STEEL PLANT SUPPLY AND DEMAND BALANCED PLANNING

Eric Meta(1) Pierre Beghin(1) Pascal Moinier(1) Luc Van Nerom(1) ABSTRACT A Steel plant scheduling is a complex process which requires taking into account several competing constraints. Also, as occurs in other industries, an unbalance between the supply and demand is cause of cost rise or loss in profit. Complexity, in addition to the lack of appropriate tools, led in the past to a fragmented solution of the problem. A scheduling department could be organized by production units (primary steelmaking, hot rolling, cold rolling, finishing), in some cases performing their tasks without sharing an effective view of the goals of the scheduling system as a whole. A volume planning provides a necessary condition to have a well balance between supply and demand as well as appropriate stock levels. We purpose layer architecture for accomplishing this planning task, allowing the incorporation of the best-suited scheduling system for each steel process. A balanced supply and demand planning can be achieved, solving the trade-off between specific process optimizations and global coordination reaching an appropriate balance between the service level, stocks level and capacity usage. As a result, will lead to ship better and more quickly, and doing so with less inventory. Keywords: scheduling, planning, supply chain, inventory

(1)

A. I. Systems, Researchdreef, 65, 1070 Bruxelles, Belgium. www.steelplanner.com www.aisystems.be 17th IAS Rolling Conference, 2008, Rosario, Argentina

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STEEL PLANT SUPPLY AND DEMAND BALANCED PLANNING

Eric Meta(1) Pierre Beghin(1) Pascal Moinier(1) Luc Van Nerom(1)

1. INTRODUCTION A Steel plant scheduling is a complex process which requires take into account several competing constraints. Also, as occurs in other industries, an unbalance between the supply and demand is cause of cost rise or loss in profit. Software solutions that support scheduling operations on a daily basis are well known today in the steel industry and companies that are using automated tools to optimize their continuous casters or rolling mills would never accept to come back to the old fashioned manual approach to solve these complex problems. On top of its proven scheduling packages, A.I.Systems has introduced solutions that implement a complementary layer, allowing for the definition and optimization of schedules over a longer time horizon (weeks), ranging up to several weeks. The benefit of these extensions is the increased visibility of the production plan allowing have a better balance between supply and demand and reducing the difficulty to deal with mix problems. 2. SUPPLY AND DEMAND UNBALANCE When supply and demand are not balanced, several consequences are observed. In case the demand exceeds the supply, customer service suffers because the steel plant is not able to deliver the product when is required by the customer, costs rises because of freight costs increases and quality often is compromised. In case supply exceeds the demand, inventories increase, carrying cost rise, and cash flow can become a problem. Also, profit margins decrease and prices are cut and discounting increase. Complexity, in addition to the lack of appropriate tools, led in the past to a fragmented solution of the problem. A scheduling department could be organized by production units (primary steelmaking, hot rolling, cold rolling, finishing), in some cases performing their tasks without sharing an effective view of the goals of the scheduling system as a whole. Since many years, an important number of publications have insisted on the fact that production optimization should aim for a global approach, avoiding the temptation of only looking for local optima. Obviously, cross-line synchronization is required to handle the over-all production planning and scheduling problem, as the objective is to determine the optimal trade-off between the work-in-progress inventory, the quality of each of the individual schedules, the due date performance.

In the steel industry, such a cross-line system needs to rely on a proven detailed scheduling foundation, as it must integrate detailed constraints coming from steel production equipment. Building a cross-line solution is a complex problem as: individual facilities (casters, hot strip mills, cold mills, pickling lines) have many technological constraints to be respected each of these constraints has significant differences from one line to another production rates and rhythms may differ significantly between lines

As a result, a buffer stock between lines will always be necessary, on top of a minimum level of security stock. (slab yards, coil yards). This tradeoff is represented in Figure 1.

