driving profitability with plant and process data
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Chemical Industry Tackles Operational Performance with Better Execution
DRIVING PROFITABILITY WITH PLANT AND PROCESS DATA
Chemical Industry Tackles Operational Performance with Better Execution
DRIVING PROFITABILITY WITH PLANT AND PROCESS DATA
TABLE OF CONTENTS
SECTION 1: Executive Summary and Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2: State of Plant and Process Manufacturing Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3: Applications of IIoT and Enterprise Operational Analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4: Opportunities in the Chemical Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Executive Summary and Demographics
Section 1
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Three Challenges, Three Areas for Investment
Chemical companies are beginning to recognize the value of data
created within their plants, but for many, the use of that data does not
extend past manufacturing operations . The data is not visible to roles
outside the four walls, and companies can’t combine it with corporate
or financial data for value-added analysis and superior execution .
However, some organizations are beginning to provide this visibility
and integrate their data into wide-ranging business and operational
analytics, with the expectation that combining manufacturing, supply
chain, and financial data, and even data external to the company, can
drive higher profitability by uncovering “hidden” opportunities and
previously unrecognized synergies for improvement .
In this research, LNS explores:
� The relationship between operational performance and
the use of newer operational technology (OT), industrial
internet of things (IIoT), and advanced analytics platforms in
performance improvement; and
� The impact of these capabilities on corporate performance .
Our initial survey findings reveal that the top three challenges facing
chemicals companies are:
� Market forecasting and supply chain visibility
� Leveraging and deploying new technologies
� Difficulties in improving Operational Excellence
and the top three areas for future investment are:
� Operational systems
� New production technology
� Big Data and predictive analytics capabilities
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Three Challenges, Three Areas for Investment (Cont.)
Companies that use plant and process data combined with
operational performance analytics have significantly better
performance compared to companies that don’t . This research
explains what separates the top performers from the rest of the pack,
and why, with recommendations for closing the gap .
© LNS Research. All Rights Reserved.
Dimensions of Data and Analytics
Fast
Latent
Precise
Ambiguous
Structured
Semi-structured
Unstructured
SPEED AND QUALITY OF DATA
TYPES OF ANALYTICSTYPES OF DATA
Descriptive
Diagnostic
Predictive
Prescriptive
Visualization
Dimensions of Data and Analytics
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We examined the use of plant and process data in a survey
with 350 valid respondents: manufacturing executives
responsible for operational technology (OT), across the
process, batch and discrete industries, using the dataset
acquired in 2018 for our Analytics Really Do Matter
publication . In early 2019, we supplemented the initial survey
data with additional questions explicitly tailored for three
segments of the chemical industry: petrochemicals, basic
and bulk, and specialty . We separated those respondents into
two groups: companies that had implemented widespread
availability of plant and process data and implemented IIoT
and enterprise operational analytics, and companies that
had not yet implemented these capabilities . We surveyed
industry trends, challenges, and where they plan to invest
over the next 12-18 months .
Demographics
GEOGRAPHYCOLOR BY HQ LOCATION
REVENUECOLOR BY COMPANY REVENUE
North America
EuropeSmall: <$250M
Medium: $250M-$1B
>$1B
37%
29%
34%
50%
26%
11%
13%
JOB TITLE
Senior Executive
Director
Manager
12%
23%
27%
22%16%
INDUSTRY
Discrete Manufacturing
Process Manufacturing
Batch Manufacturing
44%
28%
28%
DISCIPLINE / ROLE
Operations
Engineering
Information Technology
Quality
Maintenance
Research and Development
All Others
26%
20%20%
6%
5%
4% 19%
Asia / Pacific
Rest of World
Consultant
All Others
State of Plant and Process Manufacturing Data
Section 2
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Data Access, Sources, and Roles
We asked who has access to plant information to make timely
decisions and what their role is in the organization . Not surprisingly,
plants own, control and are the primary consumers of their data
with only about one-quarter of business unit leads having control
and access . This indicates that the visibility into and analysis across
multiple plants may be lacking in many chemical companies .
Access to Plant Information
Control of Data That Leaves the Plant
Business Plant Corporate
60%
50%
40%
30%
20%
10%
0%
Basic and bulk Specialty Petrochemicals
QUESTION
Business
Plant
Corporate
BASIC AND BULK SPECIALTY PETROCHEMICALS
14% 40% 36%
55%
9%30%
30%
29%
57%
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Given the traditional OT architecture, the plant historian is the
primary source of production data, especially for petrochemicals, but
is not the dominant source of data for enterprise analytics . Analytics
sources data from several systems, including quality . It’s interesting to
note that half of all companies indicated that they have the analytics
people that they need, but nearly one in four said they need help
from large-scale consultancies with specialized industry experience
or intend to hire additional advanced analytics capabilities .
