Description
The oil and gas industry in the United Kingdom produced 1.42 million boepd in 2014, of which 59% was oil/liquids. In 2013 the UK consumed 1.508 million bpd of oil and 2.735tcf of gas, so is now an importer of hydrocarbons having been a significant exporter in the 1980s and 1990s.
Integrating the Petroleum Supply
Chain Drives Value
June 2009
2 ©2009 Aspen Technology, Inc. All rights reserved 2
Disclaimer
Aspen Technology may provide information regarding
possible future product developments including new
products, product features, product interfaces,
integration, design, architecture, etc. that may be
represented as “product roadmaps.” Any such
information is for discussion purposes only and does
not constitute a commitment by Aspen Technology to
do or deliver anything in these product roadmaps or
otherwise. Any such commitment must be explicitly set
forth in a written contract between the customer and
Aspen Technology, executed by an authorized officer
of each company.
3 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
4 ©2009 Aspen Technology, Inc. All rights reserved
Global Oil Outlook
Information derived from CERA market briefing dated January 12, 2009
• Forecasted average oil prices for 2009
and 2010 are $47 and $59 per barrel
respectively
• US and Canada’s GDP forecasted to be
negative in 2009 rebounding in 2010
• Global GDP is expected to shrink in 2009
• Global oil demand expected to decrease
by 2 MBPD in 2009
• Spare oil production capacity could grow
to 6MBPD in 2009
5 ©2009 Aspen Technology, Inc. All rights reserved
• Tight capital markets will continue to impact new projects and production runs
• Low margins and high capital investment hurdles will delay or cancel a significant
number of capital projects
• Downstream chemical volumes and margins will remain weak for 2009
• Increased potential for mergers and acquisitions as smaller companies struggle
with financial and capital issues
Petroleum Industry Expectations
• Continued lower global demand with
rising spare capacity will keep average
oil prices around $50 per barrel in 2009
• OPEC could cut production in the first
quarter of 2009
6 ©2009 Aspen Technology, Inc. All rights reserved
Strategic Issues for Petroleum
Globalization
Fundamental shifts in demand, flow of trade and
demography
Changing capital investment and restructuring patterns
New competition from India and China
Energy Management & Sustainability
Long term energy demand growth and the geopolitics of
resources
Alternative feedstocks
Compliance regulations
Portfolio Management
M&A – primary vehicle for growth for certain segments
(mid-sized companies)
Sharpen product portfolio through restructuring
New groups of buyers emerge (India, China, Middle
East)
Innovation
New business models and processes (skills, knowledge
management,
collaboration, value add services)
Advanced IT technologies to support innovation
Managing IP
7 ©2009 Aspen Technology, Inc. All rights reserved
• Merger & Acquisition
? Economies of Scale
? Stay cost competitiveness
• Throughput & Margin Increase
? Increase Capacity Utilization (USA, Western Europe, Japan, etc.)
? Grass-root refinery & petrochemicals complex (Middle East, China, India,
Russia)
? Revamp existing plants (Korea, China, India, etc.)
? Increase conversion unit capacity
• Optimization
? Feedstocks
? Yields
? Explore high value products
• Collaborative Decision Making
? Focus on supply chain coordination to maximize margin and reduce supply
chain disruption
? Increase focus on collaborative decision making
• Explore Alternatives
? Ethanol, Bio Diesel, H2, Solar, etc.
? Gas Cracking, Catalytic Cracking, etc.
Petroleum Industry Strategy
8 ©2009 Aspen Technology, Inc. All rights reserved
What are the “High Value” initiatives in
Petroleum Downstream?
Supply Chain Initiatives
1. Improve Feedstock Selection
– Integrate Planning and Scheduling Workflows
– Reduce Gap in Plan vs. Actual Crude Selection
2. Optimize sourcing and distribution of products
– Distribution Optimization
Manufacturing Initiatives
1. Decrease GAP between Plan and Actual
Molecular management /Component modeling
System Application of Planning and Scheduling
2. Increase Unit Throughput and Improve Reliability
Advanced Process Control and optimization with
Performance Monitoring
3. Real-Time Visibility into Refinery Operations
KPI and Refinery Visualization
Production Performance Analysis
9 ©2009 Aspen Technology, Inc. All rights reserved
Trend - Integrating the Supply Chain
• Traditionally each operation within the supply chain (both
inside and outside of the refinery) was managed and
“optimised” in isolation
• Most oil companies have started to realise the large benefits
to be had by integrating the supply chain and optimising
across the enterprise.