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Figure 1. Tradeoff in a balanced supply and demand plan A.I.Systems has developed several decision support systems for the scheduling of Continuous Casters, Hot Strip Mills and Mini Mills. These tools improve the programmer ability to create larger programs and have a better due date performance, as part of the whole planning process, but looking at the local planning problem of each line. Then, a global view is necessary to guide the local solvers in order to be able to have a good balance between supply and demand.

3. FLOW PLAN: VOLUME PLANNING A volume planning provides a necessary condition to have a well balance between supply and demand as well as appropriate stock levels. As a result, will generate constraints for the detailed scheduling of each process to be sure the line will provide the enough material to avoid stops and have a good due date performance. After a flow plan is done, the detailed scheduling for each line is performed. The flow plan offers a global view of the plant, and is initialized with the current situation of the plant considering initial stocks, present demand and production in progress. It will also consider as constraints minimum and maximum stock levels as well as the residence time necessary for the arrival of the material to the line previous to being consumed and its maximum time to relay in the stock before being consumed. The flow plan configuration is made by product families, representing the different flows of material trough the lines and the stocks we want to control and predict. The product families not necessary are the same in all the lines, instead we can build a tree-like structure were product families are spitted into more detailed level to let downstream lines have the necessary level of detail which is not required in upstream lines. Once the flow is done, a mapping can be done to the orders, to have an initial view of the due date performance previous to the detailed programming of the lines. Figure 2 illustrates the flow planning configuration.

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Figure 2. Flow Planning configuration

After generating the flow plan, each local scheduler will receive the flow constraints generated in the flow plan and will deal with the specific mix of orders and restrictions of each line as shown in Figure 3.

P ro d u ctio n G oa ls

M a ster P la n n in g M a teria l F lo w P la n n in g D eta iled S ch ed u lin g

L in e 1 L in e 2 L in e 3 L in e 4

P ro d u ctio n D eta ils

P ro d u ctio n

Figure 3. Layer representation of the production plan

Later, when each detailed schedule is generated, all the schedules can be loaded back in the flow planning system and have a more realistic prediction of order fulfilment and stock levels. In some cases, we will need a joint flow constraint for groups of lines, instead of a flow constraint per line. This is the case for example when several lines share the same stock yard, and the produced material goes also to the same stock yard. In that case, even if both lines require its specific detailed schedule, from the flow point of view is only one line where the productivity is the result of adding the capacity of both lines. The model should be able to solve situation in which the flow plan of a given line depends on the flow plan of another line. This kind of relations can be found very often in steel plants, and then the solution should be able to solve all the lines with related flow plans at the same time, and take into account the cross effects of the flow plans. Figure 4 shows a possible plant configuration in which a global planning is necessary as a consequence of the routing between the lines.

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In the plant shown in Figure 4, there is a plant with only one product family, which can be delivered by lines Line 4 and Line 3. Then, the material produced by Line 3 should not be produced by Line 4. Even more, the stocks in front of Line 2 and Line 4 will depend on the material provided by Line 1 and their flow plans. Thus, we can see interdependency between flow plans of Line 4, Line 2 and Line 3, which all together affect the flow plan of Line 1. The situation described above, can only be solved with a global solution which takes into account all the lines at the same time.

Figure 4. Plant diagram example 4. CONCLUSION The logistics and processes in the steel industry are complex. This complexity calls for dedicated models and solutions in order to ensure schedules feasibility, and bottlenecks optimization. In the steel industry, production details are so important that they must be considered not only on the detailed scheduling level, but also at the higher global level, where planning is necessary to avoid cost rises and inventories increase due to an unbalanced supply and demand planning. The proposed open architecture allows incorporating the best-suited scheduling system for each steel process. On top, balanced supply and demand planning, managed by MFC, solves the trade-off between specific process optimizations and global coordination and ensure appropriate balance between the service level, stocks level and capacity usage. As a result, will lead to ship better and more quickly, and doing so with less inventory.

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