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The Workbook: Conducting a Supply Chain Opportunity Assessment. Supply Chain Optimization Team Project Kickoff - October 1998. Work Session Outline. Discussion Topics I.Work Plan II.Leveraging the Mobil Analysis III.Mapping to Supply Chain Drivers IV.Quantify the Benefits

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The workbook conducting a supply chain opportunity assessment

The Workbook:Conducting a Supply Chain Opportunity Assessment

Supply Chain Optimization Team

Project Kickoff - October 1998


Work session outline

Work Session Outline

  • Discussion Topics

  • I.Work Plan

  • II.Leveraging the Mobil Analysis

  • III.Mapping to Supply Chain Drivers

  • IV.Quantify the Benefits

  • Appendices - Project Result Examples

    • Solution Approach

    • Templates:

      • Crude Selection, Product Supply, Customer Segments

  • Deliverable Samples

  • Data Requirements for 12/31/98


The workbook conducting a supply chain opportunity assessment

1

2

3

What Problem Are We Trying To Solve?

What problem should we work?

Problem Level

“Optimize

all networks”

Maximize potential

of one individual network

“Make Things Happen Right Every Day”

inside each operating unit of an individual network


The workbook conducting a supply chain opportunity assessment

5.

2.

3.

4.

Define Deliverables

Where to Start on 10/15

October 15

Interpret Mobil Analysis

Define Solution Approach

1.

3 Weeks

MobilCheckPoint

Define Project Workplan

Present Results

Process Improvement

SE

L

E

C

T

E

D

ME

T

H

O

D

S

Quick wins

Identify Dollar Benefits

Analysis Pilot

After 12/31

Metrics Definition

8 Weeks

Best Practices Research

Specific Recommendations

MobilCheckPoint

December 31

Develop ChangeProjects


The workbook conducting a supply chain opportunity assessment

Overall Solution Approach

Supply Network

Orientation

Project Team

Physical Analysis

Process Analysis

“As-is” Analysis

(Current Reality)

Root-Cause

Analysis

“Ah-Ha’s”

  • Emerging Findings

  • Conclusions

  • News Items

  • “As-is” Decision Process

  • Mentions Analysis

  • “As-is” Metrics

  • Balanced scorecard

Opportunity

Identification &Analysis

Supply ChainModel

Sizethe Prize

12/31/98

  • Network Analysis

  • Inventory Analysis

  • Manage N/B/D

  • Projected Benefits

SpecificRecommendations

1

Best-Practices

Define Change

Projects

2

  • Outside Oil Industry

  • Oil Industry

  • Best-Practice Principles

Process

Redesign

Stakeholder

Analysis

3

  • Process Definitions

  • Metrics Development

  • Future State

  • Stakeholder Ident.

  • Stakeholder Needs

  • Strategy Draft

What problem are we

trying to solve?


What we have to work with

What we have to work with

Mobil Team research to date...

I.NBU definition and detail

II.Physical flows and system nodes

III.High level processes and decision making maps

IV.30+ Decision processes, owners, stakeholders

V.Improvement opportunities from Phase I & I

VI.Some root cause analysis

VII.Chesapeake modeling of one network’s processes

VIII.A review of existing metrics - with misalignment noted


Leveraging mobil analysis

Leveraging Mobil Analysis

Restoring “traction”...

  • Organize by supply network:

  • Team

  • All analysis

1

  • Understand value drivers:

  • Physical

  • Process

2

Categorize networks by supply chain drivers

3

Quantify benefits

Prioritize projects

4


Each network is a different animal

Each Network is a “Different Animal”

Analysis sequence is very important...

Understand crude and product regulatory environment

1

Know all the assets:

Facilities: refineries, pipelines, terminals, ports

Knowledge:exchanges, processing, trading, markets

2

Know, model and anticipate your competitors:

both facilities and strategies

3

  • Have a solution approach - framework that manages:

  • Processes, Organization, Measures & Policies

  • Functions (and/or facilities)

4

Discover: Where are the benefits, how large

Acknowledge: Change takes time, stepwise approach makes sense

5


The workbook conducting a supply chain opportunity assessment

Define the Supply Networks

6

Russell- Susan

Ron & Lynn

Supply - Trading

5A

4

Ex-Paulsboro

5B

Joliet

1

Torrance

as a Metrics

Model

Beaumont

Retail Market Share

Chalmette

Greater than 20%

10-20%

Less than 10%

2

3

Paul


The workbook conducting a supply chain opportunity assessment

Sponsors

Brian Baker

NAM&R

John Simpson

ST&T VP

Team

1Torrance

2Beaumont

3Chalmette

4Joliet

5Paulsboro

6S&T

Steering Team

Crude Supply

Mobil:

