Mariana Badell

Simultaneous optimization of process operations and financial decisions to enhance the integrated planning/scheduling of chemical supply chains

Abstract This paper addresses the integrated planning/scheduling of chemical supply chains (SC) with multi-product, multi-echelon distribution networks taking into account financial management issues and suggests a novel approach for enterprise wide management. In order to tackle this problem, it is derived a mathematical formulation combining a scheduling/planning model with a cash flow and budgeting formulation. To motivate the use of such integrated model, a sequential scheme representing traditional enterprise practices is firstly applied. Within this strategy, scheduling and planning decisions are taken firstly, and finances are fitted afterwards considering the cash flows associated to the scheduling/planning decisions previously computed as input parameters. The comparison between the results of the sequential approach and those of the integrated model highlight the advantages of the latter option, in which scheduling/planning and cash management decisions are optimized in unison with a common objective of maximizing the change in equity achieved by the company. The modeling approach developed in this paper and the obtained results suggest that a new conceptual strategy in enterprise management systems consisting of the integration of the financial models of the enterprise with those dealing with the operative area is a must to improve the firm’s performance and its overall earnings and ensuring also healthy cash flow management.

Planning, scheduling and budgeting value-added chains

This paper addresses the implementation of financial cross functional links with the enterprise value-added chain including retrofitting activities at plant level when scheduling, planning and budgeting in short term planning in batch process industries. The main idea is achieving financial-supply chain integration into advanced planning and schedule (APS) enterprise systems (Badell & Puigjaner (2001a). Discover a powerful tool for scheduling in ERM systems. Hydrocarbon Processing, 80(3), 160; Badell & Puigjaner (2001b). Advanced enterprise resource management systems. Computers & Chemical Engineering, 25, 517). The platform built combines a deterministic cash flow management model with an advanced schedule algorithm using a MILP formulation. The modelling framework created can support the budgeting activity of the entire enterprise functionality, being now the budget the core document for enterprise management. The benefits of this work are shown through a case study that illustrates the modelling framework, the information flows and procedures necessary to implement a financial/supply chain scheduling methodology for the use of financial managers during planning and budgeting activities in process industries.

Advanced enterprise resource management systems for the batch industry. The TicTacToe algorithm

Abstract Since 1997 the authors have prototyped an enterprise resource management (ERM) system recommending essential improvements to the available software packages, which today claim automatic real time performance and an efficient transaction-oriented approach. The ERM system proposed is a decision-making tool for the manufacturing industry, which makes integrated financial/production trade-off planning and optimisation in the supply chain management. The application supports management cycles because during its use are available degrees of freedom to make the system work as a decision-making tool. The enterprises must be aware of its internal problems to be dynamically approachable instead of prematurely evolving to networked enterprises by links in the electronic commerce. ERM systems are capable of managing dynamically realistic and optimal delivery dates with price-time trade-off during the marketing activities. Cost objective functions integrated with system performance measures are developed, including a cost model to evaluate the due date policy economics in real time. The order management system proposed is based on the TicTacToe algorithm, which follows an exact non-combinatorial deterministic approach to time and optimise production sequences in multiproduct plants in very short time using asymmetric travelling salesman problem formulations for the scheduling task. The resulting tool is appropriate to fulfil the requirements of autonomous order entry systems in integrated real time systems.

Integrated on line production and financial scheduling with intelligent autonomous agent based information system

This paper proposes a methodology to cope the development of a system achieving the integration of financial and production planning with on-line predictive/reactive transaction-oriented scheduling in batch process industries. The best solution of delivery dates is found taking into account the trade off between customer satisfaction (meeting due dates) and company liquidity (minimum net cash-flow constraint). The resulting schedules are improved by means of an objective function to be minimized under the constraint of minimum cash by a simulated annealing (SA) algorithm. Production schedules are updated with process data. Predictive models upgrading control set points and product recipes close the loop of the managerial production cycle. A planning layer with autonomous web-based agents in an order-entry information system is used to obtain a quick feedback and response of the whole system to order requests. This system architecture can be used in an inner-network information system within a manufacturing Networked Enterprise (NE). In addition to the knowledge in real time of the electronic market, the integrated system performs the status/usage profile of the resources including the net cash-flow. These new capabilities in scheduling assure better financial decisions and a quick response to clients, a response which is backed up with a system that outputs an updated optimal price-time trade-off of the order requested. The methodology is illustrated with a case study.

