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Planning production and supply chain in energy intensive process industries
Linköping University, Department of Management and Engineering, Production Economics. Linköping University, The Institute of Technology.
2014 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

To make a difference among the energy intensive process industries, this dissertation addresses production planning and supply chain planning problems related to industrial energy management issues. The energy issue is turning more and more important from different angles, involving price as well as environmental problems due to climate change leading to political pressure on all energy users. The process industry sector is one of the largest users of energy, and thus important to analyse. Process industries are also capital intensive and operate on large and expensive process equipment, making it imperative to plan their production well in order to reach preferable capacity utilisation. Therefore this dissertation strives to locate the most important energy management issues for the long term profitability of process industries, and investigates the  symbiotic effects of including energy issues in production and supply chain planning.

Three different studies at three case companies are carried out, analysed, and presented in five papers. The cases represent the process industry sectors: chemicals, pulp, and steel. Both qualitative case study methodologies as well as quantitative mathematical modelling and optimisation approaches have been practiced. The research questions are analysed from both an energy system and from a production process point of view, separately as well as combined. Energy is somewhat considered to be the main workforce for process industries and this dissertation exemplifies some of its most important dimensions in this context.

Several prerequisites for putting energy management on the strategic agenda are located in a specialty chemical industry where the importance of introducing a strategic perspective on energy, the way energy is used, and the possibilities of increasing alternative revenue from utilising by- and/or co-products differently are pinpointed. Approaches for including energy issues in planning processes are also suggested in terms of a MILP model for the entire supply chain of a pulp company, including decisions on purchase and transportation of raw maerials, production allocation, energy mix, and distribution. Another example is presented based on the perspectives of economics of scale and lot sizing through economic order quantity principles in a steel company. By using real company data, energy smart approaches in planning and scheduling are developed with respect to the most important intersections between the production processes and their supporting energy system. The accumulated resource intensity and embedded energy could, and probably should, hence be more fairly  reflected in the product price. The research finally shows some possible impact with including energy issues in a production and supply chain planning model. By planning differently, production prioritisations can be done, and it is not only possible without any large investments, but also prosperous with savings on both energy and money within reach.

To conclude, planning of production and supply chain has either a direct or an indirect impact on the energy cost-effectiveness of a company. This dissertation argues that such impact also exists in its mutual form, and is very important when the energy issues are large enough, as they often are in the energy intensive process industry sector. Decision makers should thus beware of the short end of the stick that might be  devastating in the long run, but also aware of all the possibilities that can bring success and prosperity when the future begins.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2014. , 75 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1635
Keyword [en]
Process industry, Energy-intensive production processes, Energy system, Energy management, Production planning, Supply chain planning, Case studies, Mixed Integer Linear Programming, Modelling, Specialty chemicals, Pulp, Steel
National Category
Engineering and Technology Business Administration Economics and Business Energy Systems
Identifiers
URN: urn:nbn:se:liu:diva-112289DOI: 10.3384/diss.diva-112289ISBN: 978-91-7519-173-7 (print)OAI: oai:DiVA.org:liu-112289DiVA: diva2:765227
Public defence
2014-12-18, ACAS, A-huset, Campus Valla, Linköpings universitet, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2014-11-21 Created: 2014-11-21 Last updated: 2017-06-26Bibliographically approved
List of papers
1. Strategic Perspectives on Energy Management: A Case Study in the Process Industry
Open this publication in new window or tab >>Strategic Perspectives on Energy Management: A Case Study in the Process Industry
2013 (English)In: Applied Energy, ISSN 0306-2619, E-ISSN 1872-9118, Vol. 104, 487-496 p.Article in journal (Refereed) Published
Abstract [en]

It has been anticipated that energy management will gain increased interest amongst companies in a near future. Yet, even in energy-intensive companies, like process industries, energy management is seldom treated strategically. The purpose of this study is thus to investigate the necessary prerequisites for putting energy management on the strategic agenda in energy-intensive process industries. This is done by the means of a literature review and a case study, and the analysis is based on how energy management is treated from three perspectives; a strategic perspective, an energy system utilisation perspective, and an alternative revenue perspective. The case study shows, similar to other process industry companies, that the strategic importance of energy management, to a large extent, is neglected. The research also indicates necessary prerequisites, for each perspective, for highlighting the strategic importance of energy management for a typical company in the process industry sector.

