AI Driven Demand and Price Prediction for Raw Materials for a Global Chemical Manufacturer
THE BACKGROUND
Intelligent procurement is crucial to every manufacturer — so was the case with Soothsayer’s multinational chemical manufacturing client. The client’s procurement department received requests for raw materials from manufacturing plants and then purchased these materials from suppliers around the world. This was an inefficient and very manual process, and the procurement department faced various challenges such as limited visibility into buyer’s actions. For instance, the buyer was unaware of each plant’s raw material requirements until the plants approached them. This often left the buyers with less time than desired to make informed and optimal decisions, which led to regular situations that required urgent orders and resulted in excess stock being a regular occurrence. Furthermore, the prices of these raw materials in the market showed significant volatility. This could not be properly leveraged in existing process as buyers could not detect correctly short term and long-term trends. These impediments led to higher procurement costs. To overcome these impediments, the client wanted to develop an A.I. driven procurement optimization solution. The goal was to provide buyers with visibility six months into the future through a cost-savings ordering schedule. The schedule suggests to the buyer when to buy a raw material, how much, and from whom—to reduce procurement costs.