The Extended Oil & Gas Supply Chain SAP Business Forum 05 Series Houston, Texas March 22, 2005 Mickey McBroom, Industry Principal Downstream Dirk Williams, Manager, Field Services, IBU Oil & Gas
Introduction & SCM Business Overview SAP Solution Overview Extending the SAP SCM Solution Next Steps
The Ecosystem and the Oil & Gas Supply Chain Upstream Midstream Supply Refining Primary Supply Secondary Distribution Service Station & Convenience Retailing Producer Distributor Refiner Distributor Retailer Crude NGL / LPG Natural Gas Refined Products Lubricants SAP AG 2005, Shell SCM Overview, Speaker Name 3
What is Downstream Oil & Gas Supply Chain Management? What is Supply Chain Management? A few definitions Integrated Supply Chain Management (ISCM) is a process-oriented, integrated approach to procuring, producing, and delivering products and services to customers. [M.I.T] Supply chain management involves coordinating, integrating and executing these flows both within and between companies. SCM s aim is to optimize the activities occurring along the supply chain to maximize asset usage, minimize costs and drive maximum revenue from the activity. Within the Oil and Gas Industry, we typically describe SCM stages of planning, scheduling and execution as taking place, with constant and ongoing tracking parallel to these. Key Characteristics in Oil & Gas Large quantities of products managed on a global basis Typically long lead times for transportation Highly fungible market, both in terms of products and partners Long term contracts the normal basis for business SAP AG 2005, Shell SCM Overview, Speaker Name 4
Key Issues for Supply Chain Management Key Issues Rationalizing Supply Chain network Lack of global industry wide standards Observations Lack of visibility and lack of integration of supply chain Lack of central source of mission critical data Lack of ability to rapidly respond to real world scenarios Lack of collaboration between supply chain partners High occurrence of M&A Need for real time data visibility and ability to perform what if scenarios to quickly adjust operating plans Creates imbalances and inefficiencies along supply chain Creates disruptions to company operations and management Lack of Risk Management Creates possibility of distress spot contracts SAP AG 2005, Shell SCM Overview, Speaker Name 5
A Fully Integrated, Closed-Loop Process All Steps of the Process are Integrated and Seamless 1. Planning & Optimization Demand Planning Refinery planning Upstream planning Crude supply planning Product supply planning Trading Plan 2. Operations & Scheduling Schedule Building Schedule Balancing Schedule updates Inventory Management Trading Operations 4. Evaluation & Analysis Profit Loss Analysis Optimization of Inventory Risk Management Performance Monitoring 3. Execution & Settlement Custody Transfer Event management Back Office Updates Invoicing / Payments SAP AG 2005, Shell SCM Overview, Speaker Name 6
SAP Oil & Gas SCM Solution Release Timeline A Collaborative Approach to Solution Development Industry TSW started Global Industry Advisory Council Time / Releases SAP APO started Demand Planning 1st release TSW Focus Group Pilot case CITGO live Network Planning Production Planning Major 4.6c Saudi Aramco Event Manager Equiva Inventory Hubs SCM Integration BHPBilliton / TOTAL Gas mysap SCM Components Oil & Gas Components Industry Experience Pemex Gas +++ SAP AG 2005, Shell SCM Overview, Speaker Name 7
Introduction & SCM Business Overview SAP Solution Overview Extending the SAP SCM Solution Next Steps
Supply Network Scenario - Geographical Colonial Products Pipeline Baton Rouge Refinery / Terminal Sugarland Crude Pipeline St. James Terminal Off-/Onshore Wells O/G Marine Supply SAP AG 2005, Shell SCM Overview, Speaker Name 9
Major Roles in the Supply Chain - Pipeline Marine Carrier Partner Trader Pipeline Operator Partners Products Trader Greensboro Refinery Manager Baton Rouge Crude Pipe Scheduler Colonial Pipeline Scheduler Crude Trader Doraville Demand Manager Supply Network Manager Exchange Manager Supply Manager St. James Terminal Manager Crude Marine Scheduler NWE Rotterdam Onshore / Offshore Wells Off Galveston SAP AG 2005, Shell SCM Overview, Speaker Name 10
What s happening? Supply Chain Management Bulk transfers Greensboro Rack exchange Rack exchanges Rack sales Partner Own Baton Rouge Bulk contract sales Bulk transfers Bulk contract sales Bulk transfers Doraville Rack sales Partner Own Rack exchange Rack sales Partner Own Customer Nomination Own Scheduling and Nomination Own statistical Forecast Partner Supplied forecast SAP AG 2005, Shell SCM Overview, Speaker Name 11
SAP for Oil & Gas Solution Map: Supply, Transmission and Trading Suppliers & Partners Exploration & Appraisal Development & Production Hydrocarbon Refining & Supply & Gas Manufacturing Transmission Primary Distribution Terminal Management Secondary Distribution Commercial Sales & Retailing Customers & Channels Upstream Exploration and Appraisal E&P Contract Management Field Development Liquid and Gas Production Allocation and Settlement Oil Field Service and Repair Operations Supply, Transmission & Trading Bulk Supply Chain Planning and Optimization Bulk Supply Chain Operations and Scheduling Bulk Supply Chain Execution and Settlement Bulk Supply Chain Reporting and Analytics Physical Oil and Gas Commodity Trading Oil and Gas Paper Trading and Risk Management Refining & Manufacturing Refining Operations Lubes Manufacturing Operations Downstream Marketing & Retailing Marketing Planning and Execution Sales Planning and Account Management Opportunity to Cash Customer Service Terminal Management Hydrocarbon Products Transportation Service Station Fuel Management Convenience Retailing SAP AG 2005, Shell SCM Overview, Speaker Name 12 Asset Management Enterprise Asset Management Enterprise Management & Support Analytics Financials Human Capital Management Corporate Services Operations Support
