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Pasco Shikishima – Global Supply Chain Optimization

Pasco

Pasco Shikishima, a Japanese leading food company ($1.5 billion in annual revenue, 4,000 employees), has chosen LocalSolver to solve a huge, global supply chain optimization problem. LocalSolver won the benchmark against Gurobi, Cplex, and Xpress. The software solution was developed by the optimization experts of the service company Future Architect, with the support from MSI, reseller of LocalSolver in Japan, together with the LocalSolver team. This optimization solution is daily used in production since 2015.

Context and problem

Pasco's supply chain involves 13 factories in Japan, each one with several production lines, more than 100 supply sites, and 26 delivery hubs. Pasco's catalog contains more than 1,000 products. 900,000 orders have to be produced each day in Pasco's factories. For each order, Pasco has to decide where and when to produce it. Moreover, Pasco has to decide where to source raw materials and which routes to take to deliver distribution centers. The goal is to minimize production and distribution costs over several days, while respecting production and distribution capacities.

checklist

Key figures

  • 1,000 catalog products
  • 900,000 orders to produce per day
  • 100 supply sites
  • 13 production sites
  • 26 delivery sites
link

Constraints

  • Production capacities
  • Production times
  • Distribution capacities
  • Distribution times
target

Objectives

  • 1. Minimize production and distribution costs
  • 2. Maximize use efficiency of raw materials
  • 3. Minimize work-in-progress (WIP)
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32 million variables, including 8 million binaries

Once mathematically modeled using LocalSolver (or any other solver), the resulting problem to be solved is gigantic. Here is the typical scale of LocalSolver instances solved at Pasco:

  • 32 million variables
  • 1 million constraints
  • 8 million binary variables
  • 16 objectives

Such a model is solved in 3 minutes of running time on a basic server, including input and output processing times.

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LocalSolver won the benchmark against Cplex, Gurobi, Xpress

After weeks of an extensive benchmark against leading commercial MIP solvers (Cplex, Gurobi, Xpress), LocalSolver proved to be the sole general-purpose mathematical optimization solver able to deliver high-quality solutions quickly to Pasco's all-Japan supply chain optimization problem. MIP solvers needed the original problem to be decomposed into 20 subproblems, each one solved separately, which then led to poor-quality solutions to the original global problem. On the contrary, LocalSolver was able to tackle it directly, without any decomposition. Having passed all stress tests, LocalSolver was integrated into Pasco's Supply Chain Management (SCM) information system. Since 2015, it is used on a daily basis to save a significant part of Pasco's production and distribution costs.

We developed the Pasco optimization model using LocalSolver within a few days of work. LocalSolver provides outstanding solutions, as considered by Pasco planners, in just a few minutes of running times, even though the number of variables is gigantic (tens of millions). We could not imagine that such a feat was possible at first, since state-of-the-art MIP solvers like Cplex, Gurobi, Xpress were unable to tackle the problem in hours. Now we know that by using LocalSolver, it's possible!

Mr. Shinichi Kuroda, Pasco SCM Optimization Project Director, Future Architect.

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