ABSTRACT
This chapter will focus on collaborative manufacturing in the continuous segments of process industries such as pulp and paper, refining, mining and metals, and chemicals. These heavy industries personify the uniqueness of process manufacturing: added value by physically converting raw material (feedstock) into an intermediate or finished product. This industry group is characterized by heavy processing assets, long periods of continuous operation (3 to 5 years), absolute conformance to the physical laws, and very strict health and safety regulations. Beyond this environment, process manufacturing has two fundamental differences from discrete manufacturing. The first is in the nature and distribution of capital assets and costs. A typical process manufacturer has up to 75% of its capital assets invested in manufacturing assets, and approximately 65% of its costs occur in manufacturing operations. The high cost of manufacturing assets and their associated maintenance usually position process manufacturing as a high volume/low cost operation that makes return on assets (ROA) a primary measure of financial performance. The second difference is in the supply chain model that each employs. Discrete supply chains tend to be convergent, combining multiple suppliers’ components, with a defined specification into a finished product. Process supply chains are divergent, V-type, processing a limited range of materials into many products defined by many diverse specifications. A classical example is in the pulp and paper industry where a pivotal part of the business model is to build the mill at the source of its feedstock in the middle of the forest where it produces hundreds of grades of kraft paper and fiberboard.