• Integration of the supply chain
requires changed business
processes and working
practices, supported by new
and integrated tools.
•Optimisation of the supply chain can make a significant
improvement in overall company profitability.
10 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
11 ©2009 Aspen Technology, Inc. All rights reserved
The Petroleum Supply Chain
Produce Crude
Primary Distribution
Secondary Distribution
Inbound Logistics
Refine Crude
Wholesale (Rack)
Marketing
1
Supply and
Trading
• Crude valuation
• Crude and
Products Trading
• Crude blending
• Constraint
modeling
• Inbound Logistics
Refining
2
• Product blending
• Operations Scheduling
• Advanced controls
• Order execution
• Performance
Management
Product Placement
and Sourcing
3
• Demand Management and
Forecasting
• Regional Refinery Planning
• Unplanned Event Response
• Buy/ Make/ Sell/ Exchange
tradeoffs
• Exchange management
4
Retail Marketing
Distribution
• Inventory
Management
• Scheduling (In-plant
and Distribution)
• Performance
management
12 ©2009 Aspen Technology, Inc. All rights reserved
Supply Chain Challenges Business Impact
• Wrong products at terminals
• Large Demurrage charges
• High inventories or run-outs
• Many users with unlinked spreadsheets
• Local “optimization” without enterprise-wide visibility
• Poor visibility into future operational needs
• Difficult to define best mix of make, buy and trade
decisions
• Difficulty in executing term and exchange deals
profitably
• Scheduling thousands of products/crude movements
• Nominating vessels, pipelines, inspections
• Managing exchange contracts
• Managing compulsory stock obligations
• Product/crude shortages in the network
• High working capital
Uncertain Demand
& Supply
Inventory Management
Planning Directives
Operations Scheduling
Enterprise Visibility
Petroleum Supply Chain Challenges
13 ©2009 Aspen Technology, Inc. All rights reserved
Summary of Challenges and
Opportunities
• Fundamental changes in the industry are
creating opportunities and challenges in
managing the petroleum supply chain.
• Unprecedented global changes of
supply/demand balance requires excellent
Supply Chain Management practices.
• Market volatility – it’s here to stay, feast or
be feasted upon
• Overcoming organizational barriers is a
significant challenge
• How do you get there – continuous focus
on improving supply chain practices
14 ©2009 Aspen Technology, Inc. All rights reserved
But how will the best handle the
challenge?
AspenTech observes “ Best in Class” Petroleum Industry
Leaders working in these areas:
• Enterprise Strategy versus Individual Market/Region Strategy &
Management
• Nimble, Market-based Refining, Marketing, and Supply Strategy
• Organizational and Process Alignment
(Refining – Supply – Trading and Marketing)
• Building an integrated view of key shared data (inventories, demand,
supply plan, production plan)
• Standardized Work Processes and Enabling Technology
15 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
16 ©2009 Aspen Technology, Inc. All rights reserved
Typical Supply Chain work processes
Refinery activity
Headquarters activity
Market
Demand
Forecasting
Refinery Operational Planning
Blend
Scheduling
& optimisation
Production Plan
Primary Distribution Scheduling
(Physical Operations)
Supply/Demand Optimisation
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Secondary
Distribution
Scheduling
Retail Demand
(by terminal)
Refinery
Scheduling
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Advanced Process Control
Process Unit
Set-points
Blend recipes
Pipeline
Scheduling
Pipeline
schedule
Product availability
& demand
Ship
Scheduling
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Feedstock selection
17 ©2009 Aspen Technology, Inc. All rights reserved
Corresponding AspenTech Products
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
18 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Collaborative Demand Management
19 ©2009 Aspen Technology, Inc. All rights reserved
Why Demand Management Matters
Demand Forecast Drives Critical
Decisions
More accurate demand = better
planning
If you do not know where you need to go,
then you risk optimizing the route to get
to the wrong place!
