Capability Mapping for Chemical Manufacturers

1. Capability Mapping for Chemical Manufacturers www.capstera.com 1

2. Transform Your Chemical Enterprise with Strategic Capability Clarity In the highly competitive and regulated chemical ▪ manufacturing sector, understanding your organization's full capability landscape isn't just good practice—it's essential for strategic advantage. Without a comprehensive capability map, chemical manufacturers struggle to prioritize investments, identify performance gaps, and align operations with strategic objectives. A well-constructed business capability map provides chemical ▪ manufacturers with the architectural foundation to drive digital transformation, optimize operations, ensure regulatory compliance, and accelerate innovation in an increasingly complex business environment. www.capstera.com 2 2

3. The Power of Capability Mapping for Chemical Manufacturers 1 Chemical manufacturers face unique challenges that require specialized capability mapping to navigate industry complexities. A structured capability map becomes the central reference point for transformation planning and execution. • Strategic Alignment: A capability map creates a clear line of sight between strategic objectives and operational execution, ensuring investments target the capabilities that deliver maximum competitive advantage. • Complexity Management: Chemical operations involve intricate processes spanning R&D, manufacturing, quality control, and regulatory compliance that require systematic decomposition to identify improvement opportunities. • Change Acceleration: A comprehensive capability view enables faster identification and prioritization of transformation initiatives that will deliver the greatest business impact. • Performance Transparency: Mapping capabilities to key performance indicators reveals critical gaps and improvement opportunities across the chemical value chain. • Cross-Functional Visibility: The capability perspective transcends organizational silos, creating a shared understanding of how R&D, production, safety, quality, and commercial teams must work together to deliver value. www.capstera.com 3

4. Essential Capability Domains for Chemical Manufacturers 2 Chemical manufacturing demands focus on specific capability domains that reflect industry requirements. These primary domains form the backbone of a comprehensive capability map. • Research & Development: Capabilities spanning molecular research, formulation development, scale-up, and process engineering drive the innovation pipeline essential for competitive differentiation. • Production Excellence: Manufacturing execution, quality assurance, and process optimization capabilities ensure consistent, compliant, and cost-effective chemical production. • Supply Chain Resilience: Raw material sourcing, inventory management, and logistics capabilities enable efficient material flows while managing supply volatility. • Regulatory Compliance: Product registration, safety documentation, and environmental management capabilities safeguard operations in a highly regulated industry landscape. • Market Development: Product commercialization, application development, and customer technical support capabilities transform chemical innovations into sustainable revenue streams. www.capstera.com 4

5. Capability Mapping Methodology for Chemical Enterprises 3 Developing an effective capability map requires a structured approach tailored to chemical manufacturing realities. This methodology ensures comprehensive coverage while maintaining focus on strategic priorities. • Capability Definition: Establish clear, consistent terminology that distinguishes capabilities from processes, functions, and technologies to create an enduring architectural foundation. • Hierarchical Structuring: Organize capabilities in a multi- tiered hierarchy from Level 1 (strategic) to Level 3 (operational) to enable both executive visibility and detailed analysis. • Industry Alignment: Incorporate chemical-specific capabilities like formulation management, batch processing, and regulatory affairs that reflect sector requirements. •Cross-Reference Design: Create logical connections between capabilities and other architectural elements including processes, information assets, technologies, and organizational roles. • Governance Framework: Establish clear ownership, update processes, and usage guidelines to ensure the capability map remains a living, valuable asset rather than a static document. www.capstera.com 5

6. Capability Assessment Techniques 4 Converting your capability map from a static inventory to a dynamic transformation tool requires effective assessment methodologies tailored to chemical manufacturing contexts. •Current State Evaluation: Apply systematic maturity assessment techniques to score each capability's current performance across dimensions like process maturity, technology enablement, and resource adequacy. • Future State Definition: Identify target capability levels based on strategic objectives, competitive benchmarks, and industry best practices to establish a clear transformation vision. • Gap Analysis: Quantify the difference between current and future states to reveal priority investment areas and inform transformation roadmap development. • Heat Mapping: Apply visual techniques to highlight capability gaps, criticality, and performance issues that require immediate attention in the transformation plan. •Performance Benchmarking: Compare capability maturity against industry peers and cross-industry leaders to identify competitive advantages and critical improvement opportunities. www.capstera.com 6

7. Did You Know According to a 2023 study by Forrester Research, chemical ▪ manufacturers with mature capability mapping practices achieve 23% higher returns on transformation investments than industry peers without formalized capability models. www.capstera.com 7

8. Chemical Industry-Specific Capability Considerations 5 Chemical manufacturers must address specialized capability requirements that reflect the unique nature of their operations and business model. • Formulation Management: Capabilities supporting formula development, testing, validation, and protection are fundamental to product innovation and intellectual property security. •Batch Process Excellence: Production capabilities must address batch sequencing, equipment cleaning validation, and yield optimization unique to chemical manufacturing. • Hazardous Materials Handling: Specialized safety, training, and compliance capabilities ensure proper management of dangerous substances throughout the value chain. • Quality Assurance: Testing, documentation, and statistical process control capabilities are essential for meeting exacting product specifications and regulatory requirements. • Environmental Management: Emissions monitoring, waste treatment, and sustainability reporting capabilities address growing regulatory pressures and stakeholder expectations. www.capstera.com 8

