Supply Chain Logistics

Business Process Overview

Terminal
Terminal
Management
Management

Pipelines
Pipelines

Marketing
Marketing

10th May 2013

Retail
Retail
Operations
Operations

Overview of Supply Chain Management in Oil Industry

Production

Terminaling
Refining

Dispensing

Overview of Supply Chain Management in Oil Industry

Production

Terminaling
Refining
Multi Modal Transport

Dispensing

Overview of Supply Chain Management in Oil Industry

Production

Terminaling
Refining

Dispensing

Multi Modal Transport

Product Availability

Optimization
Business Process
Technology

Value Creation

What are we looking to learn from this session?

Supply chain solutions for strategic differentiation
and operational superiority

What are we looking to learn from this session?

Supply chain solutions for strategic differentiation
and operational superiority

SCM provides end to end supply chain

management offerings that cover
demand planning and forecasting to
supply plan analytics and optimization

What are we looking to learn from this session?

Delivering business value through supply chain analytics

Are my cost reduction programs through value engineering

delivering on the promise?

How do we use predictive modeling techniques to forecast

probabilities for success in my new product line?

Can I identify dead or obsolete stock and manage it through

product ageing strategies?

What are we looking to learn from this session?

Business Process Overview in Oil Industry:

Terminal Management
Pipeline
Marketing
Retail Operations

How is Value created at each link of the chain?

Structure

Practices
Operations

Business Process

KPI

What is the end-to-end process chain?

Import
Tanker

Coastal /
Inland

Refinery
Tanker
Wagon
Pipeline

1
Receipt

Terminal

What is the end-to-end process chain?

Depot /
TOP
Tanker

R
ec
e

ip

Import
Coastal /
Inland

Refinery

Lorry
Wagon

Tanker
Wagon
Pipeline

Pipeline

1
De

Receipt

Terminal

t ch
a
sp

What is the end-to-end process chain?

Tanker

R
ec
e

ip

Import
Coastal /
Inland

Refinery

h
atc
sp
De

Depot /
TOP

Lorry

Retail
Outlet

Lorry
Wagon

Tanker
Wagon
Pipeline

Lorry

Pipeline

1
De

Receipt

Terminal

t ch
a
sp

Wagon

Pipeline

Direct
Customer

What is the end-to-end process chain?

Tanker

Coastal /
Inland

Refinery

R
ec
e

ip

Import

h
atc
sp
De

Depot /
TOP

Lorry

Retail
Outlet

Lorry
Wagon

Tanker
Wagon
Pipeline

Lorry

Pipeline

1
De

Receipt

Terminal

t ch
a
sp

Wagon

Pipeline

Direct
Customer

Logistics in Oil Industry

Logistics of Oil
Cairn Energy Story

(Eco Times, 23rd May)

The Rajasthan fields of Cairn India will start producing crude two
years from now but the pipeline to take the oil out is far from ready.

Besides, there's an alternative plan to set up a Greenfield refinery in

Rajasthan. NDTV has learnt that it may come with new caveats. The
initial plan of 7.5 mtpa capacity has been brought down to 4 mtpa,
which would force Cairn to cut peak output by 50 per cent from
1,50,000 bpd to 80,000 bpd.

The government argues that a lower output will ensure the field
continues to produce oil for a longer period of time, which in turn will
make the refinery viable. ONGC with 30 per cent equity in the project
is also doing a flip-flop. The former management of the company was
committed to the refinery but the new management feels the refinery
is not viable, as it won't have any crude to process after Cairn's fields
dry up.

Questions of Logistics of Crude Oil

What options an inland producer of crude oil

has got?

Have you wondered why there are 3 refineries

in NE India?

Why a refinery in Baruani?

Logistics of Crude Oil buying

Produce

How would OVL move

its production from
Kazakasthan?

How does Kazakasthan

oil provide energy
security for India?

Home
Abroad

Buy
Trade
Swap

Logistics Issue for Product buying

Should a buyer of Naphtha

buy from a domestic refiner at import parity
price
or
import naphtha?

Challenge of
Logistics in Oil Industry

Oil is asymmetrically distributed over

the world
and therefore

it travels extensively from the surplus

area to deficit area.

Challenge of
Logistics in Oil Industry

The chain between production and

consumption is rather long one.

