We are seeing many developments in the chemical industry. New and innovative processes for modularization of production are putting both production and logistics structures to the test. At the Chemical Logistics Forum, held by the German Logistics Association (BVL) in the Höchst district of Frankfurt, participants got a first-hand look at current trends in the chemical logistics field.

The logistics professionals were eager to hear from Dr. Stephan Kessler, project engineer at Bayer Technology Services, Leverkusen. Dr. Kessler was presenting on the conceptual and logistic implications of modular production, currently a hot topic for research and testing in the chemical industry.

Modular production, broadly speaking, is an innovative concept which increases productivity through process intensification technology. By using microreactors or high-viscosity reactors, among other things, small facilities are able to achieve a level of process efficiency that until now has been limited to large-scale plants. Production facilities can thus be scaled back.

This innovation is getting the attention of chemical logistics specialists and process technicians around the world. In the past, companies had two options when setting up a production operation. They would either select small to mid-scale processes, in which the process was often adapted to existing systems, or they would invest in the development of a central large-scale facility to achieve economies of scale.

However, central large-scale facilities have a few drawbacks:

• They are inflexible; in the event of a drop in demand, they quickly become unprofitable
• They incur considerable logistic cost and effort; products for the world’s markets are produced and shipped from only two or three facilities
• They are highly prone to the snowball effect; a breakdown at any large plant results in serious bottlenecks in the supply chain.

The modularization of production offers a better option, providing the efficiency of large-scale facilities and the flexibility that comes with smaller plants. And instead of having either a small or large facility, modularization lets companies build production containers that are flexible for set-up wherever they are needed – for example, near the customer or near the procurement sources for upstream products. This helps to cut down on transportation time. If the manufacturer needs the product in greater quantities, an additional production container is supplied.

Dr. Kessler sees real potential here: Reductions in time to market of up to 50% are possible, while energy consumption and logistics costs can be lowered by as much as to 30%. In addition, there is gained access to markets in new geographies, greater proximity to more customers, simpler response capability to policy changes, and greater process security. The disadvantages: the economies of scale of larger plants are not reproducible. “The technical feasibility of modular production has been proven,” says Kessler. But logistic aspects still have to be addressed. He cites the development of suitable logistic processes and the integration with value chains as some of the next steps in the development of modular production concepts.

To create a suitable logistics structure for modular production facilities in particular, you need highly developed tools of planning and analysis. One thing is certain: The logistics for production containers will be very different from the logistics of a central large-scale facility, as there will no longer be fixed routes. Chemical companies considering the move to a modular production system will have to ask themselves several important questions:

• Given the current customer and supplier structure, what are the optimal locations for production containers from a cost standpoint?
• What transport containers and/or types of packaging are cost-optimal and still meet customer requirements?
• What transport networks must be developed for distribution and production supply?

No “manual” optimization is possible here as the sheer number of variables overwhelms human understanding. What is needed is access to a wide range of data materials and a high-powered optimization algorithm.

Are you already using modular production for your logistics processes? Let us know in your comment below or send us a tweet @Quintiq.

By Björn Helmke