Discovering advantageous potential of Economy of Chain supply chains

164 Pages·2015·4.92 MB·English

Discovering advantageous

potential of Economy of
Chain supply chains
A concept to extend Industrial Symbiosis

J. Kupfernagel
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cover picture taken from: http://www.telstra.com.au/bus/industries-demos/supply-chain/images/SupplyChain_layer2b.png
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Discovering advantageous potential
of Economy of Chain supply chains
A concept to extend Industrial Symbiosis

By

Juliane Kupfernagel

In partial fulfilment of the requirements for the degree of

Master of Science
In Industrial Ecology

Student number: s1259466 (Leiden), 4260759 (Delft)
At Leiden University and the Delft University of Technology,
To be defended publicly on Thursday March 5, 2015 at 10:00 AM.

Thesis committee:
Dr. T.E. van der Lei (1st Supervisor) TBM, TU Delft
Ir. P.L.J. Swinkels (2nd Supervisor) TNW, TU Delft
Dr.ir. G. Korevaar (3rd Supervisor) TBM, TU Delft

An electronic version of this thesis is available at http://repository.tudelft.nl/.

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Executive summary
This report provides an analysis of competitive advantages for a new way of producing and supplying
chemicals in a concept called Economy of Chain (EoC). By applying this concept existing supply chain
architecture is transformed. Economy of Chain is a modular production concept, with the help of
process intensified equipment the reactor sizes are reduced and ideally a whole factory can fit into
just one shipping container. Within the Economy of Chain different container factories can be
operated in series and build a local production network (LPN). The small size of the factory allow the
network to be mobile, the network could be sited at the demand site (customer based) or at the
supply site (supplier based).
Industrial Symbiosis (IS) consists of local supply chains and through cooperation wastes are reduced
within the network. EoC has the same objectives as IS. The main result of this research is the answer
on how EoC can contribute to establish IS.
The perspective of analysis is multidisciplinary. The advantages for EoC are derived from co-siting,
Process Intensification (PI) technology and supply chain perspectives. A definition and taxonomy of
co-siting has been developed because the term has not existed in academic literature yet. The
methods of analysis include literature review, desk research and the conduction of interviews with
companies involved in co-siting. The advantages of EoC from a technological point of view and from a
supply chain perspective have been derived through desk research.
The results have been used to create an analytical framework. This framework has been developed to
have a guideline for analyzing three case studies. Per case study three different supply chain scenarios
were created: an Economy of Scale supply chain, supplier based Economy of Chain supply chain and a
customer based Economy of Chain supply chain. The method of case study analysis has been chosen
to evaluate the applicability of the found advantages with existing or conceptual supply chains. The
case studies cover the upstream supply chain of polymer production. All calculations and in depth
argumentation of scoring per supply chain scenario can be found in the appendixes.
The Economy of Chain supplier based scenarios always scored better than the Economy of Scale
scenario. In one case study the EoS scenario scored better than EoC customer based. The good
performance can be explained with the finding that a LPN can reduce complexities (in terms of
transaction costs) and uncertainties due to inherent properties. This makes an EoC supply chain
difficult to copy.
The Economy of Chain supply chains scored better when the reference supply chain was not
integrated and when the EoC production technology was safer because of redesign than the EoS
supply chain.
Some conceptual advantages have been proven to not be applicable in some case studies. For
example the transport reduction is not present if the status quo (Economy of Scale) supply chain is
already very much integrated. Additionally high capacities of a LPN that is customer based lead to
high delivery rates which eliminates the conceptual advantage of reduced transport.
From a technological point of view the LPN capacity is also critical to the size of a container factory. PI
technology limits the volumetric throughput. This could mean that one factory needs more containers
to ensure the capacity.
The advantage of less obsolescent product through production on demand is only true if the LPN
capacity is of the same order of magnitude than the customer’s demand. Otherwise overproduction
takes place or capacity is not fully used.
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Results of the case study show that certain advantages of EoC are indeed symbiotic; these
advantages are:
 Overall safety increase through process redesign and reduced transportation
 Efficient land use
 High agility of LPN to react to customer changes, possibility for Economy of Scope
 Fast market entry, and
 Waste reduction and less obsolescence
Individual advantages that are present for either the local production network or the host are:
 Agility to react to regulatory changes
 Just-in-time delivery
 Reduced inventory
 Less sunk costs because of plug&play interfaces
 Scalability
Economy of chain has a different perception of waste than Industrial Symbiosis, IS sees wastes as a
feedstock but EoC wants to eliminate it through process design. However both concepts aim for
reducing waste on a system’s level. EoC cannot be categorized as a sustainable supply chain network
because waste is reduced on a system’s level and because Economy of Chain uses or could use
effectuation logic to find a host. Economy of Chain can be a (temporarily) missing piece to establish or
extend Industrial Symbiosis. Because a LPN needs to be co-sited the same initial conditions need to be
fulfilled as for IS: a trustworthy cooperation between firms and mutual advantages. Additionally, EoC
can reduce drawbacks of IS: fluctuating demand can be handled by scaling up the LPN (operating
more container factories in parallel or shutting down), safer technological design and fast
implementation because of modular design.
The report also has some limitations. It has been found that the checklist of advantages is rather
biased towards Economy of Chain. This checklist needs to be adjusted in regard to its bias and in
regard to redundancy. The analysis is rather qualitative, this has to do with the state of research in PI
and with the fact the EoC is not yet commercial. However, order of magnitude calculations have been
performed to get an estimate of EoC plant/ supply chain size as well as delivery rates. The information
on the polymer markets is limited, only public available information has been used.
For future research it is recommended to investigate the role of technologies in order to create
Industrial Symbiosis. It is still unclear how a business model of an LPN could look like. However, the
amount of mutual and individual advantages could first of all favor a value based pricing approach. A
LPN could be an additional service of an existing chemical company that can now offer a more
customized service to a new customer segment. The “scaling up” approach has manifested into the
business paradigm to increase profitability, however thinking small could be beneficial to better satisfy
customer needs.

