AI-enhanced Chemical Supply Chain Management: Market Definition

Artificial intelligence (AI) is a diverse field of computer science focused on the creation of intelligent machines capable of performing tasks that would normally require human intelligence. The supply chain is a web that connects various functions such as logistics, production, procurement, marketing, and sales. Companies can use integrated planning to balance trade-offs across functions and optimize EBITDA (earnings before interest, taxes, depreciation, and amortization) for the entire organization.

Framework for Artificial Intelligence in Supply Chain Resilience

AI-enhanced Chemical Supply Chain Management: Market Overview

Supply chains have become significantly more difficult to manage in recent years. Physical flows are becoming longer and more interconnected as product portfolios become more complex. Market volatility has increased the need for agility and flexibility, which has been exacerbated by the COVID-19 pandemic. As a result of the increased focus on the environmental impact of supply chains, regionalization and flow optimization are becoming more common. As a result, businesses and stakeholders are focusing more on supply-chain resilience.

Artificial intelligence (AI)-based supply-chain management solutions are expected to be effective tools for assisting organizations in addressing these issues. From procurement to sales, an integrated end-to-end approach can address the opportunities and constraints of all business functions. AI's ability to analyze massive amounts of data, understand relationships, provide visibility into operations, and aid in better decision-making makes it a viable option.

Source: National Center for Biotechnology Information (NCBI)

Increased digitization and related Industry 4.0 technology trends have already had an impact on chemical manufacturing, as they have on any other manufacturing industry. Artificial intelligence (AI) is simply the culmination of this transformation—and the most efficient way to improve operations and bottom lines. Specific examples of how AI is being used in the chemical supply chain are listed below.

Predicting product grade

AI can eliminate waste, ensure high-quality products, and save energy by detecting low-quality outputs early in the manufacturing process. Traditionally, chemical manufacturers have identified product quality issues by manually comparing production data against various benchmarks. After the product has been manufactured, this comparison occurs naturally. However, by analyzing input data (such as quantity and type) and real-time production factors, deep learning algorithms can detect problems early (like temperature, pressure, and flow).

Optimizing yield

Normal production variations are thought to be responsible for 85 percent of production issues. External factors such as temperature and pressure play a big role in chemical manufacturing. Sensors can capture these operational variables, which can then be tracked over time and compared to outputs to create predictive models. AI can then use this information to both prescriptively optimize settings (before the manufacturing process begins) and make real-time adjustments (such as changing the flow rate or condenser temperature) as needed. This automated approach is a significant improvement over human-led manual operational adjustments, which are reactive by definition and rely on intuition and experience. The company then can use AI to make adjustments before any issues arise, resulting in a consistent and predictable yield, as well as higher quality and revenue.

Implementing predictive maintenance

Heavy industrial machinery is used in the chemical manufacturing process. Unexpected equipment failures can cause significant delays. Predictive maintenance is a feature of AI. With this approach, AI continuously analyses both historical and operational IIoT sensor data, providing a comprehensive picture of (a) how machines are performing now and (b) how they are expected to perform in the future. This enables the company to repair machines only when they are truly needed, such as when a component fails or when usage criteria are met, reducing unplanned downtime and dramatically lowering maintenance costs. IIoT sensors can also identify which component is at risk of failure, allowing for automated replacement part ordering.

Producing more accurate forecasts

Many businesses still use traditional forecasting models to manage their supply chains. Excel is inflexible and presumably inaccurate as a tool for analysis, especially given the ongoing uncertainty surrounding COVID-19 and other economic indicators. It's critical to get the forecast right. Excessive storage and inventory holding costs result from over-forecasting. Revenue opportunities are lost due to under-forecasting. As a result, AI is a better option for dealing with this problem. Existing forecasting models can be easily rebuilt on AI platforms and then optimized to take advantage of advanced algorithms that can identify variables that change demand and then auto-adjust forecasts as new data becomes available. As a result, there is a significant (a) cost reduction and (b) increased accuracy.

