Optimization of the worldwide supply chain at Continental Tires: A case study

Continental Tires faces difficult challenges in its production and supply chain, both upstream on the production or sourcing side, and downstream on the market or delivery side. Meeting these challenges involves a complex planning process. For example, long-term production and supply chain planning, carried out every year, supports mid-term and short-term planning or scheduling. Since long-term planning is performed on the worldwide level, it affects enormous amounts of money—billions of Euros both in terms of revenue and costs. The major goals of management and planning teams are: increase sales (e.g., through optimal assignment of production to demands), reduce costs (e.g., through production in the correct locations), and balance critical trade-offs (e.g., supply versus demand). IBM addressed these challenges with the implementation of a new long-term planning solution. The mathematical optimization approach, together with a mature software platform, solves the complex planning models. The models include aspects such as limited resources, worldwide supply chain network, multiple production locations, many products, detailed material lists, production complexity, capacity limitations, and multiple planning periods. The solution helps supply chain planners and managers create the best possible plans, and react to unforeseen events and market changes—not only rapidly but also optimally in terms of revenue and costs.