Intelligente productiebeheersing in de procesindustrie: Capturing Value with Planning

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Shell Global Solutions

• Intelligente productiebeheersing in de
  proces-industrie Capturing Value with Planning
  Scheduling In Downstream Oil and Chemicals.

Winston Lasschuit TU Delft 27 March 2003
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The world becomes greener, but it rains more
often.

• Operational environment - decision support
  essential to survive
• lower margins over capacity, commoditisation,
  reduced loyalty
• globalisation consolidation, multiple assets,
  overlap
• Planning environment -business and technology
  have changed
• world is now always on, mobile, volatility at
  speed.
• the are increasingly in managing the
  variability
• Business imperatives -what keeps VPs awake at
  night?
• fine-tuning the investment portfolio
• decisions must be based on integrated margin
  rather than just cost
• balancing demand and supply, service at minimum
  cost
• improve ability to execute
• essential to meet plan

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Challenges in the current Oil Supply Chain

• Multiple hand offs
• No Overall view of the Supply Chain
• Disjointed information flows
• No Overall planning framework

• Economies of scale not realised
• High Inventories
• Multiple systems/interfaces
• Operational inefficiency
• Poor Product/Margin decision making

• The enemy is variability!
• The solution
• shorter review cycle
• more frequent planning
• real-time decision support

Is this similar in your case?
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Are your current tools real?
Are you getting maximum benefit from your
business processes and supporting tools ?

• Is your current portfolio of tools fit for
  purpose?
• Do you have a consistent economic steering
  mechanism in place?
• Are all your critical business steps supported?
  How does this match with best practices?
• Do you have a plan in place to keep your decision
  support infrastructure aligned with (future)
  business needs?

• Are input assumptions available, on time and
  consistent?
• Are critical business constraints properly
  reflected?
• Are all your decision freedoms modelled properly?
• Are your tools properly configured?
• Are you able to disseminate results effectively
  into your organisation?

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How and Where do you start?

• Collaboration
• e-Commerce
• VSS

• Virtual Capabilities
• Outsourcing
• Revenue based services

• Planning
• APS
• Scheduling

• Process
• BPT/BPR
• ERP
• MRP

• Efficiency
• MBO
• Execution
• Benchmarking
• KPIs

Value

• Data
• Ops/SCM

1995
1975
1990
1985
2005
2000
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Improved performance comes from the Shell
Business Processes and Expertise fired and
sustained by the APS Tools.
Painters brush versus creativity and skill!
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• One Process
• One APS Engine
• Common Database
• Risk Measurement

• Event Driven
• Programming for integrated margin
• Optimisation across MSM for service/cost
• Eliminating infeasibilites

Demand
Integrated Planning

• Accountability for Forecasts
• Price/ Volume Tranches

Refinery Scheduling
Primary Distribution Scheduling
Globally Standardised
Economic Steering Pricing

• Programme Input
• Option Evaluation
• Common Process

• Programme Input
• Option Evaluation
• Common Process
• Real Time Appraisal

Information Layer

• One Stop Data Shop

Capabilities Constraints
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• So well just imagine if you could
• Rapidly take advantage of crude and trading
• opportunities, knowing that they were going to
  be profitable
• Replace transfer price mechanisms with integrated
  margin optimisation
• Continuously optimise your crude and product mix
• Continuously optimise your primary distribution
  network
• Eliminate infeasible plans by integrating
  planning and scheduling
• Eliminate minor disruptions through visibility of
  information
• Improve your negotiations through timely
  information of target prices
• Maintain customer service levels within lower
  working capital and cost

what would this be worth to you?
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We have combined strong domain expertise
existing APS in Shell with the best in SCM
Software in I2 Technologies.
Strategic Supply Chain Planning
Demand Planning
Years
Master Planning Distribution Planning Inventory
Planning
Months
Weeks
Refinery Scheduling
Primary Distribution Scheduling
Secondary Distribution Scheduling
i2 Platform
Days
Demand Fulfillment
Manufacture
Distribute
Demand
Supply
Deliver
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Demand/Supply Balanced Chain, is it real? Can
you guess which column is Demand and which
Supply?

• Better manage customer demand and reduce
  volatility through pricing and credit
• Use Customer Segmentation and historical sales to
  prioritise supply
• Set dynamic safety stock levels considering both
  demand and supply variability
• Obtain forward off-take commitments from
  customers as a secure base-load

• Manage replenishment of inventory in proportion
  to forward offtakes
• Reduce stockouts with real-time demand and
  up-to-date planning scheduling
• Blend products just in time to meet demand and to
  optimise customer margins
• Hold inventory at low duty points in the network
• Reduce transportation costs with knowledge of
  terminal and customer inventory and forward
  demand

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Demand/Supply Balanced Chain, is it real? Can
you guess which column is Demand and which
Supply?

• Better manage customer demand and reduce
  volatility through pricing and credit
• Use Customer Segmentation and historical sales to
  prioritise supply
• Set dynamic safety stock levels considering both
  demand and supply variability
• Obtain forward off-take commitments from
  customers as a secure base-load

• Manage replenishment of inventory in proportion
  to forward offtakes
• Reduce stockouts with real-time demand and
  up-to-date planning scheduling
• Blend products just in time to meet demand and to
  optimise customer margins
• Hold inventory at low duty points in the network
• Reduce transportation costs with knowledge of
  terminal and customer inventory and forward
  demand

Demand
Supply
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Solutions are modular, however many processes and
benefits require end-to-end APS
ILLUSTRATIVE
Benefit from integrating solutions and full
collaboration
Inventory reduction example
Refinery Scheduling

Distribution Scheduling
Demand Management
Supply DistributionPlanner
total point solutions
Optimal positioning of stock in the SC, shorter
planning cycle, flexible Supply
reduced variability, segmentation of channel,
product, customer, geography
Proportionality and on-time, leads to improved
service and reduced safety stocks
Reduced inventory at refinery, for crude,
intermediates, Blendstocks and FP.
Total Inventory reduction opportunity
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Success in APS requires both a fact-based
strategic direction and
an infrastructure that works.

• Do you understand margin by product, area,
  customer?
• Will the SD/Marketing networks support your
  future direction?
• What effect will your actions have on your
  competitors over the next 5 years
• How will you minimise your cost, maximise your
  profit across the SC
• What will growth mean in terms of third parties
  relationships and infrastructure
• What-if the oil price goes to, growth
  stagnates, competitors merge?

This is where strategic business planning GMOS
comes in.
Global Manufacturing logistics Optimisation
System Network Analysis and Supply Chain
Optimisation System
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GMOS Strategy Value Tree
Business
SupplyDistribution
Manufacturing
Marketing
Maintenance
Capacity Creep
Debottlenecking
Availability
Exchanges
Duties
Quality of Operation
Freight
Product Quality
FD
Personnel
Distribution Costs
Demand
Capacity
Fixed Costs
Overheads
Volumes
Prices
Yields
Variable Costs
Proceeds
Cash Costs
Feed Prices
Margin
Utility Costs
Tax
Ownership
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Analysis Structure

• Model
• Manufacturing Capabilities
• Logistics Network
• Interchangabilities
• Cash Cost / revenue Structure
• Environmental (Planet) data

• Input
• Feed availability
• Product demand
• Prices
• Profit - Planet obj.

• Output
• Manufacturing Plan
• Logistics Plan
• Supply cost curves
• PL statements
• Planet impact

• Options
• Capacities (production, FD)
• Flexibility (grades, modes of operation)
• Exchange/Swap Deals
• Planet improvement possibilities

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Thank you for your attention
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