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Content
Executive summary ..................................................................................................................... III
List of tables ............................................................................................................................. VIII
List of figures ............................................................................................................................... IX
List of abbreviations ..................................................................................................................... XI
1 Introduction ........................................................................................................................... 1
1.1 Introduction into Economy of Chain ................................................................................. 1
1.2 Problem definition ........................................................................................................... 2
1.2.1 Motivation to study Economy of Chain and Industrial Symbiosis ................................. 3
1.2.2 Theoretical gap ....................................................................................................... 4
1.3 Research objective(s) ...................................................................................................... 6
1.4 Research Questions ........................................................................................................ 7
1.5 Research approach and methodology ............................................................................... 8
1.6 Scope and Boundaries ....................................................................................................10
2 Co-siting and conceptual advantages for Economy of Chain .....................................................11
2.1 Exploring the meaning of co-siting ..................................................................................13
2.1.1 Literature review and interviews on co-siting ............................................................13
2.1.2 Definition of co-siting ..............................................................................................14
2.2 Examples of Co-siting.....................................................................................................15
2.2.1 General co-siting examples .....................................................................................15
2.2.2 Specific co-siting examples......................................................................................17
2.3 A taxonomy of Co-siting .................................................................................................19
2.3.1 Building Blocks for the taxonomy of co-siting ...........................................................19
2.3.2 Types of co-siting that distinguish the relationship within a network ..........................20
2.4 Co-siting a local production network ...............................................................................21
2.5 Results: Conceptual advantages of co-sited production and services .................................22
3 Process Intensification and modular chemical plants – conceptual advantages for Economy of
Chain ...........................................................................................................................................25
3.1 Large scale continuous and batch production in the chemical industry ..............................26
3.2 Process Intensification ...................................................................................................27
3.3 The Spinning disc reactor – An example of PI equipment .................................................29
3.4 Modular chemical production – a factory in a container ....................................................30
3.5 Case studies that compare modular chemical production with batch and continuous
production ................................................................................................................................33
3.5.1 Small scale modular continuous vs. large scale continuous ........................................33
3.5.2 Small scale modular continuous vs. batch ................................................................34
3.6 Results: The advantages of small scale modular chemical production ................................35
4 Supply Chain perspectives and conceptual advantages for Economy of Chain ...........................36
V
4.1 Trends in Supply Chain Management ..............................................................................37
4.2 Increasing the competitive advantage of supply chains through the management of
complexity and uncertainty........................................................................................................38
4.3 Supply chain perspectives ..............................................................................................40
4.3.1 Uncertainty related SC perspectives .........................................................................40
4.3.2 Complexity related SC perspectives .........................................................................42
4.4 Results: The advantages of an Economy of Scale from supply chain perspectives ..............43
5 Analytical Framework to measure the advantageous potential of Economy of Chain ..................46
5.1 Developing the analytical framework ...............................................................................47
5.2 Guide to use the analytical framework ............................................................................48
6 Case study polymers .............................................................................................................52
6.1 Case study 1: compounded PVC for cable production .......................................................53
6.1.1 Technology P-PVC production .................................................................................54
6.1.2 Co-siting of P-PVC production ..................................................................................58
6.1.3 Uncertainty and complexity in the P-PVC supply chain ..............................................61
6.1.4 Advantages in the EoS and EoC P-PVC supply chain .................................................64
6.2 Case study 2: PMMA production for photoresist use in Integrated Circuit industry ..............68
6.2.1 Technology PMMA production .................................................................................68
6.2.2 Co-siting of PMMA production .................................................................................72
6.2.3 Uncertainties and complexity in the PMMA supply chain ............................................74
6.2.4 Advantages in the EoS and EoC PMMA supply chain .................................................77
6.3 Case study 3: PC production ...........................................................................................82
6.3.1 Technology PC production.......................................................................................82
6.3.2 Co-siting of PC production .......................................................................................86
6.3.3 Uncertainties and complexity in the PC supply chain .................................................89
6.3.4 Advantages in the EoS and EoC PC supply chain ......................................................91
6.4 Symbiotic potential of Economy of Chain .........................................................................96
6.4.1 Symbiotic benefits in Economy of Chain ...................................................................96
6.4.2 Individual benefits in Economy of Chain ...................................................................97
6.5 Results of case studies and generalization of results ........................................................98
7 Discussion .......................................................................................................................... 100
7.1 Discussion on results: The added value to the science community .................................. 100
7.1.1 Definition and taxonomy of co-siting ...................................................................... 100
7.1.2 A framework to compare advantageous potential of Economy of Chain supply
chain…………………………………………………………………………………………………………………101
7.1.3 Understanding profitable conditions for Economy of Chain ...................................... 102
7.1.4 Adding Economy of Chain to the Industrial Symbiosis literature ............................... 103
7.2 Discussion on data gathering ........................................................................................ 105
VI
7.3 Discussion on approach/ methodology .......................................................................... 105
7.4 The societal benefit of this thesis .................................................................................. 106
7.5 Future research ........................................................................................................... 107
8 Conclusion .......................................................................................................................... 108
References ................................................................................................................................. 113
Appendix I ................................................................................................................................. 129
Appendix II ................................................................................................................................ 137
Appendix III ............................................................................................................................... 139
Appendix IV ............................................................................................................................... 148
Appendix V ................................................................................................................................ 149

