Product-to-plant allocation optimisation between European hubs

Founded at the beginning of the 20th century, Ideal Standard is a multiplant manufacturer specialized in the production of porcelain for bathrooms, toilets and plumbing. It owns the main brands in the segment within Europe, having more than 2 thousand units of different products.  

The European market can potentially be supplied by all of its production network, located in England, Italy, Bulgaria and the Czech Republic. With some restrictions on technology and know-how, the distribution of products between the factories can be optimized considering the cost of producing a certain part at each location plus the logistical cost up to the resellers. However, this task is complicated when considering the very different production profiles between the factories (higher or lower automation) as well as the high cost of manufacturing the molds, which are used to produce up to hundreds or thousands of pieces depending on the technology.

We created a fully customized planning model to represent each process (molding, kiln, painting, among others) of each factory, capable of handling a large number of SKUs. The mixture of integer decisions and the non-linear calculation of productivity required a mixed-integer model with quadratic constraints. The purpose of the production allocation optimization was to minimize global costs over a one-year horizon.

The use of the model in the supply chain network has impacted the annual budget exercise, a high reduction in the variable cost was observed as well as a better use of the overall production capacity of each plant.