Enterprise-wide Optimization: A New Frontier in Process Systems Engineering

Enterprise-wide optimization (EWO) is a new emerging area that lies at the interface of chemical engineering and operations research, and has become a major goal in the process industries due to the increasing pressures for remaining competitive in the global marketplace. EWO involves optimizing the operations of supply, manufacturing and distribution activities of a company to reduce costs and inventories. A major focus in EWO is the optimal operation of manufacturing facilities, which often requires the use of nonlinear process models. Major operational items include planning, scheduling, realtime optimization and inventory control. One of the key features of EWO is integration of the information and the decision-making among the various functions that comprise the supply chain of the company. This can be achieved with modern IT tools, which together with the internet, have promoted e-commerce. However, as will be discussed, to fully realize the potential of transactional IT tools, the development of sophisticated deterministic and stochastic linear/nonlinear optimization models and algorithms (analytical IT tools) is needed to explore and analyze alternatives of the supply chain to yield overall optimum economic performance, as well as high levels of customer satisfaction. An additional challenge is the integrated and coordinated decision-making across the various functions in a company (purchasing, manufacturing, distribution, sales), across various geographically distributed organizations (vendors, facilities and markets), and across various levels of decision-making (strategic, tactical and operational). © 2005 American Institute of Chemical Engineers AIChE J, 51: 1846–1857, 2005