Optimized strategic planning for increased profitability

Running more what-if scenarios to support faster decision-making
by Mike Tucker
7-minute read
Toros Tarim Mersin fertilizer plant at sunset with red sky

As Turkey’s largest fertilizer manufacturer, Toros Tarim produces over two million metric tons of fertilizer products every year. Its business planners must scrutinize every link in the supply chain for cost savings and production efficiencies to bolster margins. At the same time, management must react as quickly as possible to changes in demand for hundreds of fertilizer products.

“When farmers decide to use different fertilizers, Toros Tarim has to adapt to the new demand, even though their factories are operating at full capacity,” says Alper Şener, Data Analytics Head at IBM Business Partner Selco Consulting. “At that point, it becomes quite hard to decide which customer demands to satisfy and which demands to forego.”

For years, Toros Tarim planners used spreadsheets to develop optimal solutions for fertilizer production, based on the price of raw materials, customer demand and the production capabilities of the company’s three manufacturing plants. But this manual process was time-intensive and planners didn’t always have all the data required to see the overall situation.

Toros Tarim Ceyhan shipping dock at dusk with ship at pier

Optimization scenarios that once took days to prepare can now run in under

30

minutes

The IBM optimization platform enables Toros Tarim plants to achieve more than

95%

capacity usage and demand coverage

Well beyond enabling the digitization of our company’s planning processes, this model not only helps our decision-making process but also allows us to view operations in a wider perspective. With all the different scenarios created, it helps us quickly respond to market demand and changing conditions.
Hakan Göral
Chairman of the Board of Directors, Toros Tarim Sanayi ve Ticaret A.Ş.

“Planners could spend a week developing an optimal solution for the next month, but when they took it upstairs, management would say, ‘That looks good, but we need another scenario,’” says Şener. “Each time a new scenario was requested, it added another week to the schedule, and it could be three or four weeks before managers could make a decision. Meanwhile, market conditions kept changing.”

Further complicating the process was the fact that planners were not working with a complete set of data. “Each plant had their own production figures and product definitions and sometimes plant managers would use different subjective decision processes,” says Şener. “By using different data sets in different functional silos, it wasn’t possible to develop fully optimized scenarios. There was a huge opportunity for improvement.”

Toros Tarim Mersin plant at night with palm trees in foreground
Toros Tarim tank farm at Ceyhan plant at sunset with water in foreground
If you look at the big picture, IBM ILOG CPLEX is not only restructuring manual processes with analytical methods. It is also helping to develop and reorganize how Toros Tarim plans their supply chain operations.
Alper Şener
Data Analytics Head, IBM Business Partner Selco Consulting
Responding to opportunities with agility
If you look at the big picture, IBM ILOG CPLEX is not only restructuring manual processes with analytical methods. It is also helping to develop and reorganize how Toros Tarim plans their supply chain operations.
Alper Şener
Data Analytics Head, IBM Business Partner Selco Consulting

Based on its extensive experience with supply chain management, business analytics and information technology, IBM Business Partner Selco Consulting was chosen by Toros Tarim to digitize the company’s planning processes. “Selco consulted with us on software development and created a mathematical optimization model to find the best way to maximize profit, taking into consideration all company constraints,” says Hakan Göral, Chairman of the Board of Directors at Toros Tarim. “It took about a year and a half to build the model.”

Building a detailed math model was an enormous undertaking. Initially, it required extensive research to understand the many components of the supply chain that fed Toros Tarim’s three manufacturing plants. “The final model we built was comprised of seven million variables operating over one million constraints such as capacity usage, costs and fertilizer recipe alternatives,” says Şener.

After mapping out all the data required to run the model, Selco and Toros Tarim chose to run the model on the IBM® ILOG® CPLEX® Optimization Studio platform. “We use Microsoft Excel files to create input data for the simulation model and it takes about half an hour to update the data,” says Göral. “And when the data is ready, it takes around 10 to 25 minutes to run the model on IBM ILOG CPLEX software.”