Place, publisher, year, edition, pages
Elsevier, 2013
Keyword
Energy management, energy-intensive production systems, energy efficiency, energy planning, specialty chemicals, case study
National Category
Production Engineering, Human Work Science and Ergonomics Business Administration
Identifiers
urn:nbn:se:liu:diva-84987 (URN)10.1016/j.apenergy.2012.11.027 (DOI)000316152700049 ()
Note

An earlier version of this paper was presented at EurOMA 2010, 6-9 June, Porto, Portugal.

Available from: 2012-10-30 Created: 2012-10-30 Last updated: 2017-12-07
2. Including energy in supply chain planning at a pulp company
Open this publication in new window or tab >>Including energy in supply chain planning at a pulp company
2013 (English)In: Applied Energy, ISSN 0306-2619, E-ISSN 1872-9118, Vol. 112, 1056-1065 p.Article in journal (Refereed) Published
Abstract [en]

In this paper we consider integrated planning of the supply chain at a multi-site pulp company. In addition to the traditional focus on pulp products, also energy aspects are considered, both in the form of raw material and as revenue generating products. The idea is that energy intense raw materials not only gives fibre to the pulp process but also generates an energy surplus that can be used in different ways to create additional value or revenues. The planning horizon is one year and monthly time periods are considered. Decisions included in the planning are; purchase and transportation of raw materials from harvest areas to pulp mills, production allocation by dividing the production among the pulp mills, energy mix by choosing the energy input at the pulp mills, and distribution of products from mills to customer. An MILP model for the entire supply chain is proposed. A number of different scenarios including real data from the case company are analyzed and evaluated. The aim of the study is thus to investigate the effects on profitability while taking energy issues into consideration.

Place, publisher, year, edition, pages
Elsevier, 2013
Keyword
supply chain optimization, energy planning, energy-intensive production systems, MILP model, process industry
National Category
Engineering and Technology Business Administration Production Engineering, Human Work Science and Ergonomics Energy Systems
Identifiers
urn:nbn:se:liu:diva-84988 (URN)10.1016/j.apenergy.2012.12.032 (DOI)000329377800113 ()
Note

An earlier version of this paper was presented at ICAE 2012, 5- 8 July, Suzhou, China.

Available from: 2012-10-30 Created: 2012-10-30 Last updated: 2017-12-07
3. How energy price changes can affect production- and supply chain planning – A case study at a pulp company
Open this publication in new window or tab >>How energy price changes can affect production- and supply chain planning – A case study at a pulp company
2017 (English)In: Applied Energy, ISSN 0306-2619, E-ISSN 1872-9118, Vol. 203, 15 p.333-347 p.Article in journal (Refereed) Published
Abstract [en]

The process industry in general is very energy-intensive, and therefore models focusing on energy can be very important in order to reach higher profitability. In this study, an optimization model of the supply chain in a pulp company, where energy is included with respect to its revenue generating capabilities, is used. Using real company data, and through an analysis of the model’s results, we show that higher profitability can be achieved when integrating energy into the planning process. Our findings show that when energy-intensive raw materials not only provide fibre to the pulp process but also generate an energy surplus, there is room for different planning approaches in order to maximize the total profit. This paper reveals promising changes that can be made for improving the current planning process. The scenarios considered involve market changes for energy demand and price, and also alternative production opportunities. A cross-analysis compares the scenarios in order to reveal additional relations that are important to consider. Depending on a price change of energy, the model prioritizes in its selection of pulp products to produce. From this we provide guidelines on where and when to increase or decrease pulp production. The model shows that the company can increase its total profit no matter which of the included energy parameters that increase in price. The paper contributes to previous research by enhancing the usefulness of this model for not only the case company as such, but also by illustrating and describing how the approach applied can be useful for other cases within the energy intensive industry.

