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Elkem Uses Optimization in Redesigning Its Supply Chain

Author

Listed:
  • Nina Linn Ulstein

    (Department of Industrial Economics and Technology Management, Norwegian University of Science and Technology, Alfred Getz vei 3, 7491 Trondheim, Norway)

  • Marielle Christiansen

    (Department of Industrial Economics and Technology Management, Norwegian University of Science and Technology, Alfred Getz vei 3, 7491 Trondheim, Norway)

  • Roar Grønhaug

    (Department of Industrial Economics and Technology Management, Norwegian University of Science and Technology, Alfred Getz vei 3, 7491 Trondheim, Norway)

  • Nick Magnussen

    (Elkem, Hoffsveien 65 B, Oslo, Norway)

  • Marius M. Solomon

    (College of Business Administration, Northeastern University, 314 Hayden Hall, 360 Huntington Avenue, Boston, Massachusetts 02115)

Abstract

Elkem’s silicon division is the largest supplier of silicon metal and ferrosilicon in the world. With the slowdown in the global economy that started in 2000, the corporation decided to improve the efficiency of its supply chain network and evaluate its product portfolio. To help the division manage this process, we developed a strategic-planning model. This mathematical-programming model addresses decisions pertaining to future plant structure, including possible closures, new plant acquisitions, and investments in production equipment. The silicon division has used the model and its scenario analysis capabilities extensively to obtain important benefits. The company agreed to a restructuring process, which included reopening a closed furnace and investing $17 million in equipment conversion. Overall, as a result of the restructuring plan, Elkem expects a significant and sustained improvement in yearly revenue for the silicon division.

Suggested Citation

  • Nina Linn Ulstein & Marielle Christiansen & Roar Grønhaug & Nick Magnussen & Marius M. Solomon, 2006. "Elkem Uses Optimization in Redesigning Its Supply Chain," Interfaces, INFORMS, vol. 36(4), pages 314-325, August.
    • Handle: RePEc:inm:orinte:v:36:y:2006:i:4:p:314-325
    DOI: 10.1287/inte.1060.0221
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    References listed on IDEAS

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    Cited by:

    1. Nickel, Stefan & Saldanha-da-Gama, Francisco & Ziegler, Hans-Peter, 2012. "A multi-stage stochastic supply network design problem with financial decisions and risk management," Omega, Elsevier, vol. 40(5), pages 511-524.
    2. Huang, Edward & Goetschalckx, Marc, 2014. "Strategic robust supply chain design based on the Pareto-optimal tradeoff between efficiency and risk," European Journal of Operational Research, Elsevier, vol. 237(2), pages 508-518.
    3. Martínez-Costa, Carme & Mas-Machuca, Marta & Benedito, Ernest & Corominas, Albert, 2014. "A review of mathematical programming models for strategic capacity planning in manufacturing," International Journal of Production Economics, Elsevier, vol. 153(C), pages 66-85.
    4. Sanjay L. Ahire & John B. Jensen, 2017. "Snider Tire Optimizes Its Customers-Stores-Plants Transportation Network," Interfaces, INFORMS, vol. 47(2), pages 150-162, April.
    5. Ilkyeong Moon & Yoon Jea Jeong & Subrata Saha, 2016. "Fuzzy Bi-Objective Production-Distribution Planning Problem under the Carbon Emission Constraint," Sustainability, MDPI, vol. 8(8), pages 1-17, August.
    6. Burcu B. Keskin & Halit Üster, 2012. "Production/distribution system design with inventory considerations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(2), pages 172-195, March.
    7. Ma, N., 2014. "Optimal scope of supply chain network & operations design," Other publications TiSEM e6187708-b664-44bf-aef8-f, Tilburg University, School of Economics and Management.
    8. Smirnov, Dina & van Jaarsveld, Willem & Atan, Zümbül & de Kok, Ton, 2021. "Long-term resource planning in the high-tech industry: Capacity or inventory?," European Journal of Operational Research, Elsevier, vol. 293(3), pages 926-940.
    9. Mustapha Ouhimmou & Sophie D'Amours & Robert Beauregard & Daoud Ait-Kadi & Satyaveer Singh Chauhan, 2009. "Optimization Helps Shermag Gain Competitive Edge," Interfaces, INFORMS, vol. 39(4), pages 329-345, August.
    10. Melo, M.T. & Nickel, S. & Saldanha-da-Gama, F., 2009. "Facility location and supply chain management - A review," European Journal of Operational Research, Elsevier, vol. 196(2), pages 401-412, July.
    11. George Dikos & Stavroula Spyropoulou, 2013. "Supply Chain Optimization and Planning in Heracles General Cement Company," Interfaces, INFORMS, vol. 43(4), pages 297-312, August.
    12. Moritz Julius Ziegler & Kilian Seifried & Philipp Kuske & Moritz Fleischmann, 2019. "TRUMPF Uses a Mixed Integer Model as Decision Support for Strategic Production Network Design," Interfaces, INFORMS, vol. 49(3), pages 213-226, May.

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