How Can Digitization Create Value In The Supply Chain Of The Petrochemical Sector?

Mar 30, 2020
Supply Chain


Petrochemicals are a pillar of the global economy. Many sectors rely on the constant availability of petrochemical substances for manufacturing and preserving rhythm whilst maintaining a low level of risk in the transportation of these (often unstable) materials on a regular basis is of paramount importance to establish and maintain a dependable petrochemical supply chain.

A single incident will create a ripple effect on the entire supply chain, causing disruption and major losses for companies all along the production and distribution line and tarnishing their image. Risk management plans are key to analyzing, understanding and mitigating risks as much as possible in order to avoid such scenarios.

The first step to build resilience and reduce both the frequency and severity of risks along the supply chain is to pinpoint root causes. This can be done with AI. Intelligent routing systems and real-time visibility are now giving manufacturers the means to study their supply chain’s performance and safety by aggregating data collected from past deliveries and incorporating external factors such as terrain, weather, and traffic. These solutions can analyze itineraries in depth and highlight correlations between past incidents, allowing supply chain managers to rethink itineraries based on concrete data rather than theoretical risks.


Given the industry’s significance economically, developing and maintaining supply chain agility is crucial for businesses evolving within the petrochemical sector. If demand for petrochemicals isn't showing any sign of slowing down (It has, in fact, experienced constant growth and is set to account for more than a third of the growth in world oil demand by 2030), pricing for energy and raw materials is notoriously unstable. Industries dealing with petrochemicals must deploy strategies to gain in supply chain agility in order to stay ahead of the competition.

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These unpredictable shifts in pricing mean companies cannot rely solely on classic cyclicality or other patterns to anticipate demand. In order to react to supply shortages and respond to market demand faster and with more flexibility than their competitors, companies are increasingly turning to demand forecasting services.

Demand forecasting systems use statistical evaluations and projections of past consumption trends in order to identify demand patterns. However, their main asset for the petrochemical industry is their ability to identify the main areas of variability and the quantification of their negative impact on the supply chain. These weak spots can then either be replaced with more dependable alternatives in order to reduce variability or taken into consideration for scenario modeling in order to elaborate a series of action plans in case of a sudden shortage or incapacity to operate. 


Real-time visibility and predictive analysis are becoming key differentiators for businesses across the petrochemical industry and a promising tool for increasing supply chain agility and boosting logistic efficiency.

By offering visibility over global supply chain operations, real-time visibility providers are offering companies valuable insight on their logistics operations, sending automated updates on delivery progression and alerting them in real-time in case of incident or delay. These advancements are giving businesses a clear overview of their freight operations and the means to monitor both upstream and downstream flows across all modes of transportation (road, boat, multimodal, parcel, FTL, LTL).