Oil undergoes physical and chemical

transformation, primarily through refining and
blending.

Oil is a composite product

Challenge of
Logistics in Oil Industry

The crux of supply plan of oil is its availability at

every chain of handling,

which in other words means balancing demand and

supply from multiple sources at each point.

The whole business process revolves around this

balancing at each stage of handling.

Review Question

What is meant by commodity balance?

How does a company achieve its commodity

balance?

What is the implication of commodity balance

for the country?

Transportation Process

Mode
Ocean tanker
(Barge)

Pipeline

Cross country
Local network

Tank Wagon

Tank Lorry

Process
Loading / Pumping
In transit / voyage monitoring
Unloading / Discharging
Receipt
Quantity Assessment
Quality Assurance
Documentation
Insurance
Freight payment (demurrage)

Business Process in each mode of Transport

Commercial

Operation

Quality Control

Quality of carrier

Quality of Product

Documentation

At loading point
In transit
At unloading point

- Customer centric

- Value maximization

- Automation

- Explore alternatives

- Cost minimization

- Safety

Marketing

Product Classification
Class

Flash Point (deg Cel)

< 23 d

23 64

65 93

> 93

Statutory Licenses

Explosive License
Factory Inspector
Pollution Control Board
Legal Metrology (Weight & Measure)
Customs and Excise
Sales Tax
Labor Dept, under Contract Labor Act
Environmental Protection Act
Fire / Electricity / Disaster Management Cell

Terminal Operation
Lorry /
Wagon
Loading

Tanker

Storage

Terminal Operation
Receipt

Despatch

Ocean Tanker
Pipeline
Rail Wagon

Ocean Tanker
Pipeline
Rail Wagon
Tank Lorry
Storage
Fixed Roof Tank
Floating Roof Tank
Tank Farm Operation

Terminal Operation
Mode of
Receipt
Ocean Tanker
Pipeline
Rail Wagon

Operation
Safety
Accounting
Quality
Manpower
Inventory
Financial
Sales
Engineering & Project
Business Development
Materials and Stores
Planning & Coordination

Storage
Fixed Roof Tank
Floating Roof Tank
Tank Farm Operation

Mode of
Despatch
Ocean Tanker
Pipeline
Rail Wagon
Tank Lorry

IT application in Terminal Management

Tank farm management

Inventory Management
Integration between tank
farm operation and
inventory
Stock loss analysis
Stock accounting
Transaction document
Integration between stocks
accounting and statute
compliance

Tank lorry and tank wagon

operation
Fleet management
Integration between stock
and despatch
Loading loss analysis
Integration between
operations and statute
compliance

Process flow of tank farm operation

Pre-Receipt
preparation

On line
Receipt
monitoring

Post
Receipt

Tank
Nomination

Pipeline
pressure

Tank
Gauging &
sampling

Monitoring
withdrawal

Tank
Gauging &
sampling

Product
Density

Batch
Formation
Test

Tank
Pressure &
Product
Density

Pipeline
Line up

Reconciliation
Discharge
Receipt

Duty payment

Operating
Loss /
Gain

Tank
Released

Key Performance Indicator of

Terminal Operating Process
Terminal
Operation has
to support

Refinery
Process
Planning
Evacuation

Refinery
evacuation /
import
planning on the
one hand and

Cycle

marketing
commitment on
the other

Import
Planning

Input and output has dissimilar

operating cycle
Terminal Operation has to synchronies the
time and turnaround the volume
Terminal
Receipt /
Storage /
Despatch

Retail
Instantaneous
Unplanned

Market
Demand

Various sub processes in the terminal operation

Have to synchronies and support themselves

Key Performance Indicator of

Terminal Operating Process - Overall

Terminal throughput
(growth over historical,
meeting the refinery
evacuation / import plan)
Operating cost per unit of
throughput handled
Freight cost incurred per
unit of throughput
Power consumption cost
Overtime incurred
Operating loss / gain
(product)

Demurrage incurred for

Railways and for Ships
Loss time injury
Rate (KL/per hour) of tanker
loading and unloading
Cost due to product down
gradation
Dues / recoverable outstanding
from customers

Organizational Structure
of a Terminal
Terminal
Manager
Operations

Tank Farm

Tank Wagon

Tank Lorry

E&P

Project

Maintenance

Admin

HR / IR

Cash

Pipeline Operations

Advantages of Pipeline over

other mode of transports

Least energy consumption

Least cost of transportation for
large volumes and over long
leads.
Environment friendly
Safety is an intrinsic feature of
pipeline transportation.
Least impact from vagaries of
nature like flood, beaches etc most reliable and dependable
mode of supply.
The carrier is stationary. No
movement of empty carrier
Close circuit operation; no
evaporation.