Forecast
Aspen PIMS
Aspen IMOS
Aspen DPO
Distribution
Planning
Operations
Scheduling &
Inventory
Management
Refinery
Planning &
Scheduling
20 ©2009 Aspen Technology, Inc. All rights reserved
Why Demand Management Matters
Demand Forecast Drives Critical
Decisions
More accurate demand = better
planning
If you do not know where you need to go,
then you risk optimizing the route to get
to the wrong place!
Forecast
Aspen PIMS
Aspen IMOS
Aspen DPO
21 ©2009 Aspen Technology, Inc. All rights reserved
Collaborative Demand Management
– Business Process Flow
Generate
Statistical
Forecast
Statistical
Forecast
Analysis/
Metrics
View
Forecast
Adjusted
Forecast
Adjust
Forecast
Generate
Demand
Plan
Consensus
Demand Plan
Sales
History
Data
ERP
View
History
Adjusted
History
Data
Adjust
History
Consensus
Forecast
Competitor
price change
Competitor
price change
Override
demand
forecast
Information
Override
demand
forecast
Information
New
promotion
New
promotion
Change in
planned
promotion
Change in
planned
promotion
Competitor
price change
Competitor
price change
Override
demand
forecast
Information
Override
demand
forecast
Information
New
promotion
New
promotion
Change in
planned
promotion
Change in
planned
promotion
Incorporate
Market
Information
Validate
Market
Information
Collaborative Steps
22 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Primary Distribution Planning Optimisation
23 ©2009 Aspen Technology, Inc. All rights reserved
Aspen Petroleum Supply Chain Planner
(DPO)
Sales
Terminals
Rail
Barge
Pipe, Truck or Rail
to Terminal
Refinery 2 Tanks
Exchange Receipts
Pipeline
Exchange Delivery
P
ip
e
lin
e
,
R
a
il,
T
r
u
c
k
t
o
T
e
r
m
in
a
l
Bulk Terminals
Purchase
Sales
Sales
Truck
Rack
Pipeline Rail
Truck
Sales
Truck
Rack
Refinery 1
Tanks
Pipe, Truck or Rail
to Terminal
Sales
Sales
Sales
Aspen Petroleum Supply Chain Planner is an LP
planning tool used to optimize the economics of
distributing multiple commodities, using multiple
modes of transportation, over multiple time periods.
24 ©2009 Aspen Technology, Inc. All rights reserved
Aspen Petroleum Supply Chain Planner
(DPO): General Functionality and Use
Strategic Users
• Study effects of adding or removing assets (e.g. terminals or markets)
• Evaluate expansion of distribution facilities (e.g. pipeline expansions)
• Determine the optimal size of rail/barge/marine fleets
• Developing financial budgets
Operational Users
• Optimize product distribution using varied transportation options
• Evaluate make/buy/exchange options
• Use economics to drive decisions in response to supply chain events
• Proactively evaluate supply & demand problems before they occur
• Optimize terminal inventory
? Seasons and seasonal changeovers
? Turnarounds, shutdowns, slowdowns
25 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Inventory Management and Operations
Scheduling
26 ©2009 Aspen Technology, Inc. All rights reserved
Inventory Management & Operations
Scheduling
• Primary Distribution Scheduling environment
• Provides visibility of future inventory positions across
the organisation
• Web-based, multi-user environment
• The backbone of the Petroleum Supply Chain –
integrates with:
? Refinery Planning and Scheduling
? Primary Distribution Planning
? Secondary Distribution Scheduling
? ERP system
? Tank Gauging systems
? Back office systems
27 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Aspen Fleet Optimizer
28 ©2009 Aspen Technology, Inc. All rights reserved
• Poor inventory management
• Missed Opportunistic purchasing
• No demand planning
• Primarily manual processes (phone,
fax, email, excel…)
• Reactive order process
• Excess transportation costs
• No control over supply chain
The Business Problem
– Traditional Processes
The Result…
• Excess inventory positions
create poor cash flow
• High Cost per Volume Delivered
(CPVD)
• Poorly negotiated freight
contracts
• Excessive run-outs, retains
• Supply shocks result in
excessive transportation costs or
revenue loss
• Lost revenue at the terminal
29 ©2009 Aspen Technology, Inc. All rights reserved
Inventory Management
Order Placement/Capture
Fleet Scheduling & Source Optimization
Order Assignment to Accounting
Distribute for execution to fleets
Execution (Real time) Management
Reconciliation with ERP
Aspen Fleet Optimizer
30 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
31 ©2009 Aspen Technology, Inc. All rights reserved
Industry Leading Practices
• Standardization and streamlining of business
processes
? Well defined business processes from forecasting, planning,
scheduling to execution
• Standardization and integration of tools and systems
? Well defined system functional scope and data transfer
• Enterprise visibility
? Inventory, production, deals and movements
• “Network” optimization
? Refining and distribution
• Analytic-based decision support
? Case study and situation simulation
32 ©2009 Aspen Technology, Inc. All rights reserved
In Closing…
• The global oil market will continue to be volatile.
