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17
Supply Chain Modeling More than a Sophisticated Toy? Dr. Georg Mogk LogiChem 2010 22nd April 2010, Düsseldorf

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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

Page 1: Chemical Supply Chain

Supply Chain ModelingMore than a Sophisticated Toy?

Dr. Georg Mogk

LogiChem 201022nd April 2010, Düsseldorf

Page 2: Chemical Supply Chain

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

Page 3: Chemical Supply Chain

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

Page 4: Chemical Supply Chain

Mogk

2010-04-22 • Page 4

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

Page 5: Chemical Supply Chain

Mogk

2010-04-22 • Page 5

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

Page 6: Chemical Supply Chain

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

Page 7: Chemical Supply Chain

Mogk

2010-04-22 • Page 7

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

Page 8: Chemical Supply Chain

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.

Page 9: Chemical Supply Chain

Mogk

2010-04-22 • Page 9

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.

Page 10: Chemical Supply Chain

Mogk

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.

Page 11: Chemical Supply Chain

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

Page 12: Chemical Supply Chain

Mogk

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.

Page 13: Chemical Supply Chain

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.

Page 14: Chemical Supply Chain

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?

Page 15: Chemical Supply Chain

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

Page 16: Chemical Supply Chain

Mogk

2010-04-22 • Page 16

The biggest optimization potential can be achieved by efficient communication.

Thank you for your Attention!

Page 17: Chemical Supply Chain

[email protected]

www.bayertechnology.com