Building Optimization Model For Supply Chain Management
A subsidiary of French group Lafarge, Lafarge India Ltd. (LIL) is a giant construction company in Indian market. With a total production capacity of 5 million tons and clinker capacity of 3 million tons, it produces Portland Slag Cement, Ordinary Portland Cement and Portland Pozzolana Cement. Market expanded in 14 states of the country, it has a dense dealer network.
With a multitude of raw materials input and finished good output points, Lafarge India Ltd. was struggling with blockages in its supply-chain process. They were looking for an urgent requirement of optimization of their existing system. Collection of data from scattered resources and their processing in accordance with availability of experimental real time data/reports for the facilitation of production and distribution related decision-making was the main challenge here.
To fix the problem, LIL invited Binary Semantics to assist them in defining and constructing this supply chain solution.
- Optimization of over all supply chain on the basis of given constraint like: raw material inventory, production capacity, market demand & status, transportation cost and production cost.
- Development and implementation of a web interface to accept inputs from varied sources and provide various input, output and analysis reports across the company's network.
The problem fixing method suggested by Binary was the use of OR (Operation Research) technique and LINGO 9.0 modeling software. Binary’s optimization tool was designed with the help of mentioned technologies and various constraints of time, costs, inventory and distance; these were encompassed together to generate a mathematical model.
Consisting Lingo engine, Optimization model and web interface, Binary’s Optimization solution was offered to LIL to send and receive data. The decision variables in the optimization engine were designed to decide the exact quality of raw material and finished goods, which are going to be shipped into various Stock Keeping Units (SKUs).
A clear improvement was visible in LIL’s planning capability for manufacturing and distribution process after implementation of optimization solution. This also helped in creation of more robust supply chain.