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A Challenging Planning Environment

Leadership

 Petroleum and process companies have been leaders in applying technology to supply chain planning problems. They were the first to acquire computers and address supply chain planning in the 1970's and 1980's.

Inadequate Commercial Tools

 Most currently available commercial tools are geared towards discrete industry application. Optimization within process chemicals often requires sophisticated tools which require training and support. Many vendors are not equipped to address these issues.

Few Integrated Solutions

 There are very few examples of integrated SCM applications. Often we find "islands-of-excellence". There may be an application to optimize crude selection, another to forecast demand, another to support traders, replenishment and material requirement applications, and so on.



Unique Opportunities in Chemicals (some examples)

Integrating blending and pipeline schedules

Often this is done sequentially and opportunities are lost. Net result is lower yields and higher inventories.

5% to 10% reduction in working inventory

Product Wheel Optimization

In processes such as polyethylene , polypropylene, and others, transition costs are not well understood, nor is the inherent variability in product transitions. As a result, planners often concentrate on solving the next crisis rather than plan for smooth operations.

20% reduction in "difficult" transitions

Integrating rail car movement with plant schedules

Because empty rail cars are often crucial to keep the plant running, the amount of cars used within distribution is often higher than what is needed.

Up to a 10% reduction in leased cars

Visibility of demand and orders on the reactors.

By creating this visibility, schedulers are able to increase reactability and synchronize schedules with demand

10% to 15% improvement in on-time delivery

Integrating trading opportunities with the operational plan.

Traders within a company often operate in a vacuum, or at best with an outdated version of the operational supply chain plan. As a result, they cannot readilly evaluate the complete impact of a trade.

Stake: Believed to be 20 to 25 cents per barrel



Many companies prepare to address these opportunities by creating a quantitative and disciplined basis for a tactical plan - This is usually referred to as a Sales and Operations Plan which becomes the framework for identifying opportunities, and measuring the effect of supply chain improvements.