Improving health and safety compliance

Chemical manufacturing is one of the most strictly regulated industries in the world, with a patchwork of national and international regulations governing not only core operational procedures (such as fabrication, handling, and distribution), but also health, safety, and environmental (HSE) concerns. AI can help improve personnel and physical asset safety while also ensuring that all regulatory data collection and documentation requirements are met. AI gathers data from the physical world (such as quality control data on chemical inputs and outputs) and converts it into a digital record of operations and supply chains. Even at remote locations, this monitoring data provides greater visibility of both assets and personnel. AI can detect everything from employees not wearing proper PPE to environment hazard leaks when systems are fully integrated.

Boosting new product development

AI technologies can be used early in the product and process development stages to speed up innovation and make the "idea-to-market" process more efficient. Advanced analytics and machine learning can be used by chemical companies to mine data from previous experiments, simulate new ones, and systematically optimize formulations for performance and cost. 

Timely Delivery

AI technology has reduced the reliance on the labor force, making the procedure safer, faster, and more intelligent. The technology makes it possible to deliver goods to customers on time. Because every mile and minute counts in supply chain delivery, automated systems have sped up traditional warehouse procedures. The machine has been given information about the customers, drivers, and vehicles, and it will use algorithms to create the most efficient routes and make timely deliveries.

Inventory Management

Due to real-time pictures of available items in the inventory, inventory management has become more complicated. It provides many advanced solutions to inventory managers and allows them to manage the process more efficiently with the help of AI. The technology can ensure that the correct amount of raw material enters and exits a warehouse by automatically ordering the right flow of items to meet manufacturing demand. This also assists the warehouse in avoiding running out of stock, overstocking, and understocking.

Minimize Operational Cost

Artificial intelligence (AI) systems boost business productivity while reducing reliance on manual labor. One of the most significant benefits of AI in supply chain management is this. Intelligent operations that are automated can work without errors for a long time, reducing the number of errors. Warehouse robots are more productive and provide faster and more accurate service.

Enhance Safety

Artificial intelligence-based automated tools reduce human error behind the wheel and ensure smarter planning and warehouse management, potentially improving worker and material safety. AI can also look at workplace safety data and alert manufacturers to any potential dangers. Machine learning can be used to evaluate risk factors over time, and this data can be used to prevent on-floor accidents or fatalities.

Warehouse Efficiency

The AI technology recognizes the pattern and suggests actions, as well as replenishing nearly out-of-stock items and ensuring a smooth customer journey. AI systems can also solve a variety of warehouse issues faster and more accurately than humans. A well-run warehouse is an important part of the supply chain, and it also saves time. Artificial intelligence-driven automation can significantly reduce the need for and cost of additional warehouse personnel.

Application of Artificial Intelligence (AI) in Various Supply Chain Route
AI-enhanced Chemical Supply Chain Management Market Outlook: North America

After China, the United States is the world's second-largest chemical manufacturer, supplying materials for consumer goods and intermediate products to almost every industry. Plastics, packaging, fertilizers, pesticides, synthetic fibers, cleaners, lubricants, paint, and a seemingly endless list of other materials are made from the basic ingredients that originate in oil and gas fields and travel through an enormous global supply chain. However, significant crises have put those long supply chains to the test in recent years. Winter Storm Uri ripped through Texas in February 2021, slashing the state's natural gas production by nearly half and olefins (essential chemical building blocks) by 80%. The chemical manufacturing industry on the Gulf Coast was shut down for months.

From its foundations in the volatile oil and natural gas sector to its reliance on reliable global shipping, the COVID-19 pandemic continues to expose other flaws in the chemical supply chain. Other recent issues included a price war between OPEC and Russia in early 2020, as well as a trade war between the US and China, the industry's most important trading partner. While chemical demand has recovered in 2021, supply chain delays are persisting, owing to shipping congestion and supply backlogs, and may extend into 2022. According to a survey conducted by the National Association of Chemical Distributors in June 2021, in the United States, 85 percent of chemical industry distributors reported at least one imported item out of stock, up from 47 percent from March 2021. Following a decade of expansion, the chemical industry now appears to be evaluating how to recover from these setbacks and plan for the future. In 2020, the chemical industry contributed US$486 billion to US GDP and US$125 billion in exports, supplying 13% of the world's chemicals and giving the US a US$28 billion chemicals trade surplus. In the United States, the sector employs 529,000 people.

