In April 2016, BÜFA created a new logo and slogan – Neue Chemie or New Chemistry. Can you explain what this means? Does the idea of “new chemistry” relate to the industry 4.0 concept, the automation drive that is transforming the manufacturing sector?
“New chemistry” does not necessarily have to do with industry 4.0 and automation. Of course, our new slogan partly refers to the enlargement of our production sites, which includes a stronger automation of logistics and processes. But it rather relates to sustainability and a circular economy which focuses an efficient use of resources. Moreover it refers to special interpersonal relationships we have with our customers and within our company.
At a High-Tech Gründerfonds (HTGF) conference in Bonn in January, you said the chemicals sector was still in the early stages of digitisation, and BÜFA was working hard to foster dialogue with startups. Tell us more about what BÜFA is doing to promote this dialogue – do you work with startups primarily in Germany, or around the world?
BÜFA uses the platform of HTGF to get access to interesting startups. This is mainly focused on Germany, but could also include a few startups from other European countries. We do not have a strategy that excludes other European countries, but in order to follow up trends, Germany is a good point to concentrate on. Moreover, we should keep an eye on what is going on in Silicon Valley.
I can imagine investing further in startups that can help us, for example, to avoid changes our value chain, or to offer ways to enlarge our business model – we ask ourselves if it is possible for digitisation to replace our business model. This question led us to found BÜFA-i, a startup within BÜFA Group developing an online marketplace for chemicals trading. We have also met some startups via our networks and cooperated with them by testing their products – for example Multibind, a developer of biological decontamination agents, or Nfon, a cloud-based telephone systems company.
Does BÜFA currently have a corporate venturing unit?
It is not economically viable for BÜFA to have a whole unit for corporate venturing affairs. The management board is mainly involved in this, assisted by some employees. HTGF can help us to find interesting side investments with its large portfolio of startups.
BÜFA plans to invest €30m ($32m) in the next few years to expand its plants as part of a drive to advance digitisation throughout the company. Of this €30m, what are some of the biggest investments you are making in digital technologies?
We are investing in a new enterprise resource planning system and in customer relationship management and product information management systems. We will also improve logistics and process automation. By investing in digital technologies, we seek mainly to increase efficiency.
BÜFA-i, the platform that promotes open innovation and allows manufacturers, traders and customers to improve operational efficiency, was launched last year. What is the latest on this platform?
It is in its testing phase. It will be operational from the beginning of May so we do not have any performance data yet. In the long term, we seek to enlarge it and have many suppliers who feed it, not to mention a high number of customers who buy via the platform.
You have said that while other sectors have set up online platforms, the chemicals industry has additional difficulties because of strict regulations governing online sales of chemical products. How much of a barrier is regulation and what can be done about it?
We try to avoid overregulation, together with the German Chemical Association in which we participate. Nonetheless, the matter of safety is very important to us. We, as well as the government, are interested in a very high safety level and we see the need for regulation, especially in the chemicals industry, to protect the environment and people.
How else can BÜFA take advantage of digital technology to create new revenue streams?
With digital technology, BÜFA can have a far bigger geographical reach than today. Our speciality products will not be limited to the German or European market, but can be sold worldwide. Digital marketing will also help us to promote our new products, especially in the ecological range. We are gaining a lot of experience in that respect with our “green” web store, which sells the ecological consumer products of Sodasan, an environmentally-friendly detergents manufacturer in which we hold a 25% share.
What are BÜFA’s plans to expand abroad? How will this expansion be achieved?
At the moment we believe we can still enlarge our market share in Europe. M&A certainly will play a role, either for enhancing technology or to consolidate markets. The international market can be interesting for our niche products.
What advice does BÜFA have for other European chemicals companies looking to digitise?
My advice is to listen as much as possible to your employees, customers and suppliers as well as to startups. From them you will get hundreds of impulses for projects. The biggest pitfall I see at the moment concerning digitisation is being too slow.