9. Information and Technology Alignment 6 A comprehensive capability map provides the foundation for aligning information assets and technology investments with business priorities in chemical manufacturing. • Information Architecture Mapping: Connecting information entities to capabilities reveals data quality issues, redundancies, and integration requirements critical for analytics excellence. • Technology Portfolio Rationalization: Mapping applications and systems to capabilities highlights redundancies, gaps, and opportunities for consolidation in the technology landscape. • Investment Prioritization: Capability-based technology assessment directs investments toward the systems that enable strategically important capabilities rather than the latest technology trends. • Integration Requirements: Capability mapping reveals critical information flows between systems that require robust integration to support end-to-end processes. •Digital Transformation Planning: Capability assessment informs targeted digitalization initiatives that deliver measurable business value rather than technology for technology's sake. www.capstera.com 9

10. Organizational Impact and Change Management 7 Capability mapping provides powerful insights for organizational design and change management in chemical manufacturing enterprises. • Role Clarity: Mapping roles and responsibilities to capabilities reveals overlaps, gaps, and opportunities for organizational streamlining and effectiveness enhancement. • Skills Assessment: Capability-based skills analysis identifies critical competency gaps requiring targeted hiring, training, or partnership strategies. • Governance Optimization: Clarity on capability ownership enables more effective decision rights allocation and governance model development across the chemical value chain. • Change Readiness: Assessing organizational maturity at the capability level reveals where change management efforts must be concentrated for successful transformation. • Performance Management: Capability-based metrics and accountability structures drive continuous improvement aligned with strategic priorities rather than functional optimization. www.capstera.com 10

11. The Value of Pre-Built Chemical Capability Maps 8 Leveraging pre-built industry capability maps offers significant advantages over creating maps from scratch for chemical manufacturers undertaking transformation initiatives. • Accelerated Development: Starting with an industry- specific foundation reduces mapping time from months to weeks, enabling faster transition to transformation planning and execution. • Industry Best Practices: Pre-built maps incorporate proven chemical industry capabilities reflecting years of cross- organization expertise that internal teams may not possess. • Comprehensive Coverage: Industry maps typically include 300-400 capabilities across all domains, ensuring complete coverage that internal mapping efforts might miss. • Standardized Taxonomy: Adopting established capability definitions enables more effective benchmarking against industry peers and standards organizations. • Resource Optimization: Using pre-built maps reduces the burden on subject matter experts who can instead focus on strategic assessment and transformation planning. www.capstera.com 11

12. Did You Know McKinsey's Chemical Industry Insights report found that ▪ 67% of chemical manufacturers cite "unclear capability priorities" as a primary factor in failed digital transformation initiatives, highlighting the critical role of capability mapping in transformation success. www.capstera.com 12

13. Customizing Pre-Built Maps for Your Chemical Enterprise 9 While pre-built maps provide an excellent foundation, effective customization ensures alignment with your organization's unique strategic priorities and operating model. • Strategic Tailoring: Adapt capability definitions to reflect your specific strategic focus, whether in specialty chemicals, industrial chemicals, or agricultural inputs. • Process Alignment: Refine capability details to align with your established process methodologies including Six Sigma, Lean, or other continuous improvement frameworks. • Terminology Harmonization: Adjust nomenclature to match your organization's established language while preserving the structural integrity of the capability model. • Capability Prioritization: Enhance capabilities most relevant to your competitive differentiation while maintaining appropriate coverage of baseline operational areas. • Governance Integration: Adapt the capability model to align with your existing governance structures and decision- making frameworks to ensure sustainable adoption. 13 www.capstera.com 13

14. Building the Capability Map: Critical Success Factors 10 Whether developing your map from scratch or customizing a pre-built solution, certain success factors significantly impact mapping outcomes for chemical manufacturers. • Executive Sponsorship: Securing visible C-suite support establishes capability mapping as a strategic priority rather than a technical exercise, driving organization-wide engagement. • Cross-Functional Participation: Involving leaders from R&D, manufacturing, supply chain, quality, and commercial functions ensures comprehensive perspective and builds organizational buy-in. • Iterative Approach: Developing the capability map through multiple refinement cycles with appropriate stakeholder review improves quality while building organizational understanding. • Tools Selection: Choosing appropriate modeling and visualization tools balances analytical rigor with accessibility to ensure broad organizational utilization. • Documentation Discipline: Creating clear definitions, ownership assignments, and assessment guidelines ensures consistent interpretation and application across the enterprise. www.capstera.com 14