• Leading oil companies are working on operation
excellence to manage financial risks and market
dynamics.
• Operation excellence in S&D focuses on enterprise
visibility and collaboration to improve forecast
accuracy, supply optimization, and distribution
scheduling & execution.
doc_468313979.pdf
The oil and gas industry in the United Kingdom produced 1.42 million boepd in 2014, of which 59% was oil/liquids. In 2013 the UK consumed 1.508 million bpd of oil and 2.735tcf of gas, so is now an importer of hydrocarbons having been a significant exporter in the 1980s and 1990s.
Integrating the Petroleum Supply
Chain Drives Value
June 2009
2 ©2009 Aspen Technology, Inc. All rights reserved 2
Disclaimer
Aspen Technology may provide information regarding
possible future product developments including new
products, product features, product interfaces,
integration, design, architecture, etc. that may be
represented as “product roadmaps.” Any such
information is for discussion purposes only and does
not constitute a commitment by Aspen Technology to
do or deliver anything in these product roadmaps or
otherwise. Any such commitment must be explicitly set
forth in a written contract between the customer and
Aspen Technology, executed by an authorized officer
of each company.
3 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
4 ©2009 Aspen Technology, Inc. All rights reserved
Global Oil Outlook
Information derived from CERA market briefing dated January 12, 2009
• Forecasted average oil prices for 2009
and 2010 are $47 and $59 per barrel
respectively
• US and Canada’s GDP forecasted to be
negative in 2009 rebounding in 2010
• Global GDP is expected to shrink in 2009
• Global oil demand expected to decrease
by 2 MBPD in 2009
• Spare oil production capacity could grow
to 6MBPD in 2009
5 ©2009 Aspen Technology, Inc. All rights reserved
• Tight capital markets will continue to impact new projects and production runs
• Low margins and high capital investment hurdles will delay or cancel a significant
number of capital projects
• Downstream chemical volumes and margins will remain weak for 2009
• Increased potential for mergers and acquisitions as smaller companies struggle
with financial and capital issues
Petroleum Industry Expectations
• Continued lower global demand with
rising spare capacity will keep average
oil prices around $50 per barrel in 2009
• OPEC could cut production in the first
quarter of 2009
6 ©2009 Aspen Technology, Inc. All rights reserved
Strategic Issues for Petroleum
Globalization
Fundamental shifts in demand, flow of trade and
demography
Changing capital investment and restructuring patterns
New competition from India and China
Energy Management & Sustainability
Long term energy demand growth and the geopolitics of
resources
Alternative feedstocks
Compliance regulations
Portfolio Management
M&A – primary vehicle for growth for certain segments
(mid-sized companies)
Sharpen product portfolio through restructuring
New groups of buyers emerge (India, China, Middle
East)
Innovation
New business models and processes (skills, knowledge
management,
collaboration, value add services)
Advanced IT technologies to support innovation
Managing IP
7 ©2009 Aspen Technology, Inc. All rights reserved
• Merger & Acquisition
? Economies of Scale
? Stay cost competitiveness
• Throughput & Margin Increase
? Increase Capacity Utilization (USA, Western Europe, Japan, etc.)
