Decentralized modular production to increase supply chain efficiency in chemical markets

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Decentralized modular production to increase supply chain efficiency in chemical markets An example of polymer production Tristan Becker1 · Bastian Bruns2 · Stefan Lier3 · Brigitte Werners4 Accepted: 14 October 2020 © The Author(s) 2020

Abstract In the chemical industry, shortened product life cycles and greater differentiation of customer demand increase challenges to efficiently meet specific customer requirements. Thus, production systems with high flexibility are required. One innovative production concept that meets this requirement is decentralized, small-scale modular production which offers significantly more flexibility in the tactical configuration of the production network. Corresponding production plants are assembled from standardized apparatus modules in transportation containers, hereby enabling a fast relocation of modular plants and adjustments of the production process. Therefore, modular plants can be operated close to customers or suppliers, which supports local sourcing strategies and a reduction in delivery costs. In this paper, we analyze the advantages of these modular production systems for a case from the specialty chemicals industry. Respective advantages arise especially from a technically flexible design of parallel process lines, autonomous production and local sourcing. In order to evaluate economic efficiency and network configuration of modular production networks, an efficient mathematical formulation for the optimization is proposed. This formulation includes a new way to model relocations of modules. We apply this model to a case based on real data from the chemical industry. As a result of this application we come to three technical and managerial conclusions. Firstly, technical designs with parallel process lines improve flexibility and efficiency compared to mono processes. Secondly, autonomous production increases economic efficiency in contrast to staffed production and finally, local sourcing offers significant cost reduction potential compared to central sourcing. Keywords  Small-scale modular production · Chemical industry · Network optimization · Decentralized production network · Supply chain

* Tristan Becker [email protected]‑aachen.de Extended author information available on the last page of the article

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JEL Classification  C02 · C61 · L23 · L65 · O14

1 Introduction In the chemical industry, shorter product life cycles and greater differentiation leads to increasing difficulties in predicting and meeting customer demand. One innovative production concept that fulfills these requirements is small-scale modular production, for which the first prototypical chemical plants have already been deployed. These modular plants can be swiftly assembled from standardized apparatuses and can be installed in transportation containers. It is possible to quickly relocate modular plants or to change the production process. Additionally, production capacities can be scaled by adding or removing modular plants. Therefore, it is possibl