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By optimizing four key production processes, this manufacturer reduces inefficiencies and cuts costs.
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Business impact Realized a 10% reduction in the number of scheduling experts needed and up to 50% reduction in unused weight in each slab.
Issue The manufacturer was dealing with a changing business environment. Customers were placing smaller orders with shorter fulfillment lead-times and there were regional economic difficulties, production excesses and trade disputes. The company needed to cut costs and be more efficient to stay competitive.
Executive summary This steel manufacturer optimized four production areas to achieve big efficiency gains and significant cost reductions.
What IBM did IBM was hired to help optimize the four basic areas of steel production - inventory application, slab design, cast design and finishing line scheduling. Each area was treated as a separate project. IBM researchers and consultants worked together to define the issue for each project and break those issues into smaller problems. Next, using client guidelines the team modeled the optimal solutions, inventing new algorithms as needed.
For inventory application, IBM researchers created a system that allowed orders that could be done from the same slab to be grouped together in the pipeline and matched orders with material already in inventory.
Good slab design reduces the number of steel slabs required as well as the unused weight in each slab. Improving cast design reduces the surplus and variation in slab widths and the number of excess slabs. IBM researchers discovered that by solving the slab and cast design problems together they could provide greater savings for the company over solving the problems separately.
Finally, the finishing-line scheduling problem was more complicated because of scheduling restrictions and the large number of coils and finishing machines used by the manufacturer. A combination of techniques was used to build a flexible solution. First, the best grouping of coils and optimal sequence of the resulting groups was sought. Then, within each group, coils were sequenced for more efficient processing.
Results When the IBM team had addressed all four areas of production, the manufacturer achieved significant improvements in efficiency and cost reductions. For example, the number of stock slab types was decreased by up to 40%, unused weight in each slab was cut by as much as 50% and the number of scheduling experts needed was reduced by 10%.
Capabilities applied The IBM Steel Industry Solutions Group applied expertise in advanced techniques from operations research and artificial intelligence to optimize multiple aspects of the steel production process.
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More on the team | Hiroyuki Okano Optimization expert Hiroyuki Okano has been efficiently solving logistic and scheduling problems for IBM clients for the past 10 years. |
More on research | Supply Chain Planning and Production Design and Operations Scheduling in the Steel Industry Access information on supply chain optimization from IBM’s Steel Industry Solutions Group. |
More on research | IBM Steel Industry Solutions Group The IBM Steel Industry Solutions Group provides leading-edge solutions for steel manufacturers. |
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