Industry embracing automation, analytics to streamline operations, reduce emissions, accelerate R&D, ISG Provider Lens report says.
STAMFORD, Conn. – (BUSINESS WIRE) – Chemical producers in the U.S. are adopting GenAI and other new technologies to improve efficiency, innovation and sustainability, according to a new research report published today by Information Services Group, a global AI-centered technology research and advisory firm.
Chemical companies need leaner operations and continued innovation as the industry faces high costs and overcapacity. Digital technologies, including GenAI, are helping them capture new opportunities.
The 2025 ISG Provider Lens Agribusiness and Chemicals Services and Solutions report for the U.S. finds that the nation’s chemical industry, which strongly influences agribusiness as a source of fertilizers and other agricultural chemicals, has been affected by market volatility since the COVID-19 pandemic. Production and revenue suddenly fell, then recovered with rising demand, and more recently declined again as end markets reduced inventory. Over the last two years, chemical manufacturers have been cutting costs through efficiency, partly by implementing new technologies.
“Chemical companies need leaner operations and continued innovation as the industry faces high costs and overcapacity,” said Dale Hearn, ISG partner and chemicals industry lead in the Americas. “Digital technologies, including GenAI, are helping them capture new opportunities.”
A growing number of chemical companies are using GenAI-based tools to optimize production, the report says. With advanced analytics, IoT sensors and predictive maintenance, chemical makers have become as much as 10 percent more efficient by reducing equipment downtime and using resources more effectively. At the same time, many firms are modernizing decades-old IT and OT systems by migrating functions to the cloud and using AI-powered monitoring and predictive tools such as digital twins.
GenAI is accelerating chemical research and development by allowing companies to automate activities such as discovering new materials and determining optimal formulations, ISG says. Computational materials science, which uses modeling and simulation to understand materials, is moving from theory to practice with the help of GenAI.
Many companies are using AI, IoT and AR/VR to monitor and manage demand, inventory and supply chains, ISG says. These tools enable integrated demand sensing, which can instantly forecast the demand for products from a given factory at a certain point in the future, while also reporting how much supply will be available.
As one of the largest consumers of energy for feedstock production and manufacturing, the chemical industry is under pressure to become more sustainable, the report says. Companies are investing in end-to-end sustainability services from providers, which allow them to collect and report data on waste and emissions from all stages of production and delivery. Such services help manufacturers reduce waste and implement circular economy practices such as advanced recycling.
“For many chemical companies, sustainability and operational performance go hand in hand,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Leading service providers offer solutions and expertise to achieve both.”
