There are those companies that you can only stand back and admire. Take Fibrant. They make Caprolactam, a much-used product in the fibre industry. You come across it everywhere: in high-quality clothing, under the bonnet of your car, in your cheese packaging, your living room carpet... Without this product from Fibrant, you can’t make these items. Naturally such a chemical process requires good logistics. CQM has developed a mathematical optimization tool that ensures tighter control in the factories, saves a lot of time and, more importantly, avoids unnecessary costs!
We discussed this wonderful project with Bertin Terpstra, Supply Chain Manager at Fibrant, and our colleague Jacob Jan Paulus, Principal Consultant at CQM.
What Fibrant does
Fibrant makes basic chemicals that its customers polymerize into intermediate or end products. These form the basis of, for example, clothing, toothbrushes, heat-resistant parts in your car and things in your living room. Endless products contain Fibrant’s high-quality fibres and plastics. To actually produce this end product, Fibrant employs eight mutually integrated factories at Chemelot Geleen in the Dutch province of Limburg. Suppliers also play an important role in the process and Fibrant is therefore also dependent on these parties. In short, good inter-communication and management are extremely important!
Real-time monitoring and adjustment
The tool CQM has built helps Fibrant better manage the factories and various parties involved. “It does this in two ways” explains Bertin. “Many prices fluctuate on a monthly basis in the chemical market. For example, raw materials or the price at which we sell our product. The tool now gives us real-time insight. So we can make much more direct decisions about the situation. The tool lets us quickly calculate what we should produce and how, and then make the necessary adjustments. Suppose a supplier increases its raw material price. We can then see the effect this will have on the total costs and our margins. But also the impact of more incidental, complex situations that may arise during a chemical process. For example, if a supplier lets us down so that our production process has to use other raw materials. The tool then calculates: what will this cost us, and which solution will cause the least damage and deliver the best outcome?”
Tipping point of whether or not to produce
“To reach a good decision, a helicopter view is needed that takes into account the entire interplay of all the factories, suppliers and customers,” explains Jacob Jan. “If you know the selling price of your product and the costs involved in the production process, there will be a tipping point somewhere. A point at which, when there’s a change in the market, you can decide whether it’s better to discontinue or continue production. Or in the event of a supplier failing to deliver and you having to decide whether and how the production process should continue. Before the tool existed, it was sometimes determined per factory what the best approach was, and the decision then made to switch to another (perhaps more expensive) party. But now you can immediately see that sometimes overall such a decision will cost more than it delivers. So Fibrant can now choose to produce less and thereby save on costs. This coordination across the factories facilitates better management.”
5 solutions within 1 minute
“The tool has many more benefits,” Bertin believes. “The Supply Chain Management (SCM) and Purchasing departments are now much more in the lead. We’re therefore less dependent on (input from) other departments, which means we can adapt quickly. What’s more, we don’t have to calculate anything from scratch and we work less with Excel. With Excel, it takes a lot more effort to arrive at a single solution; while with the tool you have five solutions at your disposal within a matter of minutes. In highly complex situations, the tool helps us to find the best factory set-up much faster. In the past, it sometimes took us a week to come up with a solution. Now we can do it in a day. That a six-day difference and a seven-times-faster decision. And for us, adapting faster often means significant savings!”
Internal support and power to persuade
“Moreover, we not only win financially,” argues Bertin. “The tool also provides internal support. Once a month we have a Sales & Operations Planning Meeting of the Sales, Production, Finance, Purchasing and SCM departments. The team that together manages the entire business. And managing things is a lot easier when you can sketch the various possible scenarios and immediately provide insight into the (financial) consequences of any decision. The power to persuade has increased enormously.”
The collaboration with CQM
So all in all, a highly successful project with which Bertin is very happy. “It’s really great working with CQM. You have modellers who simply execute the work, and you have people who think with you, who can give meaning to the numbers. People who really understand where the bottlenecks are and translate that into a good solution. That’s the power of CQM! In addition, you ‘get’ a personal consultant, who’s always available for you, adapts quickly and does everything in their power to deliver. Which is great. CQM also has a strong external focus. People sometimes assume mathematicians will be introvert and only see the numbers; but nothing could be further from the truth. CQM is focused on its profiling, with its customers. Our case simply confirms that. There’s so much warmth in your company, the human aspect always prevails. And that at a company where they like nothing more than working with numbers and formulas!”
Jacob Jan smiles. “What a compliment for our organisation and our collaboration together. This is what makes this job so amazing. Of course the maths behind this case is interesting and challenging. But making people happy, thinking with them at a strategic level, and getting the chance to see behind the scenes at great companies. That’s what makes my daily work such a joy.”
Publication and/or duplication of texts/images is only permitted following explicit permission from CQM.
Photo credit: Fibrant.