VALUE-CHAIN PLANNING IN THE FOREST BIOREFINERY: CASE STUDY ANALYZING MANUFACTURING FLEXIBILITY
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The biorefinery concept is emerging as a promising solution to transform the pulp and paper industry and improve the fundamental business model, including the development of more robust planning approaches that consider overall supply-chain profitability. Products manufactured by biorefineries will certainly face market price volatility because they will replace or substitute for fossil-based products. Several strategies can be used to mitigate this risk of market volatility such as financial hedging, vertical integration, and partnerships, but also manufacturing flexibility. With better planning and management of process flexibility, production and procurement costs can be reduced while maximizing revenues. The objective of this paper is to study the benefits and implications of manufacturing flexibility in a multi-product biorefinery. A case study of a newsprint mill is used that implements a biorefinery based on wood fractionation producing ethanol, hemicellulose sugars, furfural, and lignin. These are sold both as specialty chemicals and as fuels. Supply-chain planning is optimized under different market scenarios using a tactical model formulated as a mixed-integer linear program with a profit maximization objective. Results of the case study show that, for a multi-product biorefinery, feedstock and throughput flexibility can have significant impacts on the profitability of operations and can therefore be useful for mitigating market volatility. In certain market scenarios, exploiting manufacturing flexibility can increase EBITDA by up to 15%. The results also show the importance of designing biorefinery processes with manufacturing flexibility to benefit from sales and procurement opportunities.
