Road To Recovery - The specialty chemicals sector has proven to be more resilient than most process industries to the negative effects of the economic downturn. Today, the recovery is underway and growth prospects are looking ever more positive for the industry.

Business Insights recently forecast that the global market will grow at a CAGR of 2% during 2010-14 to reach a total value of approximately $319 billion in 2014. The 15 leading European companies generated $44.9 billion sales in 2009, accounting for 15.6% of the $288 billion global specialty chemicals market.

While the majority of these players were affected by falls in industrial input costs, Business Insights' revenue growth index nevertheless found that during the downturn, specialty chemicals businesses of European players performed better than their non-specialty operations.

Barriers To Success

Significant issues do remain across the sector if growth is to be sustained. Specialty chemicals are a complex and highly demanding marketplace. The industry is characterized by the need to deliver high-quality products quickly while taking into account constantly shifting needs and expectations from customers for innovative products and shorter lead times. Added to these challenges are issues around escalating raw material costs, intense global competition driving prices down and conflicting production strategies (make-to-stock versus make-to-order).

In addition, companies have to deal with a dynamic manufacturing environment where they need to optimize trade-offs between inventory levels, customer service and manufacturing costs and to manage variable demand across a broad portfolio of products. Perhaps most significantly of all, the industry has to tackle complex manufacturing processes involving tightly coupled multi-step batch processing with mixing and blending operations.

Planning And Scheduling

In the specialty chemicals sector, the key to addressing these challenges successfully is the ability to optimally plan and schedule production processes while taking into account continuously shifting customer demands and operating constraints previously referenced.

The traditional approach used to plan and manage the production of a suite of products at geographically distributed production sites, for geographically distributed customers, relies on a two step process involving long range (12 months) production planning across all assets and short term (one week to one month) local production scheduling.

The goal of the production plan is to assign production quantities for each asset while taking into account asset capacities, recipe unit ratios, raw material and transportation costs and product prices.

The goal of the production schedule is to determine the timing of and the material produced by each batch run on a reactor, as well as cleaning tasks, while taking into account inventory replenishment needs and inventory capacities.
Ideally, the two should work together to deliver operational efficiencies and achieve optimization across the specialty chemicals production process.

The Importance of Scheduling Optimization

Effective scheduling is absolutely critical to achieving sustained success in this sector.

Specialty chemicals solutions can typically perform critical operational functions that are beyond any planning system. On account of sequence dependent product change-over costs, the short term product schedule for a given asset can have a significant impact on its capacity and, therefore, the long range production plan. However, the production plan does not directly account for change-over costs but instead uses discounted capacities for each asset. Likewise, the production plan does not consider inventory constraints.

Scheduling decision software tools bring process industry manufacturers several key advantages over and above what a planning solution could deliver. These include the ability to schedule under current operational constraints, taking into account equipment, capacity and customer order deadline issues.

Equally, these solutions deliver the ability to schedule to optimized technology constraints including minimal cleaning and set-up time. The best of these can provide greater efficiency through increased capacity to evaluate multiple alternatives and the ability to achieve quicker, more detailed evaluation of more production scenarios.

The best scheduling tools also potentially deliver increased flexibility, including the ability to react quickly to unplanned events. They should be able to save time allocated by management and the scheduling team for scheduling and shift the focus of the schedulers from creating schedules to improving the value of the schedules they produce.