The encyclopedia · Engineering & Operations · Operational decision · 2005–2012
Baosteel replaced manual planning with OR, a 17% capability jump
China's largest steelmaker installed four decision systems that plan production, batching and delivery, lifting capability 17% and cutting CO2.
Baosteel (Shanghai Baoshan Iron and Steel Complex)
the move
Baosteel is China's largest and the world's third-largest steel company, and the Shanghai plant's manual planning of production, batching and delivery was a bottleneck.
From 2005, a research team developed novel optimization algorithms and tailored metaheuristics and built four decision support systems to replace the manual planning methods at the plant.
The systems brought scientific operations management to the plant and transformed its production and final-product delivery operations, so complex scheduling became an optimized, reproducible plan.
Baosteel estimated a cumulative economic benefit from 2007 to 2012 and continuing annual benefit; the systems improved its IT and operations-management capability by 17% and cut carbon dioxide emissions by 585,770 tons a year.
why it works
- A multi-stage steel plant has too many interacting constraints for manual planning.
- Optimization made the plan reproducible and near-optimal rather than good enough.
- Four systems spanned production, batching and logistics so the decisions lined up.
- The measured win was financial and also a large cut in emissions.
what transfers
For a process too large for anyone to see whole, the fix is not better intuition. It is a decision-support system that turns physical constraints into an optimized plan you can actually run.
what came after
Baosteel embedded the systems and kept using them after the study; the research team published in Interfaces, and the plant reported a 17% capability improvement plus a substantial annual cut in CO2.
references
- Operations Research Transforms Baosteel's Operations
- Operations Research Transforms Baosteel's Operations
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