Data Access, Sources, and Roles (Cont.)
Data Sources for Operational Analytics
Access to Information for Decision Making
Structured(traditional databases and applications, e.g.
PLM, ERP, MES)
Semi-structured(data historians,
time series, others)
Unstructured(data lakes,
streaming, video, GIS, web, social media
Don't know
60%
50%
40%
30%
20%
10%
0%
Basic and bulk Specialty Petrochemicals Basic and bulk Specialty Petrochemicals
Shop floor operators
Machine operators
Line / area operations
Maintenance personnel
Supervisors
Operations managers
Quality personnel
Plant / control engineers
Process / improvement staff
Plant managers
IT / Business analysts
Supply chain planners
Business unit managers
C-level executives
Don't know
0% 10% 20% 30% 40% 50% 60% 70%
38%
38%
24%
29%
33%
5%
10%
10%10%
24%
24%
57%
52%
14%
14%
14%
36%
36%
36%
27%
27%
18%
18%
0%
9%
36%
36%
45%
9%
9%
18%
40%
65%
30%
35%
40%
20%
20%
30%
40%
55%
65%
10%
25%
25%
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Plant system architectures are evolving across all of manufacturing,
and the chemical industry is no exception . Long adopters of ISA-95
and ISA-88, operating companies are beginning to incorporate IIoT,
Big Data, analytics, Digital Twins, Edge, and Cloud into their OT
architectures .
So rather than only aggregate manufacturing data in corporate ERP
and supply chain applications, the introduction of Edge and Cloud
into the OT architecture now allows timely access to company-wide
plant data providing increased visibility to manufacturing operations
to support better decision-making at the plant and corporate levels .
Operational Architectures are Evolving
WHAT ARE ISA-95 AND ISA-88?ISA-95 and ISA-88 are international standards from the International Society of Automation for global manufacturers. ISA-95 relates to developing an automated interface between enterprise and control systems. It outlines the standard terminology, object models, and boundaries between the enterprise systems and the control systems, and the information exchanged between the two. ISA-88 provides a consistent set of standards and terminology for batch control and defines the physical model, procedures, and recipes.
Learn more about them at International Society of Automation (ISA).
CONNECTIVITY BUS
AdvancedComputingPlatform
Controllers
Wired I/OWired Edge
Devices WirelessSensors
I/F
Wireless EdgeDevices
Historian
I/F I/F
LIMS
Analyzers MachineryMonitoring
ConnectedWorker
Internal OTPlatform
FieldNetworks
ElectricalSystems
SafetySystems
I/F I/FI/F
External3rd Party
OT Platform
BusinessTransactional
ComputingPlatforms
CyberThreat
Monitor
= DIGITAL TWIN
© LNS Research. All Rights Reserved.
Applications in Plant System ArchitecturesApplications in Plant System Architectures
Applications of IIoT and Enterprise Operational Analytics
Section 3
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Top Metrics Among Manufacturers
Using Metrics
Using Analytics
2
0
60 100
140
1204080
8
1600 MPH
MEASURE ANALYZE
REACT
END
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Metrics Versus Analytics
“Operational analytics” is not merely a new way to say “metrics .” The
difference is an important one: metrics tell you what is happening or
has happened in the plant and your business, while analytics uncover
why things happen and what could happen — and even more impor-
tantly, show you what to do about them . In other words, process and
production metrics have been the primary source of information to
measure performance and to show people how they’re doing . The
approach is straightforward and has been supported for years by
systems such as data historians, dashboards, and standard BI tools .
Operational analytics, on the other hand, close the loop among the
data, the analysis of the data, and the decision of which action to take .
The manufacturing industry has seen a wide range of new analyt-
ics applications over the past three to five years . The surge includes
specialized applications in asset performance management (APM) and
other maintenance-related processes, typically focused on high-cost
resources . In previous years, companies started with a dashboard of
simple metrics to show the up-to-the-second status of equipment,
processes, and operations, and focused on improving response time
and time-to-resolution when issues occurred . However, very little
“live data” from these systems move into data stores outside the plant .
Corporate systems have been primarily reactive “scorekeepers,” not
proactive “scorers .” That’s changing in a big way in process manufac-
turing . In fact, it has been the reason why LNS has shifted focus from
business metrics to enterprise operational analytics — it’s also why
companies without a plan to address it need to take action .