Creating a comprehensive model and using the IBM software as a solution for all of Toros Tarim’s plants was a significant step forward. “One of the success points was having the company agree on a single database in a single data system,” says Şener. Everyone sacrificed their buffer zones and started talking about actual numbers, actual capacities and shared definitions.”

By using the IBM ILOG CPLEX Optimization Studio solution instead of manually preparing optimization scenarios on spreadsheets, Toros Tarim decision-makers no longer had to wait for days or weeks for the what-if scenarios they needed. “With a long process time, we were not able to run alternative scenarios while changing the constraints,” says Göral. “The shorter the process duration, the more alternative scenarios we can compare. Now we are able to find the best possible solution — or alternate solutions — to maximize company profit.”

Increased profit margins through insightful analysis

After the first year of running simulation models created by the IBM ILOG CPLEX Optimization Studio solution, Toros Tarim has seen operational improvements across its supply chain, including:

  • Utilizing more than 95% of total production capacity and distributing demand more evenly among all three manufacturing plants
  • Covering more than 95% of the demand received from customers for fertilizer products and finding the best fertilizer recipes to meet customer demand at the minimum possible cost
  • Distributing demand more evenly between all eight warehouses, foreseeing the capacity for each storage area and finding the best storage location to ensure minimum logistics cost
  • Minimizing total costs from raw materials procurement to production through detailed model simulations
  • Finding optimum solutions and strategies to fulfill market demand without losing opportunities to make a profit
  • “This optimization model enables us to run simulations and foresee business conditions up to 12 months ahead,” says Göral. “It also lets us establish prices, identify staff count norms, optimize stock quantities in storage areas and set long-term purchase agreements.”

    Currently, strategic planners use spreadsheets and an intermediary software tool to upload scenario data on the IBM ILOG CPLEX Optimization Studio platform. Selco is working with Toros Tarim to make the process more seamless. “We are integrating our solution into Toros Tarim’s ERP system,” says Şener. “This will let us import data directly into the ERP system and then export scenarios directly to the ERP system, making it an end-to-end process. IBM ILOG CPLEX Optimization Studio software provides this functionality.”

    “Well beyond enabling the digitization of our company’s planning processes, this model not only helps our decision-making process but also allows us to view operations in a wider perspective,” says Göral. “With all the different scenarios created, it helps us quickly respond to market demand and changing conditions.”

    Toros Tarim Sanayi ve Ticaret A.Ş. logo
    About Toros Tarim Sanayi ve Ticaret A.Ş.

    Based in Istanbul, Toros TarimExternal Link was founded in 1974 and started making fertilizer in 1981. It is the flagship company of Tekfen Agri-Industry Group, Turkey’s largest privately owned business in its field. With over 800 employees at plants in Ceyhan, Mersin and Samsun, Toros Tarim is Turkey’s largest fertilizer producer and ranks 63rd on the list of Turkey’s Top 500 industrial firms.

    About Selco Consulting

    IBM Business Partner, Selco ConsultingExternal Link is an Istanbul-based consulting company with extensive capabilities in supply chain and logistics management. By combining information technology and advanced analytics, Selco provides multidisciplinary expertise for supply chain consulting, business analytics, software consulting, material handling logistics and warehouse logistics.

    Solution component
    Toros Tarim Sanayi ve Ticaret A.Ş. logo
    About Toros Tarim Sanayi ve Ticaret A.Ş.

    Based in Istanbul, Toros TarimExternal Link was founded in 1974 and started making fertilizer in 1981. It is the flagship company of Tekfen Agri-Industry Group, Turkey’s largest privately owned business in its field. With over 800 employees at plants in Ceyhan, Mersin and Samsun, Toros Tarim is Turkey’s largest fertilizer producer and ranks 63rd on the list of Turkey’s Top 500 industrial firms.

    About Selco Consulting

    IBM Business Partner, Selco ConsultingExternal Link is an Istanbul-based consulting company with extensive capabilities in supply chain and logistics management. By combining information technology and advanced analytics, Selco provides multidisciplinary expertise for supply chain consulting, business analytics, software consulting, material handling logistics and warehouse logistics.

    Solution component