Polystyrene is now a part of our everyday lives. The transparent dividers that help us to keep our fridges organized are made from it. So are CD boxes and it also provides the packaging that keeps our food fresh. The ease with which it can be manipulated made this substance ideal for molded parts, in both the home and office communications. BASF manufactures numerous variants of the plastic within its Styrenic Polymers business unit based in Ludwigshafen, Antwerp and Tarragona.
When heat is applied in a polymerization tank, polymer chains form in the raw material and it becomes a viscous, molten mass. In a further processing step, this mass is dyed, cooled and eventually leaves the plant in granulated form. The production process is complicated and capacities are restricted. Making changes to the machinery used to produce the granulate material is both time-consuming and cost-intensive, with order capacity suffering as a result.
In addition to the two-stage production process, global economic cycles are currently providing an extra challenge for production planning at this unit of BASF. While maximizing capacity utilization levels in production has top priority during a boom, it is vital during price wars to minimize production costs and the amount of capital tied up in stocks and to safeguard margins. This can only be regulated via price adjustments since a large proportion of the polystyrene range consists of commodities or, in other words, products that can be sold in bulk. This means that BASF must keep production costs down by using more precise processes in the planning cycle, as a competitive market position is best achieved through cost leadership. Dirk Wenzelburger, Director of Supply Chain Management at Styrenic Polymers Europe states: “High quality production planning is a key competitive advantage for BASF.”
Planning processes must be flexible enough to accommodate this. BASF currently supports these using SAP Advanced Planning and Optimization (SAP APO), a component of mySAP Supply Chain Management. The application has greatly improved the chemical group’s planning processes. The two stages of production can be planned in every detail by using this solution in conjunction with an external optimization tool and the SAP R/3 standard solution. The ability to react quickly to economic developments was advanced significantly. In addition, costly changeovers on the machines were reduced and there was a clear increase in the availability of the product variants.
Plastics on schedule
As part of the Supply Chain Initiative of Styrenic Polymers Europe, BASF decided with the axentiv business consultants to thoroughly investigate existing planning activities along the entire supply chain. The analysis convinced the chemical company that it needed to reconstruct its system support structure. Its goal was to improve the coordination of procedures in sales, plant and extruder planning. Data on production quantities and sequences plays a key role in this regard. This is first collected before being distributed to the individual extruders. In this case, detailed planning was intended to optimize utilization and allocation of the individual plants while ensuring flexible results-based control of the available production capacity and stocks. In this regard, Excel had reached the limits of its abilities.
After a team consisting of axentiv advisors and BASF specialists had specified and described the relevant processes, a decision was made, on the basis of the requirements, to introduce SAP APO complete with all modules ranging from Distribution Planning (DP), Supply Network Planning (SNP) and Global Available-To-Promise (GATP). Before the implementation, procedures such as use of cross-location synergies through centralized planning of the European production locations were optimized. Organizational changes, such as the systematic orientation of the Logistics Center’s authorities to the supply chain processes were carried out, and a roles and authorizations concept was drawn up. Subsequently, the work group tailored the new software to the relevant planning procedures. The central logistics center will essentially make decisions about the location at which production is to be carried out and the operational throughput of the plants. This allows the European production locations of Ludwigshafen, Antwerp and Tarragona to be coordinated in the best way possible.
The SAP APO standard functions covered almost all requirements in the distribution network. The SNP module allows rough production planning in a time frame of anything from one month to one year. The solution proposes the correct plant across all sites, and factors for example capacity limits and long-term raw materials requirements into the cost equation. However, the functions of the SAP solution were not adequate for detailed planning, for instance the allocation of the individual plants over a time frame of up to three months. BASF therefore opted for a two-stage mapping of production planning, despite this leading to extra outlay through additional parameters such as product and resource prioritizations or the need for precise quantities of certain raw materials. “Our goal is to develop a realizable production plan,” summed up BASF project leader Stephan Franke. “The trick is to incorporate as many restrictions as are necessary to create a realistic plan and, at the same time to omit as many as are needed, in order to ensure that this does not become an academic exercise.”
The parameters were put into effect by the supply chain management specialists from axentiv using an external optimizer, a tool which restructures procedures and in doing so enhancing their functionality. For example, the optimizer can be used to calculate which of the plants is best suited to carrying out a specific production job. The result of the calculation is than transferred to SAP APO. The technology used by the optimizer is based on the IT solution ILOG Optimization Development Framework (ILOG ODF). It consists of an interface to test data, a data model and a graphical user interface (GUI). In order to map the planning, the optimizer receives from SAP APO or the SAP R/3 standard solution the data that it requires for the costing via a pluggable memory module (cartridge). This normally consists of specifications for individual products and production locations or information about products whose manufacture depends on the production location, as well as information about resources and models of specific production processes. This includes data about individual plants, materials and formulations. The SAP solution provides the tailor-made optimizer with all of this specific information so that production can be improved and managed more smoothly.
Finally, the developers enhanced Supply Chain Management with more functions from SAP Available-to-Promise (SAP ATP). These included the cross-location product availability check, the multistage availability check, the quantities check, the scheduling of transportation and shipping, as well as backlog processing. Overall, these functions simplify planning by managing and organizing stocks across multiple locations. This means that the European production locations can make forecasts and plan for future requirements and also set priorities for requirements. In automatic recording mode, the software takes information such as material availability into account and compiles the requisitions. The person responsible for planning is informed immediately about production-related changes via special alerts. This eliminates delivery bottlenecks and demand conflicts.
Future production without peaks
The IT solution implemented by the consultants and developers is in line with the reality of the planning processes in which both finished products and their precursors must be manufactured. The two-stage mapping of production planning using the additionally developed tool has been shown to be advantageous in this regard. It allows changes in production to be implemented rapidly, which means that the capacity of the plants can be exploited more fully. This improves the quality of planning and helps to avoid peaks in production volumes and changes in compositions. This means that production can be carried out continuously and, therefore, as cost-effectively as possible. “The integration and cost advantages easily compensate for the increased cost of complexity in planning,” according to Stephan Franke from BASF.
The new solution enables BASF to react to changing circumstances and demands. In the near future, the group is looking to incorporate more business-specific parameters such as target coverage in the planning run and to map restrictions in the procurement of raw materials. Parallel to this, the newly developed planning application is to be rolled out gradually for other grades of plastic. This is a goal that can easily be achieved by BASF thanks to cutting-edge, SAP-based production planning. The group is on top form thanks to the realistic planning functions and its IT capabilities mean it is well placed for the future.