OR adds millions to car maker's profits

A car manufacturing plant in north east England had been shown consistently to be the most efficient in Europe. However, efficiency does not guarantee a manufacturing plant will stay open. In 1999 the company identified a need to increase both production and profitability, or close down the plant.

The company decided to build a third car model at the factory alongside the two they already produced, but without adding a third production line. However, such an idea was fraught with complexities and production scheduling using their existing techniques was virtually impossible.

The challenge was to schedule three car models simultaneously on only two production lines, with the need to respect some 2,500 operational constraints governing how the different vehicles and their features could be sequenced.

Recognising complexities and the range of problems created by adding a new model, the company enlisted a firm of OR Specialists. Their solution would have to account for all mandatory constraints in the factory and encompass a single end to end schedule covering all parts of the plant production process.

By applying OR techniques, the problem was split into that of routing and labelling. The solution used a line map and the required volume to generate ‘time buckets’- time determining at what point a vehicle must pass each construction point on the assembly line.

Application of the ‘solution’ to all production at the plant achieved a remarkable additional 30% in production capacity without the need for a further production line. Prior to application of the OR based solution, scheduling adherence was around 3%, but that quickly rose to over 98% afterward, allowing the company the additional benefit of reducing materials stock holding by up to 40%.

The company then announced their intention to build a further new model at the factory. This required the plant to be even more flexible, with the possibility of regular changes to the routing of four models down the two production lines. Adjustments to the original OR solution were made, and the production of four models from two lines quickly became feasible.

The first of the new models rolled off the production line as planned in December 2006 and the scheduling system continues to plan all production at the plant. At maximum capacity the direct financial benefit of the system has been valued at £2 million per week, and 1,200 jobs have been safeguarded at the plant.