2
0
60 100
140
1204080
8
1600 MPH
MEASURE COMBINE ANALYZE DECIDE ACT
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In 2018, we asked companies to gauge their analytics maturity on a
four-step scale:
1 . Descriptive (similar to metrics)
2 . Diagnostic
3 . Predictive
4 . Prescriptive
The research uncovered two significant facts . First, there was a
tremendous drop-off of adoption from predictive to prescriptive
analytics; most companies have not yet progressed to this final
maturity level (and the finding that analytics provide a path to
prescriptive control was most significant) . Second, predictive
analytics are just as prevalent as diagnostic analytics, driven by
the rapid uptake of predictive analytics, primarily focused on
equipment reliability . Data silos typically challenge all companies,
restricting access to data (e .g ., financial data and operational data
exist in separate databases or systems with strict controls in place) .
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Metrics Versus Analytics (Cont.)
Descriptive Diagnostic Predictive Prescriptive None
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Industrial Analytics Sophistication: Plant Operations and Related
Production
Inventory / Logistics
Maintenance
Quality
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Looking at the data for the petrochemicals, basic and bulk chemicals,
and specialty chemicals segments of the process industry, we found
several differences . Not surprisingly, their discrete and OEM/
machine counterparts we surveyed in the original 2018 research
were different, but more notably each segment was distinct . Further,
the chemical industry, which is a significant portion of the overall
process industry, lags discrete manufacturing sectors considerably in
the adoption of IIoT and enterprise operational analytics .
Manufacturing Software Adoption
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ADOPTION: Specialty Chemicals Sector
ADOPTION: Basic and Bulk Chemicals Sector
Advanced analytics
Advanced analytics
Data historian
Data historian
IIoT platform
IIoT platform
MOM
MOM
IMPLEMENTED
IMPLEMENTED
PILOT STAGES
PILOT STAGES
NO PLANSBUDGET (3 YEARS)
BUDGET (3 YEARS)
BUDGET (1 YEAR)
BUDGET (1 YEAR)
14%
30%
21%
15%
36%7%
10%
21%
5%
7%
10%
7%
0%
7%
20%
7%
5%
21%
5%
0%
5%
14%
25%
14%
14%
15%
50%
7%
10%
43%
50%
45%
21%
36%
20%
10%
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For example, the uptake of manufacturing software in the basic/bulk
and specialty segments lags in IIoT and advanced analytics . Further,
30-50% of companies across all three segments do not have spending
plans for these manufacturing applications . Analysis tools range from
spreadsheets to historian-based interfaces, to third-party visualiza-
tion tools, but nowhere outside of the ERP system do all these come
together in a coherent way . IIoT applications have reached the plant,
but are not being used significantly for enterprise operational analytics
yet, and where no single vendor — be it automation, ERP, big tech or
independent software vendor (ISV) – dominates the IIoT sector .
Manufacturing Software Adoption (Cont.)
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Level of Applications on IIoT Platforms
Petrochemical Specialty Basic and bulk
20% 20%12%
44%
44%
60%Yes, all applications built on IIoT platform
Yes, some but not all built on IIoT platform
No, none built on IIoT platform
11%
33%
56%
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Companies are primarily using operational analytics in forecasting,
quality control, asset performance, and plant performance metrics .
Organizations that have adopted IIoT and enterprise operational
analytics dominate every use case category . Still, no one use case ex-
ceeds 50%, indicating that there is plenty of room for growth . When
we combine this observation with the earlier low adoption of manufac-
turing software and IIoT, it tells us that enterprise analytics technology
has been very slow to penetrate these chemical industry segments,
with the specialty chemical sector being the slowest to adopt .
Enterprise Operational Analytics Adoption
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Enterprise Analytics Adoption:Chemical Industries Use Cases
Implemented Not implemented
Forecast production in individual plants
Forecast production across multiple plants
Improve manufacturing quality
Manufacturing process improvement
Performance visibility across plants
Improve asset performance (APM)
Identify plant KPI parameters
Replicate configurations and processes across plants
Alert management across plants
Benchmark performance across plants
0% 10% 20% 30% 40% 50% 60%
40%
27%
47%
50%
23%
23%
27%
40%
27%
37%
23%
23%
38%
15%
15%
8%
8%
8%
15%
15%
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IIoT Platform/Analytics Adoption:Chemical Industries Manufacturing Capabilities
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Enterprise Operational Analytics Adoption (Cont.)