15. Capability-Based Transformation Planning 11 A robust capability map becomes the foundation for developing comprehensive transformation roadmaps aligned with strategic priorities in chemical manufacturing. • Initiative Portfolio Development: Translate capability gaps into clearly defined projects and programs that deliver measurable capability improvements across the value chain. • Investment Prioritization: Use capability criticality and gap assessment to allocate transformation investments across competing priorities for maximum business impact. • Dependency Management: Identify and sequence capability-building initiatives to address prerequisites and avoid implementation bottlenecks in the transformation journey. • Business Case Development: Create more compelling investment justifications by linking initiatives directly to strategic capability enhancements rather than isolated functional improvements. • Program Governance: Establish capability-based metrics and review processes to ensure transformation initiatives deliver the intended capability improvements rather than just project completions. www.capstera.com 15

16. Chemical Capability Mapping in Action: Case Examples 12 Real-world examples demonstrate how leading chemical manufacturers have leveraged capability mapping to drive transformation and competitive advantage. •Digital Transformation Acceleration: A specialty chemicals manufacturer used capability mapping to identify critical digital opportunities across their value chain, resulting in 22% reduction in new product introduction time through targeted technology investments. • Post-Merger Integration: A global chemical corporation leveraged capability mapping to streamline operations following a major acquisition, identifying 18% redundancy in technology systems while preserving critical capabilities. • Regulatory Excellence: A crop protection company deployed capability mapping to strengthen compliance capabilities across global operations, reducing regulatory findings by 35% while improving submission cycle times. • Innovation Enhancement: An industrial chemicals provider used capability assessment to identify critical innovation gaps, implementing targeted improvements that increased new product revenue contribution by 15% within 18 months. • Organizational Redesign: A mid-sized chemicals manufacturer used capability mapping to guide reorganization efforts, resulting in clearer accountability, elimination of redundant roles, and improved cross- functional collaboration. www.capstera.com 16

17. Did You Know The American Productivity & Quality Center (APQC) reports ▪ that chemical companies using pre-built capability maps reduce their architecture development time by an average of 63% while achieving more comprehensive capability coverage than organizations building maps from scratch. www.capstera.com 17

18. Leveraging Your Capability Map for Ongoing Value 13 A capability map delivers sustained value when integrated into routine business practices beyond the initial transformation planning stages. •Strategic Planning Integration: Embed capability assessment in annual strategic planning to ensure investment alignment with capability priorities rather than functional wishlist items. •Portfolio Management: Use capability mapping to evaluate and prioritize competing initiatives based on their contribution to strategic capability enhancement. •Merger & Acquisition Support: Leverage capability mapping during due diligence to identify complementary capabilities, redundancies, and integration priorities in potential acquisition targets. • Vendor Selection: Apply capability requirements to technology procurement to ensure investments directly address priority capability gaps rather than feature comparisons. • Performance Management: Establish capability-based metrics and accountability to drive continuous improvement aligned with strategic priorities rather than disconnected functional KPIs. www.capstera.com 18

19. Future-Proofing Chemical Capabilities 14 Forward-looking capability mapping addresses emerging industry trends that will reshape the competitive landscape for chemical manufacturers. •Sustainability Integration: Enhance capability definitions to address circular economy principles, carbon footprint reduction, and sustainable chemistry requirements shaping the industry future. • Digital Transformation: Evolve capability models to incorporate digital twins, IoT enablement, and advanced analytics that drive next-generation chemical operations. • Ecosystem Collaboration: Extend capability mapping beyond organizational boundaries to identify partner capabilities required for participation in emerging value networks. • Service-Based Models: Develop new capability definitions supporting chemical-as-a-service and outcome-based business models gaining traction in the industry. • Regulatory Anticipation: Build proactive regulatory capabilities that position the organization to respond nimbly to accelerating global compliance requirements. www.capstera.com 19

20. Takeaway Business capability mapping provides chemical manufacturers with the architectural foundation essential for navigating complex transformation journeys in a rapidly evolving industry landscape. By systematically documenting, assessing, and prioritizing capabilities across the chemical value chain, organizations gain clarity on where to focus investments for maximum strategic impact. Whether developed internally or adapted from pre-built industry maps, a well-constructed capability model creates the shared understanding necessary to align strategy, people, processes, and technology investments. In an industry challenged by sustainability pressures, digital disruption, and regulatory complexity, capability mapping delivers the structural clarity essential for maintaining competitive advantage and operational excellence. 20 www.capstera.com 20

21. Next Steps 1. Assess Your Current State: Conduct an honest evaluation of your organization's capability mapping maturity and determine whether starting with a pre-built industry map or developing one internally best fits your needs. 2. Secure Executive Sponsorship: Engage key leadership stakeholders to establish capability mapping as a strategic priority with clear executive ownership and visibility. 3. Establish Your Mapping Team: Assemble a cross-functional team with appropriate business and technical representation to lead the capability mapping initiative. 4. Develop Your Methodology: Define your approach to capability identification, hierarchy development, assessment techniques, and governance processes. 5. Create an Implementation Roadmap: Establish a clear timeline for capability map development, validation, assessment, and integration with transformation planning processes. 21 www.capstera.com 21

22. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 22 www.capstera.com 22

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