Optimizing the chemicals value chain with AI

The chemicals industry is facing incredible challenges amidst the COVID-19 pandemic and the oil price collapse. Demand and supply fluctuations have driven the scale down of manufacturing production to address short-term volatility and reduce both working capital and operating expenses.

After seven years of growing employment in the US, nearly 20,000 jobs are expected to be lost in the chemicals industry in 2020. While challenging external forces are not new to chemicals companies, they are finding themselves having to adapt with greater speed and agility to navigate the current landscape and prepare for a new market reality.

80% of chemicals industry executives surveyed say AI will be important to the success of their business in the next three years.

Artificial intelligence (AI) is a critical component to help organizations be more responsive and drive business performance with new approaches and ideas. It’s essential to catalyze the value chain with AI.

The state of AI in the chemicals industry

To understand where chemicals companies are with their AI efforts, the IBM Institute of Business Value in conjunction with Oxford Economics surveyed 400 chemicals executives in 18 countries who are involved in defining or executing AI strategies and/or implementations for their organization.

Fifty-seven percent of the chemicals industry executives surveyed tell us that AI is important to the success of their organization today. And that number will increase to 80 percent in just three years.

Chemicals companies have begun implementing AI across business areas.However, while respondents stated the importance of AI to their chemicals organizations, the application of AI across the enterprise isn’t commonplace. Only four in ten chemicals respondents say their companies are executing an enterprise-wide AI strategy.

Only 4 in 10 chemicals executives surveyed say their companies are executing an enterprise-wide AI strategy.

Learning from AI champions

To help all organizations identify specific strategies to improve their AI capabilities, we analyzed survey responses and identified a small group of chemicals “AI champions,” consisting of 22 percent of our survey sample. These executives self-reported that their organizations had a well-defined enterprise-wide AI strategy that their organizations understood. These leaders deliver better financial performance than industry peers—69 percent versus 42 percent for revenue growth, and 82 percent versus 42 percent for profitability.

More than 3 in 4 AI champions have exceeded expectations with the value created by AI.

Where the AI champions really stand out is the value they have generated with their AI initiatives. Over three quarters of these leaders say they have overachieved expectations for creating value from AI initiatives over the last three years versus just 27 percent of all others. And AI champions have achieved a higher ROI on AI investments—39 percent compared to 25 percent— while spending roughly the same on AI—USD 4.9 million per billion in revenue versus USD 4.4 million per billion in revenue for peers.

Learn how these industry leaders have succeeded with AI—and how your company can get more value from its technology investments.