chemical supply chain
DESCRIPTION
Supply Chain ModelingMore than a Sophisticated Toy?By Dr. Georg MogkLogiChem 2011 will be the event's tenth anniversary and an opportunity for the most senior chemical supply chain & global logistics directors from the European chemicals community to come together once again share experiences, make new contacts and benchmark the latest chemical supply chain initiatives. Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.TRANSCRIPT
Supply Chain ModelingMore than a Sophisticated Toy?
Dr. Georg Mogk
LogiChem 201022nd April 2010, Düsseldorf
Mogk
2010-04-22 • Page 2
Contents
�Bayer Technology Services
�Project Example Network optimization – handling
conflicting supply chain targets
�Future Challenges – SCM challenges of modular chemical
production
�Conclusion
Mogk
2010-04-22 • Page 3
Corporate Center
Bayer AG
Service AreasBusiness Areas
Group Management BoardGroup Management Board
Holding CompanyHolding Company
Bayer BusinessBayer BusinessServicesServices
Bayer Technology Services
CurrentaCurrenta
Bayer Bayer
HealthCareHealthCareBayer Bayer
CropScienceCropScienceBayer Bayer
MaterialScienceMaterialScience
Bayer Technology Services – a Bayer Group Company
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Initiate, implement and support technological innovations over the long term. From product and process development through the planning and construction of plants to the automation and optimization of processes.
Design and Manage Investments
Services throughout the
Plant Life Cycle
Optimize Facilities and Products
Develop Products and
Processes
Bayer Technology Services provides services along the entire process and plant lifecycle
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Regional Office AsiaShanghai/PR China610 employees(*)
Headquarters
Regional Offices
Regional OfficeNorth AmericaBaytown, TX/USA230 employees(*)
Regional OfficeBeneluxAntwerp/Belgium
70
Regional OfficeLatin AmericaMexico City
360 employees(*)
HeadquartersEuropeLeverkusen/Germany
1,300 employees (*)
(*) 31-Dec-09
Bayer Technology Services is a global company
BerlinBergkamenDormagenElberfeldLeverkusenUerdingenWendelsheim
Regional Office IndiaMumbai/India
10 employees(*)Regional Office Middle EastDubai/UAE5 employees(*)
Regional OfficeSwitzerlandWitterswil
10 employees(*)
Regional Office Singaporeopens March 1st, 2010
Regional Office Brazilopens 2010
Regional Office Russiaopens 2010
Offers services on
external market
Offers services on
external market
Turnover worldwide(*) 375 EUR mill.
Employees worldwide(**) 2,600(*)2009 (**)Dec 31, 2009
Client industries
• Health Care
• Crop Science
• Material Science/Polymers
• Chemicals
Mogk
2010-04-22 • Page 6
Network Optimization Projects Executed by BTS
2005 Chemicals
2006 Polymers
2007 Japan
Chemicals
2007-2008 Polymers
2008Specialty
Chemicals2007Basic
Chemicals
2008 China
Pharma
2009Food
Industry
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There are different motivations for a network optimization project …
Global strategic network optimization
Regional optimization
Local site design
• global sourcing optimization • long-term market penetration strategies• rough modeling of global material flows• high level of demand aggregation
•Design of local production sites
•Optimal use of local logistics equipment and productions capacity
•Use of simulation techniques
•optimize regional sourcing•optimize regional logistics locations•detailed Modeling of demand and sourcing structures
•no detailed modeling of activities inside the knots
Mogk
2010-04-22 • Page 8
Different tasks require different approaches
Global strategic network optimization
Regional optimization
Local site design
• global sourcing optimization • long-term market penetration strategies• rough modeling of global material flows• high level of demand aggregation
•Design of local production sites
•Optimal use of local logistics equipment and productions capacity
•Use of simulation techniques
•optimize regional sourcing•optimize regional logistics locations•detailed Modeling of demand and sourcing structures
•no detailed modeling of activities inside the knots
Divide and conquerNo supply Chain Model can solve all optimization tasks in detail.
