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Resources  /  Blog  /  Arkestro: Bringing the Power of AI to Chemical Manufacturing
Sourcing Education

Arkestro: Bringing the Power of AI to Chemical Manufacturing

April 21, 2021

Chemical manufacturing is a massive global industry. Chemical manufacturers turn a wide range of raw materials into tens of thousands of different products. Some of these end up being used directly by consumers, but many of the chemicals produced become critical components used by a wide range of other industries. Food production, automobile manufacturing, farming, and pharmaceuticals are just some of the areas where chemicals play a critical role.

Globally, it’s estimated that the chemical manufacturing industry employs 20 million people. Sales for the sector are pegged at $5 trillion annually, but raw materials are expensive. They can account for anywhere from 50% to 70% of that sales revenue. Reducing costs in the industry by even a little has a huge impact on profitability. That puts procurement in the spotlight.

Procurement in chemical manufacturing is a vital role, but it’s also a challenging one. Suppliers are located across the world. Some raw materials are in short supply, and others are dangerous to extract, transport, and store. Many chemical manufacturers have ramped up their adoption of technology in the procurement office. However, they haven’t been going far enough.

In the fall of 2019, McKinsey released a report on the use of technology by procurement teams in the chemical manufacturing sector. The findings (based on a survey of 1,100 organizations worldwide) suggest chemical manufacturers are falling behind.

“Chemical companies have worked hard in recent years to rethink their procurement functions. Many have undertaken large-scale procurement transformations to make spending more transparent, to develop their processes and the capabilities of their people, and to create category strategies for their largest spending areas. Those efforts have cut costs significantly. A cross-industry perspective, however, suggests that the industry still has room for improvement.”

According to the McKinsey study, the chemical manufacturing industry trails most other sectors when it comes to “purchasing excellence.” Automotive and assembly, consumer packaged goods, aerospace and defense, pharmaceuticals, and other industries all place well ahead of chemical manufacturing. Why the gap? McKinsey says it’s because these other sectors have embraced advanced technology in procurement.

“This new wave of digital procurement is improving performance in three fundamental ways. First, it gives companies better information by using advanced analytics and the power of big data. Second, it is making possible more effective collaboration between suppliers, internal customers, and business partners. Finally, it is streamlining processes with new workflow systems and forms of automation, especially in transactional and tactical procurement activities.”

A few points jump out of this synopsis. “Advanced analytics,” “big data,” and “automation in transactional and tactical procurement.”

These aren’t capabilities or features supported by most software packages. To take full advantage of big data, run advanced analytics, and especially to automate something as complex as transactional procurement requires employing the cutting edge of technology: artificial intelligence.

Arkestro is a Predictive Procurement Orchestration Platform powered by AI, representing the leading edge of the new wave of digital procurement.

Artificial Intelligence Thrives on Data  

Any chemical manufacturing company is going to amass vast amounts of data concerning procurement. Big data. However, that big data is of little use if people can’t easily analyze it. With traditional software tools, it’s difficult to aggregate the data and pull meaningful information from it. Even attempting to do so often requires a trained data scientist.

Having all this data means little if you can’t gain insight from it. Worse, if your system is only capable of skimming chunks of the data, you’re not just missing out on the big picture. You could be making critical procurement decisions based on an incomplete and inaccurate analysis.

Arkestro utilizes AI, giving a sourcing team big advantages and deep insights to help optimize procurement. No advanced knowledge is needed to quickly and easily generate reports, intelligent first offers, and analytics required to support data-driven decision-making.

AI Supports Automation

Deep integration of AI results in another huge technological (and competitive) leap for Arkestro users: automation. AI means Arkestro users have the advantage of Intelligent first offers. This is an automated negotiation process based on AI analysis of data.

A vast range of variables is considered, including supplier reputation, historical raw material prices, competition, and product budget. In the blink of an eye, Arkestro AI performs a comprehensive total cost of ownership analysis for quick award decisions and can then place an Intelligent First Offer.

This not only cuts costs, the speed of Arkestro AI offers a significant competitive advantage by beating others to the market.

In addition to the power and advanced capabilities of AI, Arkestro delivers a wide range of critical features to an effective strategic sourcing approach. After all, this is software that was designed by procurement professionals for procurement professionals. Features of note include:

      • real-time collaboration
      • advanced supplier management and evaluation tools
      • transparency throughout the sourcing process
      • easy integration with other commonly-used software

What’s your next step? 

To learn more about this cutting-edge strategic sourcing software, visit to book a demo. See first-hand how Arkestro’s artificial intelligence can elevate chemical manufacturing procurement to a new level, cutting the cost of raw materials and making companies more profitable.