whitepaper tobacc drivers

8/3/2019 Whitepaper Tobacc Drivers

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WHITEPAPERDRIVERS IN THE TOBACCO

INDUSTRY

The tobacco industry operates in a mature market with highcost pressure and limited growth opportunities. Product and

marketing innovations lead to a high number of productvariants. This creates challenges for scheduling in the

production process.

iFRP® addresses the core tobacco industry issues, delivering

integrated batch/continuous and real time scheduling. Thisenables cigarette factories to efficiently schedule their

production processes for the first time in history.



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© by iFactory Inc., 2010, All rights reserved.

Drivers in the Tobacco Industry

1. The Present State of the Tobacco Industry

The tobacco industry operates in a mature market. It has shown low-growth rates fora number of years. Consumption of tobacco products in industrialized countries hasbeen steadily declining. This is driven by governmental regulations (bans onsmoking, sin taxes) and increased health awareness by consumers. Reduced demandcombined with competitive pressure makes it difficult for tobacco producers toincrease profit through revenue. In order to keep profit margins stable, tobaccocompanies have embarked on large-scale cost and restructuring programs duringrecent years. This cost pressure is expected to remain for at least the next decadeand will force tobacco companies to look for new cost levers.

Manufacturing makes up the largest share of cost for the tobacco industry.Production scheduling is one of the most efficient ways to reduce cost in theproduction process. The complex batch/continuous production process in tobaccomanufacturing combined with a lack of suitable scheduling technology has preventedtobacco manufacturers thus far from implementing these savings potentials. iFRP ® isthe first scheduler that enables tobacco companies to exploit the this potential.

2. Core Industry Issues

The topics below are crucial for increasing profit and countering revenue loss in thetobacco industry.

Cost PressureIn the slow-growing tobacco market, revenue increases are mainly originated bymarketing expenditures. Due to this we have seen a trend toward steadily increasingexpenditures for sales in the last years. To keep profit margins stable, it is necessary

for costs to be reduced. The industries’ awareness of this problem can be seen invarious manufacturing excellence initiatives.

Global MarketsDue to increased health awareness and political pressure in industrialized countries,market growth is mainly achieved in emerging markets. These markets often havedifferent consumer behavior and need to be served with different products. Thisleads to a global supply process and to a complex value chain from R&D toproduction forecast and logistics. Production needs to efficiently support globaldemand.



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Increasing Regulations and Green ManufacturingEcological and health issues are gaining public focus. This has resulted ingovernmental regulations of green manufacturing and ecological sustainability, whichare not only relevant for developed countries. Production processes in the tobaccoindustry must keep costs low despite new regulations. This leads to an increasingnumber of constraints for the entire process.

Increasing Number of Product Variants and Packaging SizesDeveloping new market segments enables tobacco companies to increase marketshare and revenues in a mature market. These new market segments are served withnew brands and product variants (e.g. slim and mild cigarettes). This increases thenumber of different products and package sizes which in turn increases the

complexity of the production process. Manufacturing processes must be align withdemand forecasts for an ever increasing number product variants.

3. iFRP ® Core Attributes

The manufacturing side is crucial for tobacco companies to solve core industryissues. Planning and scheduling is a key lever in the tobacco production process togain efficiency and reach manufacturing excellence. iFRP ® delivers the most efficientscheduling technology for the tobacco industry. Within this industry, fast and reliable

production scheduling is vital, due to the complexity of the manufacturing process.iFRP ® can play a key role in cutting costs and reaching manufacturing excellence.



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Cost Pressure Global Markets Regulations andGreen Manufacturing