PwC: P. Feder

Ted Shore

Greg Berry

Ian Viney

Work Team

Tom Meador

Frank Wilson

Roger Conant

Ed Sammler

Ken Lorang

Lisa Adams

Ken Lorang

Rick Ellison

Susan Johnson

Pat Daily

Trading/Feedstock

Mobil:

PwC: L. Sievers

DemandForecasting

Mobil:

PwC: R. Pell

Other...

Mobil:

PwC: R. Brennan

Organize by Network and Process

Where do you best fit?


The workbook conducting a supply chain opportunity assessment

Network 2

Network 5

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Trade, Exchange

Schedule &

Transport

Products

Trade, Exchange

Schedule &

Transport

Products

Set Price &NotifyCustomers

Set Price &NotifyCustomers

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Develop

Rack &Bulk

Customers

Develop

Rack &Bulk

Customers

Set Price &

Notify

Customers

Set Price &

Notify

Customers

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Select &

Acquire

Crude - F/stocks

Select &

Acquire

Crude - F/stocks

Plan & Operate

Refinery

Plan & Operate

Refinery

Plan & Operate

Refinery

Develop an NBU - Network Context Model

Torrance… A benchmark for the current Mobil metrics

NBU

NBU 1

NBU 2

NBU 3

NBU 4


Doing the analysis physical

Doing the Analysis - Physical

1Torrance

2Beaumont

3Chalmette

4Joliet

5Paulsboro

6S&T

  • Facilities

  • Refineries

  • Terminals

    • Owned

    • Other

  • Pipelines- Ports

  • Exchanges

  • Supply Volumes/Type

  • Crudes

  • Feedstocks

  • Products

  • Market Characteristics

  • Competitors

  • Customers

  • Price Setter

  • Mobil Characteristics

  • Strategy

  • Channels

  • Product mix

  • NBU Reporting

  • Organization

See Appendix 5


Doing the physical analysis torrance

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Plan & Operate

Refinery

Doing the Physical Analysis - Torrance

  • Facilities

  • Refineries

  • Terminals

    • Owned

    • Other

  • Pipelines- Ports

  • Exchanges

  • Supply Volumes/Type

  • Crudes

  • Feedstocks

  • Products

  • Market Characteristics

  • Competitors

  • Customers

  • Price Setter

  • Mobil Characteristics

  • Strategy

  • Channels

  • Product mix

  • NBU Reporting

  • Organization


Doing the financial analysis torrance

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Plan & Operate

Refinery

Doing the Financial Analysis - Torrance

Total

for

NBU

  • Fixed Capital Employed

  • Refineries

  • Terminals

    • Owned

    • Other

  • Pipelines- Ports

  • Inventories

  • Crudes

  • Feedstocks

  • Products

  • Other Working Capital

  • Receivables

  • Payables

  • Expenses

  • Fixed

  • Variable

  • Margin

  • Gross


Processes identified

Processes Identified

Big hit potential Granular approach needed

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Plan & Operate

Refinery

30Processes


Processes identified1

Processes Identified

Big hit potential Granular approach needed

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Plan & Operate

Refinery

30Processes

CrudeSelection

TradingFeedstock


Processes identified2

Processes Identified

Big hit potential Granular approach needed

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Plan & Operate

Refinery

30Processes


Definitions processes identified

Definitions: Processes Identified

Big hit potential Granular approach needed

Trade, Exchange

Schedule &

Transport

Crude - F/stocks

Trade, Exchange

Schedule &

Transport

Products

Set Price &

Notify

Customers

Select &

Acquire

Crude - F/stocks

Set Price &NotifyCustomers

Develop

Rack &Bulk

Customers

Plan & Operate

Refinery

Star

Enterprise

PW*Stars

Koch

Koch

Refining

PW*Stars

Koch

BPUSA+ Star

Enterprise

BPUSA + Star

Enterprise

Need a “Level 2.0”

