(223c) Optimizing the Industrial Gas Supply Chain Across Organizational Boundaries

Global competition and increasing energy costs make it more important than ever to optimize the energy efficiency of US manufacturing industries. While several industries and organizations have focused on the efficiency of individual units or plants, organizational boundaries have limited most from doing a higher level optimization of an entire supply chain. One specific area of potential impact is the Industrial Gas supply chain, where the typical supply chain includes the energy utility, the industrial gas producer, the manufacturing plant using the industrial gases, and the downstream manufacturing or production operations. The operational cost of the entire supply chain is likely much higher than it needs to be as a result of uncoordinated supply and demand. For example, while a steel mill is producing to satisfy a given market demand or inventory target, they do not consider the fact that the cost to produce oxygen may change as a function of the time of the day as the electricity price changes. Such a lack of coordination inherently limits the efficiency of the overall process, increasing energy use, emissions, and labor.

This paper discusses the impact of optimizing the overall supply chain by developing tools to facilitate such an analysis, identifying the data management infrastructure necessary to enable such collaboration, and developing methods to show how different companies, each with their own financial objectives, can best share the benefit of such collaboration. Such work is needed to transform our approach in energy intensive industries and lead to a transformative step change in manufacturing competitiveness. While the proposed work is applied to industrial gas supply chains, it's likely applicable to many manufacturing supply chains.