Texas and Louisiana produce 80% of the nation's primary petrochemical supply, and Texas chemical production leads the nation by far, with US$117.5 billion in chemical shipments. Because of the Permian Basin's shale oil and gas boom, the state's vast reserves of oil and gas – roughly 40% of US crude oil and one-fourth of US natural gas – serve as readily available raw material ("feedstock") for refineries and chemical plants all along the Gulf Coast.

Plants along the Gulf primarily produce basic chemicals, in which oil and gas hydrocarbons are first converted to liquids like ethane and propane, and then some are converted to more complex "primary outputs" like benzene or ethylene. They may then be shipped to other states or countries, where they will be processed into other manufactured goods. Asia (primarily China, India, Japan, and South Korea), as well as Canada, Mexico, and Europe, are major international trade partners for these basic chemicals. To address such supply chain disruptions of oil and gas products, North American manufacturers are turning to an AI-based chemical supply chain management system.


Basic Chemical Manufacturing, Texas

All Chemical Manufacturing, Texas

Basic Chemical Manufacturing, U.S.

All Chemical Manufacturing, U.S.






Gross domestic product (billions)





Exports (billions)





Imports (billions)





Sources: JobsEQ; U.S. Census Bureau, USA Trade Online

AI-enhanced Chemical Supply Chain Management: Covid-19 Impact

The worldwide spread of the novel COVID-19 has created significant uncertainty in the global supply chain. The pandemic's effects have wreaked havoc on the entire supply chain, affecting almost every industry. Scholars and practitioners have shifted their focus in this regard to creating a more sustainable and resilient supply chain. Supply chain management has emerged as a critical strategic opportunity for chemical companies to remain competitive, and this statement has taken on even greater importance as the world grapples with the Covid-19 pandemic. Because of the transportation restrictions imposed by the lockdown, the Covid-19 pandemic has disrupted chemical supply chains. At the same time, digital technologies such as algorithm development, data analytics, artificial intelligence, machine learning, the internet of things, and cloud computing have seen a surge in adoption, making supply chain management ever-evolving.

Following a tumultuous year in 2020, the chemical industry saw office workers return to work, customer visits resume, and manufacturing capacity reaches or exceed capacity this year as markets recovered. Concerns about supply chain issues and raw material shortages, which hit chemical manufacturers with unexpected force, tempered this functioning. Freight container shortages, border delays, and driver shortages were among the many factors causing chemical supply chain stress. On top of pre-existing logistics network issues, the sector is experiencing a long-term symptom of last year's pandemic-related supply chain dislocation. In the first nine months of this year, raw material, energy, and logistics costs at Belgian specialty chemical maker Solvay increased by €210 million (£180 million) compared to 2020. The total increase for the year is expected to be in the region of €400 million, according to the company. Solvay has increased its prices to pass on these additional costs to its customers.

AI-based technological advancement has provided tools and techniques to implement in supply operations for this purpose. Artificial Intelligence processes a large amount of data in a few minutes with the help of automated technology to provide business-based insightful information. Artificial intelligence is already changing the face of the chemical supply chain industry. Businesses, customers, and the government all benefit from effective supply chain management. AI and chemical supply chain management integration makes decision-making easier and faster, increases efficiency, and improves human resource utilization. AI has aided enterprises, businesses, brands, and retailers in making better supply chain decisions. As a result of covid, AI adoption for chemical supply chain management has skyrocketed to avoid further crisis intervention.

AI-enhanced Chemical Supply Chain Management: Recent Innovations/Developments

Companies are launching new products and expanding their presence, as AI-enhanced chemical supply chain management is a major disruptive technology that has the potential to change chemical manufacturing activities across the world.

