Ever-increasing volumes of data, connectivity, computing power, and advanced analytics are putting Industry 4.0 tools – which transform manufacturing and industrial processes with up-to-date digital technology – more within reach1.
Indeed, about half of leaders of industrial gas companies surveyed in informal interactions have expressed interest in developments in Industry 4.0. They have reason to be interested: our analysis suggests that the industrial gas sector stands to increase EBIT2 margins by two to five percentage points – a significant competitive advantage in an industry in which historical EBIT margins are a healthy 20 to 25% for major players. For companies that may already be piloting advanced analytics, a small collection of similar Industry 4.0 tools (including machine learning), scaled throughout an enterprise, can create value at low risk for industrial gas companies.
Such measures could grow the profit margins of an industry that already creates significant shareholder value. Industrial gas companies can apply Industry 4.0 tools throughout the value chain, such as advanced analytics to enhance plant efficiency or optimize bulk or packaged gas deliveries. Digital and analytical tools could also help strengthen supply chains that are especially crucial during the Covid-19 crisis – particularly ones that involve delivering liquid oxygen to hospitals and enhancing capacity at dry-ice facilities that support vaccine transportation. Gas players could start by leveraging existing technologies and approaches to quickly capture value, creating a self-funding mechanism for further digital transformation.
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