INTOUCH: Saving Millions Puts Researchers On Award Shortlist

Helping global company to reduce costs and increase earnings in declining market has gained researchers from The University of Auckland’s Faculty of Engineering finalist’s spot in an international competition.
Norske Skog, one of the world’s largest paper producers, called on the university’s Department of Engineering Science to streamline its manufacturing and supply chain costs using operations research. The model professor Andy Philpott helped Norske Skog to develop saved the company more than US$200 million over 11 years.
Now the Institute for Operations Research and the Management Sciences (INFORMS) has announced Norske Skog as one of six finalists for the 2009 Franz Edelman Award for Achievement in Operations Research and the Management Sciences. The other finalists, selected from 200 companies, were IBM, HP, Marriott International, CSX Transportation and Zara. The New Zealand team behind the Norske Skog initiative will travel to Phoenix, Arizona, next month for the competition final presentations after which the overall winner will be announced.
“This is another great achievement for the Department of Engineering Science and once again demonstrates the value of operations research. In market where newsprint demand is in decline, Norske Skog was able to increase its profitability using the operations research models developed by our team,” Philpott says.
Operations research is the scientific approach to solving management and operational decision problems. It uses advanced mathematical techniques often embedded in computer models to help companies make optimal decisions about its organisational structure, the allocation of resources, and production and logistics.
The model developed for Norske Skog is called PIVOT (Paper Industry Value Optimisation Tool) and helped the company to better allocate raw materials to mills, and products to customers, across its global operations. When it needed to downsize, the model was used to best reallocate paper to other mills and recoup the optimal salvage value from its plants.

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