In December 2021, Commodity Watch AI was launched by Resilinc Corporation, the world's leading supply chain monitoring, mapping, and resiliency solution company. The AI-powered tool monitors over four million data sources and trends on key commodities, such as gold, copper, aluminum, silicon, and paper, and forecasts price fluctuations in the coming months by analyzing historical data on how these commodities have responded in similar situations. Organizations can use this information to make strategic purchasing decisions, negotiate favorable contracts, and ensure supply continuity.

In March 2021, IBM Molecule Generation Experience (MolGX), an IBM cloud-based, AI-driven molecular inverse-design platform that creates brand new molecular structures quickly and in a variety of ways was launched by IBM. The goal of inverse design is to find tailored materials based on the product's property targets.

In June 2021,, a Polish computational chemistry company, has raised US$4.6 million to continue its quest to make theoretical drug molecules a reality. Its artificial intelligence platform system predicts the best ways to synthesize potentially valuable molecules, which is a critical step in developing new drugs and treatments.

In November 2021, A new Alphabet company will use artificial intelligence methods for drug discovery, according to Google's parent company. It will build on the ground-breaking work of DeepMind, another Alphabet subsidiary that has used AI to predict the structure of proteins. Isomorphic Laboratories, a new company founded on that success, will use it to develop tools to aid in the discovery of new pharmaceuticals.

In January 2019, Logistics Plus Inc., a leading global provider of transportation, logistics, and supply chain solutions, has launched a new division in India that will focus solely on the chemicals and petrochemicals industry's supply chain management needs. The company, Logistics Plus Chemical SCM (or LP CSCM), has opened an office in Thane, India.

In September 2019, Meanwhile, BASF is investing in research into how artificial intelligence (AI) can be used to predict chemical combinations and processes using customized mathematical models and algorithms. This will enable them to predict "the solubility of complex mixtures or dyes, as well as catalyst aging processes, resulting in concrete industrial benefits."

AI-enhanced Chemical Supply Chain Management: Future Outlook

Artificial Intelligence (AI) will have a significant impact on all aspects of the chemical industry, with significant potential to change value chain management, innovation, increased productivity, and new market entry channels.

AI has a lot of potential for use in the early stages of product development, which can help boost innovation significantly. AI-enabled strategies that demand faster responses during the experimental design phase can also boost research productivity. It has also made it possible to integrate product life cycle and sustainability goals to arrive at a targeted solution. In the case of predictive manufacturing, accurate data becomes a critical component that can be freely accessed through well-designed AI models.

AI has made industrial work much cleaner and safer in international markets. It has also led to the development of advanced molecules that are tailored to the needs of customers. Given the complex use of technology and its rapid evolution, there are uncertainties, but understanding AI is also necessary to compete in the industry.

AI, which is widely expected to transform supply-chain operations over the next five years, processes the vast amounts of data generated by operations, allowing for quality control, predictive maintenance, and supply-chain optimization. In recent years, AI and analytics capabilities have been added to a wide range of cloud-based applications for enterprise resource planning (ERP), manufacturing execution systems (MES), and warehouse management systems (WMS).

Companies can use AI to make smart predictions about future raw material needs, work-in-progress component demand, and final product demand. AI also assists manufacturers in putting their smart factory vision into action. It allows them to create a closed-loop system and, eventually, self-optimizing operations, in which the factory "constantly adapts to demand, supply variations, and process deviations." Another illustration of how a smart manufacturing execution system can transform production is in this case.

With the rapid increase in digitization and technological transformation, more and more businesses are incorporating artificial intelligence into their supply chains to ensure maximum resource utilization. The pandemic has created several business opportunities to improve supply chain management and ensure a consistent customer experience and smooth business operations. With today's increased competition, it's more important than ever to maximize productivity by reducing uncertainties and creating error-free scenarios.

In many of these implementations, AI will take center stage as companies deploy new solutions that address current supply-chain challenges while also preparing those intricate networks for the post-COVID-19 world. AI will be used in many aspects of the supply chain, from driverless trucks to delivery route optimization to demand to forecast. The pandemic will hasten the transformation, as companies deploy new technologies in a matter of months to meet the chemical industry's new demands.

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