Professional Documents
Culture Documents
Distribution Planning
• Petroleum
IndianOil Bharat Planning &
ONGC Analysis Cell
Petroleum
• Centre for High
Technology
OVL CPCL, BRPL NRL • PCRA
• PetroFed
Reliance Hindustan • Oil Industry Safety
Oil India Industries Directorate
Petroleum • Petroleum India
Limited Ltd.
International
MRPL • Engineers India
Limited
Pvt E&P
• Director General
Cos. of Hydrocarbon
UPSTREAM SUPPLY CHAIN
• Acquisition of crude oil.
• The production and the Supply and Distribution (S&D) structure forms the
basis on which the optimised plan for the entire organisation is generated
• The optimised plan for the entire corporation is also used as a basis for
feedstock selection runs.
• GIS can be used to obtain the distances between locations, which are used
as a basis for freight calculation
UNIQUE FEATURES OF THE
PETROLEUM INDUSTRY SUPPLY CHAIN
• Raw Material Supplies:
Process industry has limited choice of suppliers for
raw material
Supplies in petroleum industry are dominated by
cartels
It is a sellers market wrt supply of raw material
• Flexibility :
Supply chains are highly inflexible both in terms of
volumes handled and in terms of product
variation/customization.
FUNCTIONS OF SUPPLY CHAIN DB
• SCD provides distribution related inputs to both
Integrated Planning and Distribution Planning models
and has these following functions:
– Temporal integration: Data for yearly and quarterly
models available in one place and can be rolled up or
down as per requirement.
– Hierarchical integration: Aggregation for integrated model
is done based on detailed data available for operational
distribution models
– Calculations: Final linkage costs are calculated using tax
logic, current prices, distances and freight rates.
NON-VALUE ADDED ACTIVITIES IN
THE PETROLEUM SUPPLY CHAIN
• Waiting:
– Crude oil is often imported.
– Cargo ships have to often wait at the harbour before they can unload
the crude.
– Waiting leads to increase in inventory holding within the supply chain.
– Occur while finished product is sent to storage installations by rail
• Over Production:
– continuous process plants
– continuous supply of feed stock, resulting in the production of several
downstream products
– inflexibility in capacity, as these plants have to run continuously all the
time
– This increases inventories of finished product and results in inefficient
use of capital.
ROLE OF INFORMATION TECHNOLOGY
IN THE PETROLEUM INDUSTRY
• Timely flow of accurate information can affect performance
of the supply chain to a large extent.
• Integration of demand chain information
• Hence process optimization is the key task for the
Information Technologies function of process industries and
currently seems to be a huge challenge
• It is a method that unites the modelling, designing and
monitoring of engineering assets with scheduling, supply
chain, trading a fulfilment via multiple flows of information
between stages in life cycle of products, bringing huge
efficiencies
• Customer-segmentation strategies and effective demand
management, will lead to increased top line revenues and
reduced cost of sales.
SUGGESTIONS
• Raw Material Supplies:
Formulating a long term agreement with some of the oil
producing nations and in order to take care of price
fluctuations
Government should allow the petroleum companies to
use hedging for finalizing deals involving purchase of
crude oil.
• Transportation Costs:
Use of Pipeline transportation
• Length of Supply Chain:
Facilities at the ports should be improved and their
capacity to be increased so that more tankers could
berth at the harbour
SUGGESTIONS (Contd.)
• Inventory Carrying Costs:
Use of a reliable transportation system and quick
information exchange can reduce carrying costs
Government should aim at reducing the minimum
safety stock, which oil companies are supposed to
keep
• Integration of Supply Chain Partners:
Oil companies should aggressively use information
technology to integrate suppliers and customers.
Effective use of ERP can help in this regard.