Imagine that a customer places an urgent order for products to be sourced from your North American manufacturing plant and shipped to a location in Europe. Your logistics team creates a shipping plan based on a single “production lead time” number. Meanwhile, your production scheduler is dealing with unplanned equipment downtime, raw materials delays and capacity constraints your logistics team has no visibility into.
The result? Constant reconfirmations, a frustrated customer and schedulers conducting detective work to figure out what orders are actually for.
Does this sound all too familiar?
At OPTIMIZE™ 24, AspenTech’s bi-annual global customer event, John Riley from Momentive Performance Materials’ supply chain optimization team walked through exactly this problem and how they solved it. Momentive is an indirect wholly-owned subsidiary of KCC Corporation that develops and supplies advanced silicone and specialty chemical products that are used across a wide range of industries, including electronics, automotive, aerospace, personal care and construction.
Typical Production-Logistics Silos
Most chemicals manufacturers use planning and scheduling software – one for production planning and scheduling, and one for distribution planning/scheduling. Momentive uses Aspen Plant Scheduler-EO™ (with advanced optimization capabilities) in both areas.
Production planners/schedulers optimize for plant efficiency while logistics planners/schedulers optimize for inventory positioning and freight. Each group has its own data and its own priorities, which may lead to situations of friction between the teams.
Riley shared an example to illustrate Momentive’s situation before the advent of their “hybrid” optimization models. When a Belgium order for silicones came in, the distribution planning/scheduling software would create a production request based on a generic lead time. The New York production scheduler would receive the request a day later (after data flowed through their SAP ERP system), without context about whether it was for a customer order, forecast or safety stock. If the manufacturing plant was capacity constrained, the production scheduler had to do detective work, digging through SAP ERP to understand the true priority.
Meanwhile, if production delays occurred – which they inevitably did – the information had to flow back to the logistics planner/scheduler, who would adjust the shipping plans, which would then be communicated back to the customer. This back-and-forth process happened daily, triggering another round of coordination.
The “Aha” Moment of Insight
Momentive recognized that having planning and scheduling software to make better production and logistics decisions had created significant business value. However, the handoffs across the business processes and systems weren’t efficient.
They had an “aha” moment when they realized that they were solving the wrong problem. Instead of trying to make the extended production and logistics processes and related systems talk better to each other, what if they eliminated the need for them to talk at all?
Momentive’s “Hybrid” Planning and Scheduling Optimization Solution
Enter what Momentive refers to as their “hybrid models” – essentially a single planning and scheduling optimization model combining both production and logistics. Previously, computer and server hardware limitations prevented this type of approach. Computers weren’t powerful enough to solve these types of large-scale integrated and combinatorial optimization problems. Now, instead of separate systems making decisions in isolation, one holistic optimization model, at every manufacturing location, now handles everything from raw materials procurement to customer delivery.
Using the same Belgium example, Riley explained the significantly improved situation resulting from this innovative approach. The customer order now flows directly into the New York hybrid model. The optimizer immediately knows this is a customer order (higher priority compared to a forecast), creates the production activities, procures raw materials and generates a feasible shipping plan for the stock-transfer order – all in one optimization run. In the case of unforeseen events such as asset or raw materials delays, scheduled production and stock transfer orders stay in lockstep with the same scheduler able to investigate issues. No more delays, no more detective work needed, no more coordination headaches.
The technical implementation leverages Aspen Plant Scheduler-EO’s capabilities yet extends beyond typical manufacturing planning and scheduling. Momentive’s hybrid optimization model includes shipping points, transportation methods and logistics constraints alongside traditional production assets and capacity limits. Each Momentive site has its own hybrid optimization model, leveraging a common template.
The Business Results
The transformation has been remarkable:
- Fewer reconfirmations and more reliable delivery commitments to customers
- Improvements in on-time in-full (OTIF) order fulfillment rates (the percentage of orders delivered to customers by the promised delivery data and with the complete, correct quantity of goods requested)
- Improved response to supply/demand disruptions thanks to better positioning of inventories across the supply chain with lower overall inventory levels company wide.
Perhaps the most impactful outcomes were for Momentive’s schedulers. As Riley noted, schedulers are no longer trained on just software, but rather on the entire workflow from raw materials to customer delivery. Schedulers understand their full sphere of influence and are significantly more confident in their decision-making abilities thanks to their enhanced end-to-end supply chain visibility.
The organizational efficiencies were equally impressive. Instead of customers and internal stakeholders having to guess whether they need to talk to someone in production or logistics, there’s now a single point of contact. Schedulers can also now be repurposed to cover different Momentive sites – they just need to learn the site-specific assets and materials.
Key Takeaway: Scheduling as a Critical Enabler to Supply Chain Excellence
What struck me most about Momentive’s presentation was their philosophy regarding supply chain excellence and the criticality of scheduling. John Riley’s three recommendations at the closing of his presentation were simple:
- Don’t rely on planning. If it should be scheduled, schedule it!
- Approach scheduling with the widest feasible view possible
- Give schedulers ownership
Momentive has been on a journey toward supply chain and operational excellence for many years – and AspenTech is very proud to be a strategic technology partner on their journey.
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