Manage safety and risk
Production management of product lines and plants enterprise-wide
Production management across line of business and associated plants
Production management within plants
Rapidly respond to supply and demand changes
Deliver relevant, real-time KPIs to workers
Product and supplier quality
Speed new product designs through to volume production
Real-time visibility of manufacturing cost components
End-to-end product tracking and product component genealogy
Don't know
0% 10% 20% 30% 40% 50% 60% 70%
62%
38%
38%
54%
38%
31%
15%
8%
15%
38%
31%
37%
30%
47%
40%
43%
17%
13%
13%
27%
23%
27%
Implemented Not implemented
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Top performers — those that have adopted IIoT and enterprise
operational analytics — show significant differences in results
across every category, particularly in forecasting across multiple
plants, multi-plant performance visibility, continuous process
improvement, and quality . Furthermore, of these solution
components, analytics are the principal contributor to results with
the ability to uncover previously unidentified trends and synergies
(i .e ., hidden opportunities, especially across the supply chain and
multiple plants) .
These results reinforce our initial survey findings in which
market forecasting, supply chain visibility, and difficulties improving
operational excellence were top challenges . In addition, they explain
why one of the three top areas for future investment is Big Data and
predictive analytics capabilities .
Analytics Adoption Signals (Significantly) Better Performance
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Analytics Adoption Signals (Significantly) Better Performance (Cont.)
Our research clearly shows that operational analytics
positively impact the bottom line in measurable ways . While
operational analytics improve plant throughput through better
coordination across plants, they don’t affect individual plant
performance that much, for example, in downtime and risk
metrics, which already attract significant attention at the plant
level . Instead, the most significant impact is on business unit
metrics and supply chain in terms of reduced working capital,
on-time delivery, and quality . Also, the differences in profit
margin and ROI have critical financial ramifications .
Top performers choose specific financial and supply chain
use cases to build the business case and ensure the plant data
model integration is effective — including supply chain inventory
levels, profitability, on-time delivery, capacity, and others .
IIoT Platform/Analytics Adoption: Chemical Industries Performance
Implemented Not implemented
Reduced working capital
Increased plant throughput
Improved manufacturing
quality
Reduced planned and unplanned
downtime
Improved on-time delivery
Improved profit margins
Increased return on investment
Better compliance
Reduced operating risk
0% 10% 20% 30% 40% 50% 60%
47%
52%
48%
57%
60%
42%
44%
45%
47%
26%
38%
39%
50%
47%
40%
32%
52%
52%
21%
15%
9%
6%
14%
-7%
-5%
2%
12%
Improvement
Improvement
Improvement
Improvement
Improvement
Improvement
Improvement
Improvement
Improvement
Opportunities in the Chemical Industry
Section 4
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The current state of adoption of IIoT and enterprise operational
analytics capabilities means that there is a significant opportunity for
industrial organizations .
ADDRESS DATA BARRIERS. Every organization should assess its
data access capabilities . Petrochemicals is a big-player game
where manufacturing plants are most likely to have mature sys-
tems with rich sources of operational data . The range of ma-
turity varies across large and small basic/bulk and specialty
chemicals producers, so first work to fill gaps where access to
automation, historians, maintenance, planning and scheduling,
and other key systems is limited .
How? First, deploy an Edge and Cloud architecture that enables
structured, semi-structured, and unstructured plant data to
flow to enterprise level Big Data . Since most plant data exists
in various silos, move plant data to a data lake (a system or re-
pository of data stored in its original format) to allow enterprise
operational analytics to access the data .
Second, give data context by investing in a scalable and extensi-
ble data model that explicitly contextualizes plant data, includ-
ing asset, process, and worker elements .
Third, address data quality issues . Enterprises usually address
quality at two levels . They reconcile plant production data local-
ly using data reconciliation and material balance . And second,
they use extract, transform, load (ETL) integration and other
tools in the data lake to clean and consolidate data so that oper-
ational analytics can consume it .
Recommendations for Chemical Companies
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UNDERSTAND THE ANALYTICS LANDSCAPE. Survey the market
to understand which solution providers offer various oper-
ational analytics capabilities, and how solutions can fit into
your enterprise and plant architectures . Industrial companies
will generally find three categories of enterprise operational
analytics suppliers:
� ERP vendors
� Automation vendors with custom applications built on top
of an enterprise historian
� Independent software vendors (ISVs) that offer solutions
compatible with multiple production and supply chain
systems
The ISV sector includes solutions built on third-party historians,
integrated software suites for manufacturing operations, and
stand-alone solutions .