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Project targets
� Identification of optimal sources to deliver
polymer customers in South Asia. (4 production sites available)
�Save logistics costs.
�Considering of greenhouse gas
emissions caused by logistics.Source of
Material
Shanghai
Thailand
Europe
NAFTA
Cost Optimal Solution
Project Example 1 - For delivery of South Asia market the global network have to be considered.
It is cheaper to source Chinese
customers from Thailand than
from Shanghai (�Chinese
Tax policy) India is mainly sourced from outside
Asia.
The cost-optimal solution is suboptimal in respecting greenhouse gas emissions and robustness of the supply chain.
The cost-optimal solution contains some unexpected results.
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2010-04-22 • Page 10
Supply Chain Models help to handle conflicting targets
Controversial Objectives
99.5 %
100.5 %
101.5 %
102.5 %
103.5 %
7,500 8,500 9,500 10,500 11,500
CO2 emission (t)
Relative logistics costs
Compromise:
20% CO2-emission reduction, 0.5%
cost increase as effective solution
Minimum cost considering duty an
taxes
Minimum CO2-emissions by local
sourcing
(30% CO2-reduction,increase of 3.5%
Supply Chain Costs)
Complex network of production sites may take other parameters ongreater importance: e.g. taxation aspect for deliveries to and from Asia
Sensitivity analysis helps to reach cost-effectively additional supply chain objectives like reduction of CO2-emissons.
Mogk
2010-04-22 • Page 11
Project Example 2 - Network optimization in Japan Handling of different supply chain targets
Project targets
� Reduction of Logistics Cost
� Improvement of service time to customers
� Reduction of greenhouse emissions caused by logistics
� Optimize number and location of the Warehouses
� Optimization of transport mode
Yellow Triangle: Potential WarehousesRed Triangle: Existing Warehouses
Before Optimization: All Potential Warehouses
EstimatedLogistics
Costs
Av. Distance to Customer
[Km]
AS-IS: Optimal use of existing WH
100,0% 444
One Additional WH 100,2%
443
Five new WHs88,7%
444
One Additional WH:
Scenario 1
Five New WHs:
Scenario 2
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2010-04-22 • Page 12
Network optimization project save money and improve the public company image.
Eco Rail Mark
�The Japanese Bayer affiliate was able to increase the share of railway
transportation up to 30%, which
provide a significant contribution to CO2 reduction.
�The results were recognized by Japanese Ministry of Land,
Infrastructure, Transport and
Tourism in 2008.
The Bayer affiliate is the first company in the polyurethane
industry awarded with the Eco Rail
Mark.
Mogk
2010-04-22 • Page 13
Future Challenges in Supply Chain management: Modular Chemical Production
� Small, flexible and modular production units enable the chemical industry to setup new supply chain concepts for customer focused and close to the market production.
� Benefits of modular production:
� Numbering up instead of scaling up: Fast adaptation on marked developments (geographical and time)
� Flexible Production of small batch sizes (customer specific products)
� Mobile, distributed production near customers and near row material sources is flexible and saves money
The ability of dynamic network adjustments is one of the key factors of a successful modular production concept.
Mogk
2010-04-22 • Page 14
Modular chemical production leading to a continuous network optimization
Supply Chain Network Design
MobileProduction
Site Logistics
Modular Production
Where are the ideal locations in a distributed production network for the modular production units?
How does an optimized supply chain for mobile production units look like?
What is the right design of the logistics processes on site?
Mogk
2010-04-22 • Page 15
Conclusion
�Supply Chain models have to be created task orientated
�Supply Chain models helps in handling target conflicts
�Supply Chain settings have to be adjusted continuously
�Modern production concepts, like modular production,
lead to a very intensive interaction of logistics and production planning
�Modular production allows continuous adaption of the
Supply Chain Network
Mogk
2010-04-22 • Page 16
The biggest optimization potential can be achieved by efficient communication.
Thank you for your Attention!
www.bayertechnology.com