Elkem Uses Optimization in Redesigning Its Supply Chain

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.