optimization of the worldwide supply chain at continental
TRANSCRIPT
OptimizationoftheWorldwideSupplyChainatContinentalTires:ACaseStudy
ScottJ.Mason,PhDmason@clemson.eduFluorEndowedChairinSupplyChainOptimizationandLogistics
ProfessorofIndustrialEngineering
Schlenker,H.,R.Kluge,andJ.Koehl.IBMJournalofResearchandDevelopment58.5/6(2014):11:1-11.
BusinessBackground
• Continentaltires– Worldwidemanufacturinganddistributionoftires– BothOriginalEquipmentManufacturing(OEM)aswellasReplacementtiressegments
• Continentaltiresbythenumbers
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Category ValueYearlyRevenue 10billionEurosEmployeesworldwide 40000Productionplants 18Productvariation 10000Production stagespertire 100
ProductionStrategies
• Make-to-stock– Safetystock– Seasonalsaleforecasts
• Multipleproductionlocationsforsameproducts– Somerawmaterials:Longleadtimesandlessnumberofsuppliers
– Fulltruck-loadtransportation– Custom-mademanufacturingtools
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MarketingStrategy
• OEMandreplacementtiremarkets– Alsoservessmalldealersandgarages
• Diverseproductportfolio– High-volume,low-marginproducts– Low-volume,high-marginproducts
• Seasonalsalesinsomemarkets• Needtoincreasepresenceinemergingmarkets
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PlanningStrategiesatContinentalTires
• Long-termplanning(1to3yearsout)– Decidesallocationofproductstoglobalproductionlocations
– Capacityplanningforeachplantlevel– Transportationofproductsfrommanufacturinglocationtocustomerregions
• Mid-termplanning(12to18monthsout)– Definesproductionrequirementforweeklyrange
• Short-termschedulingandplanning(weekly/daily)– Executionofmid-termplanningstrategies
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ChallengesofComplexPlanningProcess
• Long-termplanning– Performedworldwide– ImpactsbillionsofEuros(€)intermsofrevenueandcosts
• Objectives
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Goals ExampleStrategyIncrease sales Optimalassignmentof productiontodemandReducecosts Selection ofproductionlocationBalancetrade-offs Supplyversusdemand
BusinessProblems
• Lackofdistributedandcollaborativeplanning• Highercustomerdemandvolatility• Timeconsuming,labor-intensiveplanningprocesses• Inconsistentdataacrossbusinesses– Forecastingissues
• Varioustypeoftoolsetswithdifferentcapacitiesacrossproductionlocations– Placementoftoolsetsamongproductionlocationsbasedonproductionstrategies
• Creatingbusinessscenariosforsimulationishighlycomplex
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ConstraintstoConsider
• Limitedresources• Worldwidesupplynetworks• Multipleproductionlocations• Multipleproducts• Productioncomplexity• Capacitylimitation• Multipleplanningmodels• Variousshiftsforemployees
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Solution
• ImplementedFutureAllocationandCapacityTracking(FACT)planningsolution– CreatesplanningdatarepositorywhichcanbeimportedtoERPsystemsandotherdatawarehouses
– Assignsproductionnumberstoproductsandresources– Providesdataformultipleplanninghorizons– Assignsproductionquantitiestoworldwideproductionlocations
– Constraintsincludeplantcapacity,availabilityofmachinesandvariabilityofproductcharacteristics
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ScopeofFACTApplication
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Schlenker,H.,R.Kluge,andJ.Koehl.IBMJournalofResearchandDevelopment58.5/6(2014):11:1-11.
SolutionArchitecture
• FACTapplicationisbuiltonIBMDecisionOptimizationCenter– CPLEXOptimizationStudiosolvesthemathematicalmodel– ScenarioRepositoryhasmultiple“what-if”scenariofortheplannerstoconsider
– Clientisthegraphicaluserinterface(GUI)fortheenduser
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DecisionMaking
• Twolevelsofplanning:– Allocationplanningandcapacityplanning
• Allocationplanningatworldwidelevel– Yearlyproductionquantitiesatallproductionlocations– Needtoconsiderplantcapacity,criticalmachineavailability,
productioncomplexityateachplants– ConsidersBill-Of-Capacity(BOC)whileallocatingresources
• Capacityplanningatindividualplantlevel– TakesinputfromAllocationplanningresults– Separateoptimizationmodelforeachproductionplants– Considersproductsthataremanufacturedinrespectiveplants– ConsidersBill-Of-Materials(BOM)fordecisionmakingateachplant
level
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CharacteristicsofFACT
• Actsasaplanningdatarepository• ExchangedatabetweensystemslikeERP,datawarehouses
andotherlegacysystems• Providegraphicalaswellastabularviewofresults• Supportsteamcollaboration,i.e.multiplelocationaccessand
multipleuserinputs– Easiertoconfigurecustomizeddataaccesstousersandlocation
• Computesresourceextensionstosolvecapacitylimits– Assigningadditionalworkshifts– Buyingnewmachines
• Comparescostduetoresourceextensionvs.benefitsfromincreasedsales
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BenefitsofFACT
• Improvedmasterdataqualitybecauseofconsistentdatamodel
• Consistentinformationflowfromcentralheadquarterstoeachplantbecauseoftheuseofonestandardtool
• Easiertoidentifyandrectifyincorrectdataimportedfromlegacysystems
• Simulatemultiplebusinessscenariosandhenceprovidebetterplanninggranularity
• Identifyplantbottlenecksandsuggestsnecessaryresourceextensions
• Betterdecisionmaking,highercostsavingandimprovedcustomerservice
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