Mapping the SAP Solution Supply, Transmission & Trading Bulk Supply Chain Planning and Optimization SAP Solution 1. Planning & Optimization Demand Planning Refinery planning Upstream planning Crude supply planning Product supply planning Trading Plan SAP Advanced Planning & Optimization (SAP APO) Demand & Supply Planning & Forecasting Collaborative Planning Supply Network Planning & System Balancing Global Available to Promise See also overlapping area below Supply, Transmission & Trading Bulk Supply Chain Operations and Scheduling SAP Solution 2. Operations & Scheduling Schedule Building Schedule Balancing Schedule updates Inventory Management Trading Operations SAP Traders & Schedulers Workbench (SAP TSW) Planning to Operations and Scheduling Cycle Nomination Management Inventory Planning Custody Transfer Handling SAP Event Management (SAP EM) Integration into Real World events Monitoring & Alerting SAP AG 2005, Shell SCM Overview, Speaker Name 13
Mapping the SAP Solution Supply, Transmission & Trading Bulk Supply Chain Execution and Settlement SAP Solution 3. Execution & Settlement Custody Transfer Event management Back Office Updates Invoicing / Payments SAP IS-Oil Downstream (IS-Oil) including Exchanges Commodity Pricing (formula / average pricing) Quantity Conversion handling Tax and Duty Handling Silo Management TAS Interfacing Transportation Execution & Settlement SAP Event Management (SAP EM) Supply, Transmission & Trading Bulk Supply Chain Reporting and Analytics SAP Solution 4. Evaluation & Analysis Profit Loss Analysis Optimization of Inventory Risk Management Performance Monitoring SAP Business Information Warehouse (SAP BW) Standard Reporting Flexible definition reporting Supports KPI analyses Strategic Enterprise Management (SAP SEM) Linking in data from the overall solution set and external data sources SAP AG 2005, Shell SCM Overview, Speaker Name 14
Reservoir to Terminal The Solution(s) Marine Crude Pipeline Product Pipeline Greensboro Prod. Terminal APO APO APO Advanced Advanced Planner Planner & & Optimizer Optimizer TSW TSW Traders Traders & & Schedulers Schedulers Workbench Workbench Baton Rouge Refinery Doraville Prod. Terminal TSW APO EM EM Event Event Manager Manager IS-OIL IS-OIL Industry Industry Solution Solution Oil Oil APO TSW St. James Crude Terminal TSW TSW TSW NWE Rotterdam Onshore / Offshore Wells Off Galveston TSW SAP AG 2005, Shell SCM Overview, Speaker Name 15
Introduction & SCM Business Overview SAP Solution Overview Extending the SAP SCM Solution Next Steps
Introducing Trading for Oil & Gas Supply, Transmission & Trading Physical Oil and Gas Commodity Trading SAP Solution SAP Global Trade Management (SAP GTM) Trading Contract Contract Management Trade Expense Management Position Reporting Supply, Transmission & Trading Oil and Gas Paper Trading and Risk Management SAP Solution SAP Treasury & Risk Management (SAP TRM) Paper Deal Capture Risk Management Hedging Reporting SAP AG 2005, Shell SCM Overview, Speaker Name 17
NetWeaver for Integrated Trading & Operations Trading office Operations Office Accounting Portal NetWeaver Collaboration BI Position Planning Deal Capture Nomination Shipment Settlement MDM Process Integration NetWeaver XI Trading (external) Trading (internal) ERP Inventory Supply / Demand Planning Scheduling Terminal (external) SAP AG 2005, Shell SCM Overview, Speaker Name 18
Trading & Operations Business Landscape Market Tracking & Analysis Deal Capture Trading Decision Support & Optimization Physical Trade Management Paper Trade and Risk Management Complex Risk Management and Modeling Logistics Operations Management Financial Execution and Management Enterprise Reporting and Analysis SAP AG 2005, Shell SCM Overview, Speaker Name 19
SAP Oil & Gas Integrated Trading, Risk Mgmt & Operations Initiative SAP BW Market / Tracking 3rd Party & Analysis Solution SAP Deal Capture SAP BW Basis Trading Decision Support & Optimization Physical Trade SAP Management GTM Paper Trade and Risk Management SAP TRM Complex Risk Management and Modeling Integration Logistics Operations Management TSW and IS-Oil / mysap ERP Financial Execution and Management mysap Enterprise BI Reporting (BW and Analysis SEM) SAP AG 2005, Shell SCM Overview, Speaker Name 20
SAP Oil & Gas Integrated Trading, Risk Mgmt & Operations Initiative SAP BW Market / Tracking 3rd Party & Analysis Solution SAP Deal Capture Physical Trade SAP Management GTM SAP BW Basis Trading Decision Support & Optimization xitro Paper Trade and Risk Management SAP TRM Complex Risk Management and Modeling Integration Logistics Operations Management TSW and IS-Oil / mysap ERP Financial Execution and Management mysap Enterprise BI Reporting (BW and Analysis SEM) SAP AG 2005, Shell SCM Overview, Speaker Name 21
Introduction & SCM Business Overview SAP Solution Overview Extending the SAP SCM Solution Next Steps
Next Steps Industry Workshops to Gather Requirements Develop Industry Momentum Quantify Industry Support Finalize Development Business Case (SAP) Develop Collaborative Buildout/Rollout Plan SAP AG 2005, Shell SCM Overview, Speaker Name 23