Place, publisher, year, edition, pages
Elsevier, 2017. 15 p.
National Category
Energy Systems
Identifiers
urn:nbn:se:liu:diva-138731 (URN)10.1016/j.apenergy.2017.05.146 (DOI)000412379300024 ()
Note

The previous status of this article was Manuscript and the original title was How energy price changes can affect supply chain planningat a pulp company.

Funding agencies: Swedish Foundation for Strategic Research (SSF)

Available from: 2017-06-22 Created: 2017-06-22 Last updated: 2017-10-23Bibliographically approved
4. Energy issues in supply chain and production planning in the steel industry: A case study at SSAB
Open this publication in new window or tab >>Energy issues in supply chain and production planning in the steel industry: A case study at SSAB
2014 (English)Manuscript (preprint) (Other academic)
Abstract [en]

How can a different planning of production and supply chain increase energy efficiency and effectiveness? This descriptive and rather exploratory case study investigates these possibilities by mapping the production system and its supporting energy system at a steel company’s production site. Several possibilities for improvement in the planning processes have been located and evaluated. Our findings resulted in identifying four different improvement areas: 1) planning slab furnaces, 2) utilizing embedded heat and shortening lead times, 3) broader frame when scheduling for decreasing waste at set-ups, and 4) demandresponse opportunities related to electricity price variations. The first improvement area: planning of the slab furnaces, shows the largest potential, both in terms of energy savings and reduced costs. The second and the third improvement areas are similar to each other in terms of potential energy savings, but if the lead-time also could be decreased in the second it would be more economically beneficial than the other. Additional possibilities are found in the fourth improvement area where electricity demand response actions by rescheduling the energy-intensive production into times of low electricity price might save electricity costs. To conclude, the company could reach both higher energy efficiency and profitability simultaneously, by utilizing the energy- and the production systems combined in a more efficient and effective way.

Keyword
Production planning, supply chain planning, energy efficiency, energy system, case study, steel industry
National Category
Engineering and Technology Economics and Business Business Administration Energy Systems
Identifiers
urn:nbn:se:liu:diva-112287 (URN)
Conference
18th International Working Seminar on Production Economics, Innsbruck, Austria, February 24-28, 2014
Note

An earlier version of this paper was presented at IWSPE18 2014.

Available from: 2014-11-21 Created: 2014-11-21 Last updated: 2014-11-21Bibliographically approved
5. Energy considerations in planning slab furnaces at a steel company: A case study at SSAB
Open this publication in new window or tab >>Energy considerations in planning slab furnaces at a steel company: A case study at SSAB
2014 (English)Manuscript (preprint) (Other academic)
Abstract [en]

To save energy and reduce costs we suggest production planning to consider issues with clear and large impact on both usage and costs of energy. This paper investigates how the energy system interacts with the production processes early in the value chain at a steel company. A case study at one of the company’s production facilities reveals promising opportunities to achieve increased energy efficiency by considering an energy‐related approach in planning of the continuous slab furnaces and the hot rolling processes. Analysis shows that energy can be saved and costs reduced through an alternative planning approach without taking any noteworthy investment cost. Improved communication within the different parts of the organization plays also a significant part in actualizing the managerial opportunities located. Real company data provided from the case company SSAB is used and analyzed. This paper contributes with a model used for analytical calculations on how market conditions could motivate a company to select different planning approaches. This by choosing a primary and secondary slab furnace based on their energy characteristics. As such, when the opportunities are beneficial enough, the impact of energy issues on production and supply chain planning should not be neglected.

Keyword
Production planning, energy, steel, process industry, case study
National Category
Engineering and Technology Economics and Business Business Administration Energy Systems
Identifiers
urn:nbn:se:liu:diva-112288 (URN)
Conference
18th International Working Seminar on Production Economics, Innsbruck, Austria, February 24-28, 2014
Available from: 2014-11-21 Created: 2014-11-21 Last updated: 2014-11-21Bibliographically approved

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