Land and manpower

requirement in pipelines are
significantly low compared to
those in railways.

While railways need different

type of wagons for different
classes of products, a single
pipeline can transport a large
number of products..

Least wear and tear to the

infrastructure

Pipelines do not change the land

use pattern. Pipelines can
traverse highly difficult terrain.

Pipeline Operations Process

Preparation of Productpumping schedule for the

following month in advance, in
consultation with Refineries
and Marketing Division
Pumping operations are done
as per schedule to ensure
efficient utilization of the
pipeline system
Review of operational
performance
Determine the quantity of
delivery at terminal

Plan operational and

maintenance shut down periods
Plan pipeline pigging schedule
Ensure tankages availability for
pumping and receipt
Coordinate with Refineries and
Marketing division
Regular checking of the
pipeline operating parameters
to ensure optimum pumping
and delivery conditions

SCADA

SCADA is an acronym for

Supervisory Control and Data
Acquisition.
A SCADA System is a complete
monitoring and control system.
A SCADA system normally
includes a remote
telecommunication link.
Real-time measurements and
controls at a number of remote
stations are transmitted over
these telecommunications links
to a centralized control center.

At the central location,

computers acquire the data
measurements from all of the
stations and present a complete
dynamic profile of the entire
process.
The acquired readings are
displayed and recorded in
graphic and text formats and
control commands are
transmitted back to the remote
sites, either automatically or
initiated by System Operators,
to effect changes in the process.

Objective of SCADA system

To provide effective &

efficient monitoring and
control of entire pipeline
network

To check pipeline integrity

Automatic control by MCC

in case of Station Control
Centre (SCC) failure &
vice versa

Remote control of important

station equipment, process
set points & block valves
from MCC

Emergency shutdown of
entire pipeline from MCC

Acquisition & display of

pipeline parameters, alarms
from attended stations,
scraper stations, C.P. stations
& block valves at MCC

SCADA system schematic

MCC Master Control Centre

SCC Station Control Centre
IRTU Intelligent Remote
Terminal Unit
BV Block Valve

Master Control Centre Schematic

Station Control Centre Schematic

Key Performance Indicator of

Pipeline Operating Process

Annual throughput of the

pipeline

Operating cost per unit of

volume handled

Capacity utilization of the

pipeline

Power consumption

Downtime of the pipeline

(pumping)

Transfer loss (product)

Down gradation of product

Emergency shutdown

Dues / recoverable from

users

Shutdown due to
communication failure

Retail Marketing

IT application in
Customer Relationship Management

B 2 B Business
SOA Sharing with
customer
E Commerce Portal
E Billing
E Banking
Info sharing through web

Dealership Management
E mail communication
Price and info updating
through extra-net
E Banking
SOA viewing
SMS mailing
Data exchange

Retail Oil Marketing

Retail marketing is the last

leg of the hydrocarbon
value chain.
Supply chain management
in Retail assumes
significance as at the fag
end of the chain, supply
gets turned to a spectrum
of distribution activities.

Significant factors that come into

play in this segment are:

Inventory holding

Supply linkage

Truck transportation rate

Local duties and taxes

Discount and credit given to

customers

Retail Oil Marketing

There are two types of

marketing done at this
stage.

Micro analysis of alternate

cost structure is built into a
model to output the least
cost option of serving a
particular customer (in case
of direct market) or a
particular market (in case
of a reseller market).

The Logistics department

of each Oil Company does
this job of cost
minimization while
maintaining market share.

