Energy and Production Planning for Process Industry Supply Chains

Abstract: This thesis addresses industrial energy issues from a production economic perspective. During the past decade, the energy issue has become more important, partly due to rising energy prices in general, but also from a political pressure on environmental awareness concerning the problems with climate change. As a large user of energy the industry sector is most likely responsible for a lot of these problems. Things need to change and are most likely to do so considering current and assumed future governmental regulations. Thus, the energy intensive process industries studied and focused on in this thesis exemplify the importance of introducing a strategic perspective on energy, an appropriate approach for planning, as well as the possibilities of including energy issues in a production and supply chain planning model.The thesis aims to provide models, methods and decision support tools for energy related production and supply chain planning issues of relevance for process industries as well as for other energy intensive industries. The overall objectives are to analyze the strategic importance of energy management, production and supply chain planning, and the opportunities provided when energy is included in a production and supply chain planning model. Three different studies are carried out, analyzed, and presented as in this thesis.The first study is a case study at a specialty chemicals company and resulted in the first paper. Since the energy issue is not only a cost issue driven by supply and demand, but also a political issue due to its environmental aspects, it is likely to believe that political influence and especially continuity will have escalating effect on the energy intensive process industry sector. Thus, the strategic dimension of energy is highly relevant in this thesis. The importance of organizational integration, having a main responsible person, locating core business, and political continuity are addressed as prerequisites for including energy into the corporate strategy. Regarding long term profitability, the importance of correctly utilizing the energy system by appropriate energy planning and with respect to energy efficiency and effectiveness in both flexibility and investment issues are addressed. Further on, the quest of finding alternative revenue while striving for a proper exergy usage is addressed.The second study is a multiple case study with four different case companies involved; pulp, specialty chemicals, specialty oils, as well as a pulp and paper company. The need for improved production and supply chain planning is also addressed where for instance the lack of planning support for process industries is still an area of improvement. The production and supply chain planning in process industries is found to be rather poor compared to regular manufacturing companies. The planning methods found are often tailor made and adapted to the individual characteristics that are typical for many process industries. It has further on been difficult to distinguish similarities and differences among process industries regarding these planning issues and thus hard to generalize.The third study focuses on mathematical modelling and programming developing a combined supply chain and energy optimization model for a pulp company. Taking the first papers together there are reasons to believe that a planning and optimization model that take energy aspects in consideration, as a previously missing link, will contribute to improve the operations in process industries. A clear impact of involving energy issues into the supply chain planning is shown. The results show that a different production schedule is optimal when the energy issues are applied, and depend on, for instance, variations in energy prices such as the one for electricity. This is shown by using a model for a supply chain where the energy flow, and especially the utilization of by-products, also is involved.