What do a rubber ball and the chemical industry have in common? Think about the rubber ball for a moment. If you drop it on the ground, it bounces back. The reason is quite simple: It’s resilient by design. It can be dropped or kicked or thrown against a wall, and it always bounces back—sometimes faster and stronger than expected.

Chemical companies also need this kind of resilience. During any challenging time, but especially in the midst of a global pandemic like COVID-19, they must be able to take a hit and bounce back. For one thing, the chemical industry is essential to society. Not only does it provide numerous everyday necessities, but also the very items needed to combat the pandemic, like disinfectants and antiseptic materials.

However, the COVID-19 crisis has disrupted global demand and supply at—can we say—unprecedented levels. Traditional assumptions—from the availability of raw materials and critical supplies to the rate of domestic and international consumption—are simply no longer assured. Even as we begin to move into recovery, no one really knows what that will look like.

Navigating uncertainty requires intelligence

The fact is, chemical companies will need to be more agile, adapt to uncertainty in demand and rethink supply strategies. In short, they should adopt a business model that flexes with the
market—and does so with financial vitality.

Given the situation, our clients are asking a number of important questions. They want to know:

  • How do we optimize raw material storage inventories—factoring in raw material cost, right mix selection, forward prices and storage fees?
  • How do we know if we are producing the right product mix, and better understand the impact of our choices on supply, demand and sales revenue?
  • How do we optimize scheduling for our fleet of vessels and trucks? Are our logistics costs and margins fully understood by the individuals making decisions?

This is where data comes in. With the intelligent application of data, you can answer questions like these and use data-driven insights to optimize operations end-to-end. It is the key to operating efficiently and profitably, despite the uncertainty of outside forces like market dynamics, government regulations and broader economic conditions.

Traditional assumptions—from the availability of raw materials and critical supplies to the rate of domestic and international consumption—are simply no longer assured. 

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Strategies to come out of a crisis stronger than ever

To get answers to the questions posed above—and many others—you can begin by implementing digital solutions that leverage the data and resources immediately at hand. Here are a few tips:

  • Improve data visibility
    Gather data from plant operations, as well as supply chain and market demand sources, and use simulation technology to evaluate different potential scenarios.
  • Conduct an impact assessment
    Build artificial intelligence and data science capabilities to perform complex modeling, with variables across market, plant, supply chain, trading, etc.
  • Assemble a cross-functional team
    Bring together stakeholders from commercial, supply chain, finance, engineering, operations and planning who can start to scope and develop back-up scenarios.

In responding to the COVID-19 crisis, speed is essential. Therefore, we recommend starting with basic modules focused on high-risk and/or high-value aspects of your operation. You can then improve sophistication and breadth of your digital capabilities over time as the crisis dissipates.

On the other side of the current crisis, you can further optimize the full value chain for greater resilience and long-term strength. For example:

  • Reimagine ways of working
    Work with the business to redefine trading and production strategies, risk management and other key processes in the value chain.
  • Drive continuous improvement
    Evolve your cross-functional team to start focusing on value-added opportunities for continually improving operations, such as raw material slate swaps or white label options.
  • Go all-in with automation
    Support the team’s decision-making capabilities with data-driven intelligence to forecast disruptions, assess their impacts and generate insights for navigating through them.

To be sure, adapting through uncertainty is a journey—there are near-term considerations for getting through the current COVID-19 crisis. You can then build on that foundation with data science and more advanced AI-based analytics to emerge from this crisis stronger than ever.

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Neale Johnson

Managing Director – Strategy & Consulting, Applied Intelligence


Amit Chander Gupta

Senior Manager – Applied Intelligence

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