What’s Going on - by Process


The action is at the corners

The Action is at The Corners

Breakdown

A rated network =

  • Reduced inventory goal does not allow for product hedging strategies

  • Product traders global info not communicated to marketers or refinery

  • Plant operations has no idea of why a crude was purchased

  • Scheduling inside the plant not coordinated with crude selection process

Global Trading

Integrated

Network

Breakdown

Breakdown

Standalone Manufacturing

  • No one “owns” facilities needed to efficiently move product along a pipeline or common carrier

  • Spot product economics do not reflect margin deterioration in market


Define scm guiding principles for each network

Semiconductor

Paper

Steel

Asset Intensive =

Improved Utilization

Distribution Intensive =

Reduce cost

Define SCM Guiding Principles for each Network

Best Practices

  • Support NAM&R Strategy (SOR)

    • 14% ROCE

    • Leverage Assets

    • Industry Cost Leader

    • Selective Growth in Attractive Markets

  • Process development to provide a mutually agreed customer service level:

    • Lowest laid down cost to the terminal rack

    • Optimum feedstock cost to refineries (location, quality, timing)

    • Maximize margins along an imbalanced supply chain

    • Flexibility, adaptability in a changing environment

    • Maximize economic utilization of assets (i.e. Inventory Management)

    • Facilitate Optimization of the supply chain

  • Capture the SAP potential moving to the next level

  • Fully aligned supply chain organization (Metrics)

  • Center of expertise/knowledge for:

    • Market intelligence

    • Logistics

    • Cost-to-produce (cost structure)

    • Optimization analytics

    • Decision Making (the science)

    • Leverage business relationships

  • Fully leverage ST&T partnership

Best Practices

Automotive

Computers

Material Intensive =

Improve synchronization

Best Practices

Pharmaceutical

Consumer Products

Frito Lay


Downstream as a supply chain

Downstream as a Supply Chain

Asset Intensive

Material Intensive

Distribution Intensive

Supply Push

Demand Pull

Plants

Terminals

Sites

Crude

Product

Trading

Exchanges

Bulk

Off The Rack

ImprovedUtilization

Improved Synchronization

Cost

Reduction

  • Lowest laid down cost to the terminal rack

  • Optimum feedstock cost to refineries (location, quality, timing)

  • Maximize margins along an imbalanced supply chain

  • Flexibility, adaptability in a changing environment

  • Maximize economic utilization of assets (i.e. Inventory Management)

  • Facilitate Optimization of the supply chain

Process Improvements to Meet Customer Service Levels


Primary scm benefits

Primary SCM Benefits

Benefit Drivers

OptimizeTrades& Exchanges

ImprovedAssetUtilization

Lower DistributionCosts

Improved Customer Satisfaction

ManageInventory

Demand Planning

Network 1

Network 2

Network 3

Network 4

Network 5

Network 6


Quantify the benefits

Quantify the Benefits

$ 3 MM

ImprovedProcesses

Best

Practices

NewMetrics

Select Focus Areas

$ 5 MM

ImprovedProcesses

NewMetrics

Best

Practices

$ 10 MM

ImprovedProcesses

NewMetrics

Best

Practices

Low

Cross Network Selected Focus Areas

High

“To-Be” Value

“As-Is” Value


Pricewaterhousecoopers candidates

PricewaterhouseCoopers Candidates

Paul Feder (BSChE)

  • 31 years industry experience

  • 17 years consulting experience.

  • Expertise in crude selection, modeling & LP’s

    Robert Snell (BSChE, MBA)

  • 8 years experience with Exxon.

  • 10 years downstream consulting experience.

  • Expertise in strategy, operations and organization restructuring.

    Lynn Sievers (BA, MBA)

  • 15 years experience with Superior Burlington Resources, Torch Energy

  • 3 years consulting experience.

  • Expertise in oil/gas and NGL marketingand trading

    Ron Brennan (BSChE, BSCE)

  • 12 years technical experience.

  • 6 years consulting experience.

  • Expertise in decision support system design and implementation.

Marty Stetzer (BME, MBA)

  • 18 years experience with Esso, Superior and Mobil.

  • 10+ years downstream consulting experience.

  • Expertise in downstream trading, supply and wholesale marketing.

    Susan Hulse (Europe)

  • 10 years industry experience with Exxon.

  • Range of roles in supply and distribution.

  • Expertise in supply-distribution operations and scheduling, transportation management.

    Russell Pell (BSChE, MBA)

  • 8 years experience with Exxon, 2nd year PwC consulting.

  • Refinery experience in planning, scheduling and process engineering.

  • Expertise in coordination of supply chain management, inventory management, demand and refinery planning.


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