Increased Number ofProduct Variants

•Automatedscheduling of mixedbatch/ continuousprocess

•Minimize negativeeffects forproduction whileimplementingregulations

•Control highnumber of variantsin complex process

flows

•Minimizing resultsof disruptions

•Low rejection rate

•Adopt fast to globalrequests

•Maximization ofefficiency despiteregulatoryconstraints

•Flexible reaction onschedule changes

•Handling ofcomplex productionprograms

•Minimization of totalIT cost of ownership

•Upfronttransparency andreliability of cost

•Develop sustainablescenarios

• Joined capacitysimulation

•Productionscenarios with max.revenue

•Early transparencyregarding effects ofregulations ofproduction

•Predictable outputeven in complexproductionscenarios

IntegratedBatch/ContinuousScheduling

Real Time Scheduling

Integrates in ExistingIT-Environment

Simulation

i F R P ® c o r e a t

t r i b u

t e s

Core industry issues

Cost Pressure Global Markets Regulations andGreen Manufacturing

Increased Number ofProduct Variants

•Automatedscheduling of mixedbatch/ continuousprocess

•Minimize negativeeffects forproduction whileimplementingregulations

•Control highnumber of variantsin complex process

flows

•Minimizing resultsof disruptions

•Low rejection rate

•Adopt fast to globalrequests

•Maximization ofefficiency despiteregulatoryconstraints

•Flexible reaction onschedule changes

•Handling ofcomplex productionprograms

•Minimization of totalIT cost of ownership

•Upfronttransparency andreliability of cost

•Develop sustainablescenarios

• Joined capacitysimulation

•Productionscenarios with max.revenue

•Early transparencyregarding effects ofregulations ofproduction

•Predictable outputeven in complexproductionscenarios

IntegratedBatch/ContinuousScheduling

Real Time Scheduling

Integrates in ExistingIT-Environment

Simulation

i F R P ® c o r e a t

t r i b u

t e s

Core industry issues

iFRP ® scheduling technology provides tobacco companies the toolset to solve thesechallenges.

Integrated Batch/Continuous SchedulingIn cigarette factories, batch related primary processes overlap with continuous basedsecondary steps. This makes cigarette manufacturing highly complex and thusextremely difficult to schedule. Once a productions schedule is determined it ishighly vulnerable to disruptions. In such a complex environment, iFRP ® hasdemonstrated its ability to schedule complex production processes among variousconstraints.

SteamCondi-tioning

CaseLeaf

Dryer

Blen-ding

CuttingMillingThresh-

ing

DryingBlen-ding

MainMixer Maker

Pack-ing

P r o

d u c

t i o n

s t e p

Primary (Batch Focus) Secondary(Continuous Focus)

Cigarette manufacturing process

SteamCondi-tioning

CaseLeaf

Dryer

Blen-ding


ing

DryingBlen-ding

MainMixer Maker

Pack-ing

P r o

d u c

t i o n

s t e p


SteamCondi-tioning

CaseLeaf

Dryer

Blen-ding


ing

DryingBlen-ding

MainMixer Maker

Pack-ing

P r o

d u c

t i o n

s t e p


Cigarette manufacturing process

iFRP ® adresses core tobacco industry issues

iFRP® covers the whole cigarette manufacturing process (batch and continuous steps)



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Real-Time SchedulingExternal and internal events disrupt the manufacturing process at various timesthroughout a given day. This often creates a need for rescheduling production ordersto avoid rejections and scrap production. Quick reaction time is a core requirement

for any scheduler used in tobacco production. Most schedulers lack this ability.iFRP ®, however, reacts in real time to events, starting scheduling runs as needed,and delivering optimized results in seconds.

Integrates into Existing IT EnvironmentsHeterogeneous IT environments are cost drivers. Easy integration in existing ITenvironments was, therefore, a key requirement in developing iFRP ®. The goal is tominimize the client's total IT cost and complexity.

SimulationNew production lines, new machines, or new product variants increase thecomplexity of the production process. iFRP ® adapts to such changes without need forreprogramming or reconfiguration. Furthermore, future factory floor plans can besimulated to explore efficiency. iFRP ® simulation becomes an operative and strategicplanning tool for the whole factory.

4. Conclusion

For the tobacco industry, the use of effective scheduling technologies is essential toincrease profit margins. iFRP ® has demonstrated its scheduling powers in thisbatch/continuous industry, providing the following key features.

Fast Scheduling – The real time ability of iFRP ® and its potential to run ad hocaccording to the relevant manufacturing situation results in faster decisions thenother scheduling technologies.Optimized Schedules – As a true analytical solution, iFRP ® is not dependent on

heuristics, providing an optimal schedule.Transparency - With the simulation feature, iFRP ® provides transparency overprocess and scheduling decisions, which enables manufacturing excellence, even incomplex environments.



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About iFactory Inc.

iFactory was founded in 2007 in the United States.The company offers a real time planning and scheduling solution for manufacturingprocesses. The iFRP® Suite achieves operational excellence and predictability andtransparency among the whole manufacturing process and the whole factory througha unique and patent protected algorithm.iFactory has offices in the USA, Germany and Brazil.

iFactory and iFRP® contacts in The United States and Europe

Allyson FamousPhone: 503-719-2194Fax: 270-916-6291 [email protected]

Martin SeitzPhone: +49-941-29066-170Fax: +49-941-89975-779 [email protected]

© by iFactory Inc., 2010, All rights reserved. iFRP is a registered trademark of iFactory Inc. All used names of products and companies are properties of their relevant owners. The

functionality of the described products are under frequent development and can change at any time. Shown examples have exemplary character only.

iFactory Inc.1690 19th StreetWest Linn, OR 97068USA

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