An optimization-based application was developed to automate the sales & operations planning (S&OP) process of a polymer manufacturer with multiple sites supplying global markets. The application generates a global plan that takes into account local manufacturing and supply constraints. Decisions on plant closures/expansions, production, warehousing, and distribution of intermediates and products are now based on a rigorous supply chain model. Savings on the order of US $4 Million/yr are being seen as a result of deploying these models. Cycle time for plan creation has gone down from several weeks to a few hours allowing management personnel to focus on analysis instead of plan creation.

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	business description & background

A polymer business with global manufacturing assets, and serving customers globally, is interested in streamlining and automating their sales and operations planning (S&OP) process. The following business aspects are relevant to this project:

The existing S&OP plan creation process is carried out individually by each product line and manufacturing site using homegrown spreadsheets and rules of thumb. The current S&OP model does not depict the complexities of the business realistically, and so is unable to generate a globally optimal plan. The high dimensionality of the problem arising from the number of products, plants, and destinations involved make it impossible to manually create a financially optimal and executable plan. In the current process, the planners spend a majority of their time in plan creation and thus have very little time to do business scenario analysis and take strategic decisions.

	the challenge

Applied Optimization, was charged with the task of implementing a realistic S&OP plan creation application that:

	the solution

After analyzing the problem thoroughly, Applied Optimization determined that their Sales & Operations Planning application, which is based on a mixed integer linear programming model, would provide the most efficient means of generating optimal sales & operation plans. The application implemented by Applied Optimization was validated with the planners, and the results were verified for feasibility and optimality. A notable achievement was that, during this process, at a very early stage in the project, several new and highly beneficial business rules were discovered which had significant financial impact. These findings kept the project team engaged and supportive for the duration of the project. Applied Optimization also took an interactive approach to developing the user interface, resulting in rich features for the user.

	the benefits

By installing Applied Optimization's sales & operations planning application, for the first time a method was available to the client to make rigorously optimal decisions intimately tied to the financial goals of the business. Among the benefits realized were:

	how applied optimization added value

The S&OP solution implemented by Applied Optimization won high marks for enabling easy creation of optimal sales & operations plans. The powerful features of the package enabled our clients to benefit to the tune of $ 4 million annually. Some specific features of particular value were:

	about the client

Our client is a leading plastics manufacturer producing hundreds of different grades of plastic. Manufacturing facilities are spread over locations on three continents, raw materials are sourced globally and customers are dispersed throughout the world in many different industries.

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