Direct marketing to the

end consumer
Reseller market through
dealers and
distributorship network

Retail Automation

Retail Transformation
In today's competitive world, Oil companies have
started employing additional streams to complement
their traditional fuel sales. Range of services include

Fuel

Convenience stores

Restaurant

Car Washes

Workshops

with HO Integration

Model Retail Outlet

Architecture Diagram

HQ System

Bank
Switch

Petro
Card
Server

Point Of Sale with EDC

ATG
Console

PSTN

VSAT

0000.00
0000.00
36.78

PSTN
P N E T R ET R
11 22

LAN

P NE TRETR
11 22

FCC

0000.00
0000.00
36.78

0000.00
0000.00
36.78

P N E T R ET R
11 22

P N E T R E TR
11 22

P N E TR E TR
1 1 22

P N E T R E TR
1 1 22

0000.00
0000.00
36.78

P N E TR E TR
1 1 22

Forecourt Area

P NE

T R E TR
1 1 22

OPTs

Pumps
with
RFID
Tag
Readers

Vehicle
Care
System

Back Office with EPS

IN &
OUT
System

FCC - Fore Court Control

ATG Auto Tank Gauging
EDC Electronic Data Capture
EPS Electronic Processing
System
LAN Local Area Network
RFID Radio Frequency
Identification

IT application at the
Point of Sale

Open System platform

supports

ARTS (Association for Retail Technology

Supplier) data model & OPOS peripherals like
Receipt Printers, Scanners & Operator Displays

TCP/IP

LAN for standard communications network

Simple Graphical User Interface

10 minute training time

Integrated forecourt control

POS reporting (Cash drawer / 24 hr. report / Shift report)

Sales Processing
Multiple

active sales windows

IT application in
Back Office System

Open System platform

Open interfaces to third party components
TCP/IP LAN for standard communications network
Remote site mgmt. & monitoring thru Web browser
Stock Management (Product definition, Receipts, Rolling stock takes,
Adjustments, Supplier info. Configuration)
Fuel data (Deliveries / Reconciliation / Automatic Tank Gauging
interfacing / Grade pricing / site configuration)
Local Account handling
POS & BOS Access levels of Staff
BOS Reporting using Crystal Reports engine to provide a range of
standard reports & reconciliation tools to manage financial & product
performance of the RO (POS shift Reconciliation / Audit trail)

IT application in
Central Management System

Remote site data management

Sales performance & Summary reporting

Individual & group site reporting

Manage group site promotions

Control product ranges

Wetstock ( Petrol & Diesel) pricing

IT application in
Automatic Tank Gauging System

Four Tank monitoring capability

Graphics display

Real Time Clock

Connect to POS, serial printer or external modem

Output relay to connect to external alarm

Audible and visual alarm through front panel colour LED

Two serial & one parallel communication ports

Various reports generating capability

IT application in
Electronic Payment Server

Complete EFT (Electronic Fund Transfer) interface

from site to Bank/host
Windows based server on standard PC
Fast software development cycles
Support for Oil Industry features
Encrypted SAP transaction data base
Options for external communications
Management tools for user defined reports & remote
configuration

Key Performance Indicator of

Retailing Process
Sales volume
Revenue (margin)
Retail Marketing process
has to support

Brand equity
Quality & quantity assurance
Market share (meeting the
competition)
Customized sales promotion initiatives

Key Performance Indicator of

Retailing Process

Throughput per Retail outlet

Number of hours dry out

Detention of trucks for unloading

Vehicle drop in ratio

Potential gap in sales volume

Breakdown hours

Maintaining brand certification

Market share
Product loss
Dues / receivables from
customers
Customer feedback /
complaints

Key Performance Indicator of

Retailing Process

Sales of associated product

lines

Default on account of statutory

violation

Cross sales analysis

Number of active petro-card

holders

Power consumption

Transaction ratio through petrocard

Number of active fleet card

holders

Transactions ratio through fleet

cards

Margin earned from fuel and

non fuel

Visual manifestation standard

Product failed on inspection /

quality control audit

Retail Certification for distinction

Third party
certification
(TUV South
Asia)
for BPCL
Pure for Sure

Product Quality Inspection

Fire audit

Calibration audit

Mobile lab (Company & Industry)

Company Inspection

Index of Displays

Flow chart

Sealing Details (W&M

Company)

Thermometer / Hydrometer
calibration certificate

Mystery Audit Report

Housekeeping

Preventive Maintenance

Inspection Report

Explosive License

Sampling Report

Thank You!