An even broader group of vendors will offer IIoT solutions, all
relying on big tech for the platform-as-a-service (PaaS) func-
tionality . However, IIoT comes in more than one flavor, vendors
that offer IIoT platforms generally fall into three categories:
� Platform plus configurable operational analytics
applications
� Don’t offer the platform by itself, only the application on
which it is built
� Analytics toolset, but no specific application — either the
customer or a third party uses the platform and tools to
build the application
The first two options work best for most chemical companies,
since using the application delivers business value and not the
underlying plumbing, and because most end users will not
have the time and staff to “DIY .”
DEMAND RICH FUNCTIONALITY. Industrial companies should
expect a full-featured set of functionality to avoid multiple
overlapping and competing solutions . Look for solutions with
these capabilities:
� Data aggregation from OT and IT sources, including IIoT
and Edge devices
� Complex process KPI monitoring and calculation
� Production forecasting across individual and multiple
plants
� What-if analysis, including predictive and prescriptive
analytics
� Optimization of performance: throughput, yield,
conversion, energy, quality, etc .
� Integration with supply chain planning, scheduling, and
demand forecasting
BECOME A TOP PERFORMER. Top performing chemical compa-
nies use operational analytics more than their less-performing
counterparts and they have a strategy and vision for manufac-
turing and supply chain excellence . They are far more likely to
know what they want: data, use cases, and justification, have
an enterprise and plant architecture and data model in place
(or are well on the road to establishing them), and know what
role they want enterprise operational analytics to play .
Recommendations for Chemical Companies (Cont.)
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Industrial Transformation Resource Guide
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Companies use digital technology to drive transformation across the
value chain . Use these resources to learn how to align the people,
processes, and technologies required to achieve Operational
Excellence in your organization .
INDUSTRIAL TRANSFORMATION
BLOG | Understanding Industrial Transformation: Definition and Framework for SuccessView Blog
RESEARCH | Industrial Transformation: Architecture and Analytics Just the BeginningView Research
RESEARCH | Industrial Control Systems and Edge Computing: Enabling an Operational Architecture for Applications and AnalyticsView Research
INDUSTRIAL ANALYTICS
RESEARCH | Build a Flexible Industrial Analytics Strategy for Today and Tomorrow: Why Business Leaders Should Adopt a Use Case ApproachView Research
BLOG | How the Right Operational Architecture Powers the Analytics That MatterView Blog
RESEARCH | Analytics Really Do Matter: Driving Digital Transformation and the Smart Manufacturing EnterpriseView Research
FACTORY OF THE FUTURE
RESEARCH | Improving Continuous Improvement: Reinvent Lean Today with Digital TechnologyView Research
RESEARCH | Forging the Digital Twin in Discrete Manufacturing: A Vision for Unity in the Virtual and Real WorldsView Research
RESEARCH | MOM and PLM in the IIoT Age: A Cross-Discipline Approach to Digital TransformationView Research
APM 4.0
Solution Selection Guide | Asset Performance Management (Platform Vendors), 2018 EditionView Solution Selection Guide
RESEARCH | APM 4.0: Prescription for Better Profitability in OperationsView Research
RESEARCH | The Road to Digital Transformation Success: A Methodology to Modernize Operational ExcellenceView Research
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Industrial Transformation Resource Guide (Cont.)
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24 INDUSTRY FOCUS
AUTOMOTIVE RESEARCH | IATF 16949-2016: A Pivotal Opportunity in Automotive Quality ManagementView Research
AUTOMOVTIVE AND A&D RESEARCH | Manufacturing Performance: Automotive and A&D Gaining Momentum with AnalyticsView Research
LIFE SCIENCES RESEARCH | Digitalized Quality in Life Sciences: Roadmap to Sustainable Growth and Speeding Profitable, High-Quality Products to MarketView Research
LIFE SCIENCE RESEARCH | Quality 4.0 in Pharmaceutical: Use Cases and Advantage in a Digitally Maturing MarketView Research
METALS AND MINING RESEARCH | Data for Balanced Scorecard: Driving Profits in Mining, Metals, and Materials IndustriesView Research
POWER GENERATION RESEARCH | Driving Better Decision Making with Big Data: A Roadmap for Digital Transformation in the Power Generation IndustryView Research
QUALITY, COMPLIANCE
RESEARCH | Quality 4.0 Impact and Strategy HandbookView Blog
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Presented by:
© LNS Research, 2019. All Rights Reserved.
Author:
Joe Perino
Research Analyst
lnsresearch.com
Chemical Industry Tackles Operational Performance with Better Execution
DRIVING PROFITABILITY WITH PLANT AND PROCESS DATA
ACRONYMQUICK REFERENCE
VIEW ON BLOG
joe .perino@lns-global .com
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