement, the company can acquire an annual economic benefit of hundreds of millions of yuan. The company has been a model for continuous improvement of China chemical industry and entered the list of Global 500 companies in 2011.

Different enterprises have different industrial features and therefore have different demands for Lean Production and Six Sigma. Take process industry and discrete industry as an example. Process industries, such as chemical industry, pharmaceutical industry, etc, usually need more equipment management, such as TPM (Total Productive Maintenance). Because process industries need to use series of specific equipment, conditions of which will greatly affect the quality of products and production efficiency; the design of experiment method in Six Sigma can play an important role in process industries, optimizing process indicators through adjustment of technical parameters by applying design of experiment. But for discrete industries, such as machinery, electronics, both layout of production lines and scheduling of processes are significant factors affecting production efficiency and quality. Therefore, discrete industries pay great attention to standardization, JIT (Just in Time), billboard and zero-inventory.