? Grass-root refinery & petrochemicals complex (Middle East, China, India,
Russia)
? Revamp existing plants (Korea, China, India, etc.)
? Increase conversion unit capacity
• Optimization
? Feedstocks
? Yields
? Explore high value products
• Collaborative Decision Making
? Focus on supply chain coordination to maximize margin and reduce supply
chain disruption
? Increase focus on collaborative decision making
• Explore Alternatives
? Ethanol, Bio Diesel, H2, Solar, etc.
? Gas Cracking, Catalytic Cracking, etc.
Petroleum Industry Strategy
8 ©2009 Aspen Technology, Inc. All rights reserved
What are the “High Value” initiatives in
Petroleum Downstream?
Supply Chain Initiatives
1. Improve Feedstock Selection
– Integrate Planning and Scheduling Workflows
– Reduce Gap in Plan vs. Actual Crude Selection
2. Optimize sourcing and distribution of products
– Distribution Optimization
Manufacturing Initiatives
1. Decrease GAP between Plan and Actual
Molecular management /Component modeling
System Application of Planning and Scheduling
2. Increase Unit Throughput and Improve Reliability
Advanced Process Control and optimization with
Performance Monitoring
3. Real-Time Visibility into Refinery Operations
KPI and Refinery Visualization
Production Performance Analysis
9 ©2009 Aspen Technology, Inc. All rights reserved
Trend - Integrating the Supply Chain
• Traditionally each operation within the supply chain (both
inside and outside of the refinery) was managed and
“optimised” in isolation
• Most oil companies have started to realise the large benefits
to be had by integrating the supply chain and optimising
across the enterprise.
• Integration of the supply chain
requires changed business
processes and working
practices, supported by new
and integrated tools.
•Optimisation of the supply chain can make a significant
improvement in overall company profitability.
10 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
11 ©2009 Aspen Technology, Inc. All rights reserved
The Petroleum Supply Chain
Produce Crude
Primary Distribution
Secondary Distribution
Inbound Logistics
Refine Crude
Wholesale (Rack)
Marketing
1
Supply and
Trading
• Crude valuation
• Crude and
Products Trading
• Crude blending
• Constraint
modeling
• Inbound Logistics
Refining
2
• Product blending
• Operations Scheduling
• Advanced controls
• Order execution
• Performance
Management
Product Placement
and Sourcing
3
• Demand Management and
Forecasting
• Regional Refinery Planning
• Unplanned Event Response
• Buy/ Make/ Sell/ Exchange
tradeoffs
• Exchange management
4
Retail Marketing
Distribution
• Inventory
Management
• Scheduling (In-plant
and Distribution)
• Performance
management
12 ©2009 Aspen Technology, Inc. All rights reserved
Supply Chain Challenges Business Impact
• Wrong products at terminals
• Large Demurrage charges
• High inventories or run-outs
• Many users with unlinked spreadsheets
• Local “optimization” without enterprise-wide visibility
• Poor visibility into future operational needs
• Difficult to define best mix of make, buy and trade
decisions
• Difficulty in executing term and exchange deals
profitably
• Scheduling thousands of products/crude movements
• Nominating vessels, pipelines, inspections
• Managing exchange contracts
• Managing compulsory stock obligations
• Product/crude shortages in the network
• High working capital
Uncertain Demand
& Supply
Inventory Management
Planning Directives
Operations Scheduling
Enterprise Visibility
Petroleum Supply Chain Challenges
13 ©2009 Aspen Technology, Inc. All rights reserved
Summary of Challenges and
Opportunities
• Fundamental changes in the industry are
creating opportunities and challenges in
managing the petroleum supply chain.
• Unprecedented global changes of
supply/demand balance requires excellent
Supply Chain Management practices.
• Market volatility – it’s here to stay, feast or
be feasted upon
• Overcoming organizational barriers is a
significant challenge
• How do you get there – continuous focus
on improving supply chain practices
14 ©2009 Aspen Technology, Inc. All rights reserved
But how will the best handle the
challenge?
