Picture Credit: Freepik | Graphic Resources for everyone
For Oil industry, movement of oil has been one of the critical business operations for its midstream / downstream segment. I have been part of this industry implementing system solutions for more than 15 years. SAP Trader’s and Scheduler’s Workbench (TSW) solution delivers key business value to this segment of the industry. It has been an indispensable toolset for the business to plan, schedule, move barrels and to seamlessly track every oil movement from Crude Procurement all the way to Refined Product sale. I will be covering an overview of TSW’s capability through this blog post.
SAP ’s standard modules, Sales & Distribution (SD), Material Management (MM) and Financial Accounting (FI), aid a wide range of ERP activities that occur in the Oil Industry. However, they do not cover one of the critical functions in this industry, i.e. the oil movement for their midstream and downstream operations that needs large scale planning, scheduling and capturing the actual movement executed. This is where SAP ’s IS-OIL add-on delivers functionality through TSW to cover this essential business in logistics area. It integrates planning, scheduling and ticketing operations with standard SD, MM and FI modules and allows flexibility to align with business process. TSW follows all modes of transports that are used in the industry like rail, pipeline, marine, barge, and truck.
High-level TSW overview
Let’s start with how the business process would look at a high level for midstream / downstream area of this industry (this is just one of the many possible business process flows):
Purchase of Crude at Vendor Location
→ Movement of Crude from Vendor Location to Refinery
→ Refinery Production
→ Movement of Refined Product from Refinery to Terminal Locations
→ Sale of Refined Product from Terminal Location
These crude/refined product movements are complex and involve planning and scheduling to link demand and supplies with Purchase and/or Sales Contracts, physical locations, transport systems, scheduled timelines and the partners involved. TSW’s Planning tools (Inventory Planning Workbench- IPW, Three way pegging, Location balancing) and Nomination application allow Schedulers to set up scheduled movements that will tie all the above entities.
The planning tools give Scheduler a visibility of product inventory at relevant locations, available contracts and allows to simulate movements to use contract and fulfill the demand or supply needs between these locations. These tools will let scheduler confirm the simulated movements into scheduled movements. These schedules flow into Nomination, which is the Scheduling application.
Nomination holds the scheduled movement which links load and discharge locations, transport system, vehicle, vendor partners like carrier, shipper, supplier/receiver, product, contract, schedule timeline, movement scenario and number of other details. The nomination can be scheduled directly in the application or can be set up through the planning tools. External interfacing based on business scenario can allow auto-creation of multiple nomination schedules. The interface can also allow auto-communication with vendor partners.
These movements will eventually involve capturing the quality and quantity actuals, and actual event timelines through Bill of Lading that needs to flow into Inventory and Financial accounting. TSW’s Ticket application caters to this requirement. It allows the Actualizer to capture and tie actuals against the scheduled movement, does oil specific quantity conversions, creates automatic call off documents and inventory postings against the linked Contracts.
I will attempt to go to next granular level of the business process. This will allow us to appreciate how TSW can cover different movement scenarios across different modes of transports (again, these are just few of the many possible business scenarios). Let’s take a dive into how TSW will cover these business scenarios.
Planning and Scheduling Overview
Procure Crude from vendor in Alaska onto a Marine Vessel and transport it to Refinery Location in California
Using IPW, crude scheduler sees daily inventory projections for crude at different locations for next 60 days. These projections are calculated by the system based upon many different inputs like actualized and scheduled movements, production numbers, rack liftings that impact the particular location’s inventory.
The crude scheduler spots that there is a drop of inventory level at refinery location. He looks for possible supplies that can meet the demand at this location. He finds a crude purchase contract that was setup with a vendor in Alaska. Then within the IPW tool he creates a simulated schedule of marine purchase for the required barrels at origin from vendor’s Alaska location and transfer at discharge to the refinery location. Since this seems to meet the demand, he publishes this simulation in IPW which flows automatically into nomination schedule.
This scheduler now has a marine nomination with 2 line items – one with purchase at loading of crude into the vessel, another with a transfer of crude from the vessel into terminal at the refinery location.