Chemicals are an essential and vital element of the urban world, affecting practically every aspect of human activity. The chemical industry is a critical component of India's growing economy and the backbone of the country's industrial and agricultural development, providing several basic components and raw materials for a variety of industries such as textiles, detergents, pharmaceuticals, and agrochemicals, among others.

The chemical industry is one of the world's greatest economic sectors. Chemicals are used in 96% of all produced items in some manner, and chemical producers globally create approximately $4.73 trillion in chemicals each year.

The Indian chemicals industry is worth $178 billion in 2019 and is predicted to be worth $384 billion by 2025, growing at a 9.3% CAGR. Chemical consumption is predicted to grow at a 9% annual rate by 2025. By 2025, the chemical sector is estimated to contribute $300 billion to India's GDP. With India's expanding contribution to the global chemical industry, the country is developing as a top destination for chemical firms throughout the world.

The distribution and supply chain of the chemical industry is one of the most complicated in the world. Its supply chain encompasses everything from chemical manufacture to chemical distribution. It is critical for this sector to maintain a strict operation. However, with so many moving parts and so many stakeholders involved—including chemical manufacturers, distributors, retailers, and consumers—keeping operations running smoothly presents challenges, and managing these challenges necessitates a comprehensive and strategic strategy that takes into account the specific needs of the chemical industry.

Some common supply chain challenges faced by the chemical industry include:

Transportation Issues and Networking: The majority of India's petrochemical industries are located in Gujarat and Maharashtra, and they require an efficient and sustainable supply chain. According to research, nowadays 57% of chemical distribution occurs by road freight, 36-37% via railroads, 6 to 7% via sea water, and less than 1% via air and globally the situation just reversed. Chemicals are generally transported by train rather than by road. It is impossible to avoid relying on road transportation, but the industry advocates for decreased reliance on road transportation. There are several difficulties with roads, because the chemical might be solid or gaseous, transportation requires specialized equipment and efficiency to move it across the country.

Then there's the distinction between hazardous and non-hazardous compounds. The road journey should be longer than 200 kilometers, and it should link to a train route from which the chemicals may be transported across the nation. There are more variables, one is appropriate tank availability (ISO tanks), transit connection, and freight pricing competitiveness. Because the chemical industry is concentrated in the two states of Gujarat and Maharashtra, the remaining states lack facilities which makes transportation difficult and time consuming.

Road and pilferage problems: National roads are essential for freight transit in India. While national highways account for only around 1.94% of India's road network, they transport more than 40% of overall traffic. As a result, the majority of these roadways are extremely crowded. Furthermore, India ranks 46th in terms of road condition, therefore the road quality on national highways and minor roads is bad in many places. Poor road quality causes accidents and reduces production due to delays. Trucks in India stop at state borders to pay tolls, therefore they pass through many checkpoints on their route.

When a truck with hazardous chemicals needs to stop several times, there is increased interaction with the ecosystem and the probability of an accident increases, both of which are negative. Pilferage is also a huge issue at times; high-quality, expensive chemicals are substituted by low-value compounds, with truck drivers being the main theft. As a result, the quality of raw materials suffers.

Fluctuating chemical prices: The chemical industry's manufacturing process is heavily reliant on raw materials, any abrupt shift in pricing might interrupt the flow. Raw material prices, such as crude oil, natural gas, energy, and other commodities, are always shifting, making things tough. Various chemicals of huge amounts are now implicated and involved in the process. As a result, businesses have to maintain a better track record of changing expenses. This also causes havoc in the supply and demand chain.

Lack of visibility and complexity in the supply chain: It is critical that producers have an accurate understanding of where their inventory sits so that they can assess the need for change in the process. Visibility is required for the supply chain to run smoothly because it allows them to plan better production schedules, boost safety by decreasing risk exposure, maximize performance across all levels of the supply chain, and make wise decisions in response to market changes.

There are several variables in the chemical industry's supply chain process. All of these variables complicate the process of planning, pricing, and quality management. The ongoing effort to reduce downtime while boosting usage is also a major challenge. As a result, productivity suffers since workers continue to use outdated software.

Optimization of Load : Another chemical supply chain difficulty is optimizing truck loadings. The chemical industry frequently uses a just-in-time (JIT) inventory system. Chemical producers must consider the amount of items needed for each customer as well as weight constraints. To decrease transportation costs and boost chemical efficiency, bulk shipments should be booked wherever possible.

Optimization of Route : With chemical supply chains rapidly changing as a result of globalization and technological advancements, there is a need for software that can optimize routes and assist chemical suppliers in anticipating future demand patterns based on past trends, allowing them to be ready before customers place their orders. Route optimization is critical to success since it assists the chemical sector in not only completing orders but also successfully considering aspects such as driver schedules, available hours, total stops, fulfillment estimations, and regulatory requirements. Whether shipping chemicals by ship, rail, aircraft, or truck, route selection and planning are critical components of chemical supply chains.

Managing massive data: The chemical business deals with massive amounts of data, which is becoming increasingly difficult to handle throughout the supply chain. Along with continually changing commodity and raw material quality and cost, there are several agreements and contracts with regulatory authorities, suppliers, and consumers.

There are also government and environmental regulations to follow at all times. There are several complicated laws that apply to the chemical sector. This involves safeguarding the environment and human health during chemical handling, usage, and transportation. These regulations get revised on a regular basis and the variations cause an uneven process in the chemical supply chain.

What is the solution for the supply chain in the chemical industry?

The chemical industry may integrate operations by using big data analytics into supply chain management. This allows industries to consolidate all information into a single source. Artificial intelligence can also assist in anticipating potential supply chain threats. It will enable management to make the required changes, assist in the resolution of environmental issues, and prevent future disruptions.

The next step

As the world continues to evolve into a digital age, the chemical sector must also adapt to new ways. Transportation is undeniably vital to the chemical business, but carriers must be able to give precise online information to both the source and receiver. Underlining the massive gap in chemical logistics and digitisation, the need to understand how it may be integrated is necessary. We may have excellent transportation infrastructure in our system, but without adequate technological infrastructure, efficiency will suffer. With the use of technology, chemical industries could prepare for shipment in advance.

Many other difficulties, such as lack of visibility, process complexity, and unpredictability of demand and supply, can be addressed. As a result, the chemical sector should prioritize continuous improvement in technological advancements.