AspenTech observes “ Best in Class” Petroleum Industry
Leaders working in these areas:
• Enterprise Strategy versus Individual Market/Region Strategy &
Management
• Nimble, Market-based Refining, Marketing, and Supply Strategy
• Organizational and Process Alignment
(Refining – Supply – Trading and Marketing)
• Building an integrated view of key shared data (inventories, demand,
supply plan, production plan)
• Standardized Work Processes and Enabling Technology
15 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
16 ©2009 Aspen Technology, Inc. All rights reserved
Typical Supply Chain work processes
Refinery activity
Headquarters activity
Market
Demand
Forecasting
Refinery Operational Planning
Blend
Scheduling
& optimisation
Production Plan
Primary Distribution Scheduling
(Physical Operations)
Supply/Demand Optimisation
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Secondary
Distribution
Scheduling
Retail Demand
(by terminal)
Refinery
Scheduling
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Advanced Process Control
Process Unit
Set-points
Blend recipes
Pipeline
Scheduling
Pipeline
schedule
Product availability
& demand
Ship
Scheduling
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Feedstock selection
17 ©2009 Aspen Technology, Inc. All rights reserved
Corresponding AspenTech Products
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
18 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Collaborative Demand Management
19 ©2009 Aspen Technology, Inc. All rights reserved
Why Demand Management Matters
Demand Forecast Drives Critical
Decisions
More accurate demand = better
planning
If you do not know where you need to go,
then you risk optimizing the route to get
to the wrong place!
Forecast
Aspen PIMS
Aspen IMOS
Aspen DPO
Distribution
Planning
Operations
Scheduling &
Inventory
Management
Refinery
Planning &
Scheduling
20 ©2009 Aspen Technology, Inc. All rights reserved
Why Demand Management Matters
Demand Forecast Drives Critical
Decisions
More accurate demand = better
planning
If you do not know where you need to go,
then you risk optimizing the route to get
to the wrong place!
Forecast
Aspen PIMS
Aspen IMOS
Aspen DPO
21 ©2009 Aspen Technology, Inc. All rights reserved
Collaborative Demand Management
– Business Process Flow
Generate
Statistical
Forecast
Statistical
Forecast
Analysis/
Metrics
View
Forecast
Adjusted
Forecast
Adjust
Forecast
Generate
Demand
Plan
Consensus
Demand Plan
Sales
History
Data
ERP
View
History
Adjusted
History
Data
Adjust
History
Consensus
Forecast
Competitor
price change
Competitor
price change
Override
demand
forecast
Information
Override
demand
forecast
Information
New
promotion
New
promotion
Change in
planned
promotion
Change in
planned
promotion
Competitor
price change
Competitor
price change
Override
demand
forecast
Information
Override
demand
forecast
Information
New
promotion
New
promotion
Change in
planned
promotion
Change in
planned
promotion
Incorporate
Market
Information
Validate
Market
Information
Collaborative Steps
22 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Primary Distribution Planning Optimisation
23 ©2009 Aspen Technology, Inc. All rights reserved
Aspen Petroleum Supply Chain Planner
(DPO)
Sales
Terminals
Rail
Barge
Pipe, Truck or Rail
to Terminal
Refinery 2 Tanks
Exchange Receipts
Pipeline
Exchange Delivery
P
ip
e
lin
e
,
R
a
il,
T
r
u
c
k
t
o
T
e
r
m
in
a
l
Bulk Terminals
Purchase
Sales
Sales
Truck
Rack
Pipeline Rail
Truck
Sales
Truck
Rack
Refinery 1
Tanks
Pipe, Truck or Rail
to Terminal
Sales
Sales
Sales
Aspen Petroleum Supply Chain Planner is an LP
planning tool used to optimize the economics of
distributing multiple commodities, using multiple
modes of transportation, over multiple time periods.