VII
List of tables
Table 1: Search results on ScienceDirect on 10.12.2014 for ”Industrial Symbiosis“ AND
“Supply Chain” in title, abstract, keywords .............................................................................. 4
Table 2: Literature search results (17.02.2014) .......................................................................13
Table 3: levels of co-siting and their dimensions .....................................................................20
Table 4: Typical range of SDR operating parameters (Boodhoo & Harvey, 2013) ...................30
Table 5: Drivers of complexity and uncertainty (EPCA, 2013) .................................................39
Table 6: Advantages for EoC based on supply chain trends and perspectives .......................44
Table 7: Delivery rates of inputs per module capacity, read as: every x days a container of
input is delivered .......................................................................................................................59
Table 8: Co-siting assessment of PVC supply chain for Economy of Scale and Economy of
Chain .........................................................................................................................................60
Table 9: Advantages in the different PVC supply chains .........................................................66
Table 10: Delivery frequencies for different module capacities ................................................73
Table 11: Co-siting assessment of PMMA supply chain for Economy of Scale and Economy of
Chain .........................................................................................................................................73
Table 12: Advantages in the different PMMA supply chains....................................................79
Table 13: Delivery rates for EoC customer based PC production ............................................87
Table 14: Co-siting assessment of PC supply chain for Economy of Scale and Economy of
Chain (excl. WWTP) ...................................................................................................................87
Table 15: Advantages in the different PC supply chains .........................................................93
Table 16: Comparison of weighted scoring of all case studies .................................................99
Table 17: Symbiotic advantages of Eoc and IS ....................................................................... 111
Table 18: Characteristics of a SDR ......................................................................................... 139
Table 19: Characteristics of the large scale MMA production plant (approx. 120kt/a)
(Delikonstantis, et al., 2014) ................................................................................................... 141
Table 20: Characteristics of a small scale MMA production plant with 12kt/a capacity ..... 141
Table 21: Characteristics to determine the amount of spinning discs for a 12kt MMA plant
based on heat transfer ............................................................................................................ 142
Table 22: Characteristics to determine the amount of spinning discs for a 12kt MMA plant
based on mass transfer ........................................................................................................... 142
Table 23: Characteristics of a 10kt large scale PC production plant (Gubis, et al., 2014) ... 143
Table 24: Characteristics to determine the amount of spinning discs for a 1kt PC plant
based on heat transfer ............................................................................................................ 144
Table 25: Characteristics to determine the amount of spinning discs for a 1kt PC plant
based on mass transfer ........................................................................................................... 144
Table 26: Equipment dimensions for MMA production ......................................................... 146

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