Empowering financial tradeoff with joint financial and supply chain planning models

The concept behind improved enterprise systems is the overall integration of its whole functionality through optimised financial links. This paper addresses the implementation of financial cross functional links through the integration of production scheduling and planning with financial management in a modelling framework aimed at chemical process industries. Altogether models must play a more active role, recommending besides schedules and plans, the optimal budgetary decisions for each new scenario. The platform built combines a deterministic cash flow management model with a MILP formulation of process operation. The advantages of this approach are highlighted through case studies.

Integrating strategic, tactical and operational supply chain decision levels in a model predictive control framework

Abstract In this work an MILP model which achieves the integration of all three Supply Chain (SC) decision levels is developed. Then, the stochastic version of this integrated model is applied as the predictive model in a Model Predictive Control (MPC) framework in order to incorporate and tackle unforeseen events in the SC planning problem in chemical process industries. Afterwards, the validation of the proposed approach is justified and the resulting potential benefits are highlighted through a case study. The results obtained of this particular case study are analyzed and criticized towards future work.

Joint financial and operating scheduling/planning in industry

Abstract This paper addresses the implementation of financial cross functional links with the supply chain operations and investment activities at plant level when scheduling and budgeting in short term planning in batch process industries. The target is to obtain trade-off solutions preserving at most the profit and liquidity while satisfying customers. The platform built combines a deterministic cash management model with an advanced schedule algorithm by MILP formulation. This methodology heightens the decision-making capacity of the CEO (chief executive officer) and CFO (chief financial officer) in complex scenarios. The benefits of this work are shown through a case study that illustrates the modelling framework and procedures necessary to implement a financial/supply chain methodology to aid top-level staff when planning and budgeting

Integrating process operations and finances for the optimal design of chemical supply chains

Abstract The tight profit margins under which the Chemical Process Industry (CPI) operates are forcing companies to pay more and more attention to the design and operation of their Supply Chains (SC). Traditional approaches available in the Process Systems Engineering (PSE) literature to address the design and operation of chemical SC focus on the process operations side and neglect the financial part of the problem. This work deals with the design and retrofit of chemical SC and proposes a novel framework that consists in the inclusion of financial considerations at the strategic decision-making level. Within this framework, decisions that have a long-lasting effect on the firm are assessed through integrated models which are capable of holistically optimising the combined effects of process operations and finances. The main advantages of the proposed holistic approach are highlighted through a case study, in which the integrated approach is compared with the traditional myopic method that pursues a fairly simple performance indicator as objective and neglect the financial variables and constraints of the problem. The integrated solution not only ensures the feasibility of the strategic decisions from the financial viewpoint but also leads to superior performance in terms of value measures.

Integrating budgeting models into APS systems in batch chemical industries

Abstract This work is our proposal for a new conceptual approach to include in enterprise management systems. It addresses simultaneous integration of the supply chain outflows with scheduling and budgeting in short term planning in batch chemical process industries. A cash flow and budgeting model coupled with an advanced planning and scheduling (APS) procedure is the key of the advance. The model development made in this paper and the results suggest that a new conceptual approach in enterprise management systems consisting of the integration of the enterprise finance models with the company operations model is a must to improve overall earnings.

Integrating short-term budgeting into multi-site scheduling

Abstract In this work a novel approach is applied with the aim to improve the operation of supply chains with embedded multi-purpose batch chemical plants. The major contribution of this work with respect to previous approaches is that it includes a corporate financial planning model within the mathematical formulation applied for optimizing scheduling/planning decisions variables regarding the supply chain management. Such model maximizes the change in equity of the company and provides the budgetary guidelines for the planned period. This consideration exhibits two main advantages compared to the existing methodologies. In first place, it allows to check the feasibility of the resulting planning decisions from the financial viewpoint thus ensuring that the production and distribution activities to be carried out through the different nodes of the network do not spend more cash than the available one. In second place, it leads to better overall economic performance than in previous methodologies since the model properly evaluates the impact of financial expenses and earnings derived from the SC operation thus integrating production and financial corporate decisions. Such integration also makes the difference when considering the opportunity of investing the idle cash.