24 ©2009 Aspen Technology, Inc. All rights reserved
Aspen Petroleum Supply Chain Planner
(DPO): General Functionality and Use
Strategic Users
• Study effects of adding or removing assets (e.g. terminals or markets)
• Evaluate expansion of distribution facilities (e.g. pipeline expansions)
• Determine the optimal size of rail/barge/marine fleets
• Developing financial budgets
Operational Users
• Optimize product distribution using varied transportation options
• Evaluate make/buy/exchange options
• Use economics to drive decisions in response to supply chain events
• Proactively evaluate supply & demand problems before they occur
• Optimize terminal inventory
? Seasons and seasonal changeovers
? Turnarounds, shutdowns, slowdowns
25 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Inventory Management and Operations
Scheduling
26 ©2009 Aspen Technology, Inc. All rights reserved
Inventory Management & Operations
Scheduling
• Primary Distribution Scheduling environment
• Provides visibility of future inventory positions across
the organisation
• Web-based, multi-user environment
• The backbone of the Petroleum Supply Chain –
integrates with:
? Refinery Planning and Scheduling
? Primary Distribution Planning
? Secondary Distribution Scheduling
? ERP system
? Tank Gauging systems
? Back office systems
27 ©2009 Aspen Technology, Inc. All rights reserved
Refinery activity
Headquarters activity
Aspen CDM
(Collaborative
Demand
Manager)
Aspen PIMS
Aspen
Refinery
Multi-Blend
Optimizer
Production Plan
Aspen IMOS
(Inventory Management
&
Operations Scheduling)
Aspen Petroleum
Supply Chain Planner
(DPO)
Unconstrained Forecast
Constrained Forecast
Refinery
Production targets
Distribution &
Exchange Plan
Demand plan
Scheduled Movements
to/from Refineries
Aspen
Fleet
Optimizer
Retail Demand
(by terminal)
Aspen
Petroleum
Scheduler
Trading
Accounting
Sales History
&
Open orders
Production Schedule
Actualised
movements
Aspen APC
(DMCplus, etc)
Process Unit
Set-points
Blend recipes
Aspen
Distribution
Scheduler
Pipeline
schedule
Product availability
& demand
Aspen
Distribution
Scheduler
Ship
schedule
Product availability
& demand
Load/delivery
Confirmation,
Credit checking
Aspen PIMS
Terminal Demand
& Inventories
Aspen Fleet Optimizer
28 ©2009 Aspen Technology, Inc. All rights reserved
• Poor inventory management
• Missed Opportunistic purchasing
• No demand planning
• Primarily manual processes (phone,
fax, email, excel…)
• Reactive order process
• Excess transportation costs
• No control over supply chain
The Business Problem
– Traditional Processes
The Result…
• Excess inventory positions
create poor cash flow
• High Cost per Volume Delivered
(CPVD)
• Poorly negotiated freight
contracts
• Excessive run-outs, retains
• Supply shocks result in
excessive transportation costs or
revenue loss
• Lost revenue at the terminal
29 ©2009 Aspen Technology, Inc. All rights reserved
Inventory Management
Order Placement/Capture
Fleet Scheduling & Source Optimization
Order Assignment to Accounting
Distribute for execution to fleets
Execution (Real time) Management
Reconciliation with ERP
Aspen Fleet Optimizer
30 ©2009 Aspen Technology, Inc. All rights reserved
Agenda
• Petroleum Industry Trends
• Petroleum Supply Chain Challenges
• Petroleum Supply Chain Solutions
• Petroleum Supply Chain Best Practices
31 ©2009 Aspen Technology, Inc. All rights reserved
Industry Leading Practices
• Standardization and streamlining of business
processes
? Well defined business processes from forecasting, planning,
scheduling to execution
• Standardization and integration of tools and systems
? Well defined system functional scope and data transfer
• Enterprise visibility
? Inventory, production, deals and movements
• “Network” optimization
? Refining and distribution
• Analytic-based decision support
? Case study and situation simulation
32 ©2009 Aspen Technology, Inc. All rights reserved
In Closing…
• The global oil market will continue to be volatile.
• Leading oil companies are working on operation
excellence to manage financial risks and market
dynamics.
• Operation excellence in S&D focuses on enterprise
visibility and collaboration to improve forecast
accuracy, supply optimization, and distribution
scheduling & execution.
doc_468313979.pdf