PROJECT REPORT

ON

Study of Logistic and Supply Chain Management at IOCL

Submitted by: Group-2

Abhinav Pathania
Atul Sharma Prince Soni Satnam Singh Dhiman Shanjeet Singh Mavi Vikas Sharma

501104003 501104006 501104017 501104023 501104025 501104027

Under the Guidance of: Er. Gaurav Goyal Assistant Professor LMT School of Management January, 2013 LMT School of Management THAPAR UNIVERSITY, PATIALA

DECLARATION
We, hereby declare that the project work entitled Study of Logistic and Supply Chain Management at IOCL is an authentic Record of our own work carried out at LMT School of Management, Patiala as a requirement of the course curriculum for the subject Logistic and Supply Chain Management for the award of degree of MBA (Operations Management), Thapar University, Patiala, under the guidance of Er. Gaurav Goyal during Nov 2012 to Jan 2013.

.. Abhinav Pathania 501104003

.. Atul Sharma 501104006 .... Shanjeet Singh Mavi 501104025

.. Prince Soni 501104017

... Satnam Singh Dhiman 501104023

.... Vikas Sharma 501104027

DATE: January 13, 2013 It is certified that above statement made by the students is correct to the best of my knowledge and belief.

Er. Gaurav Goyal Assistant Professor LMT School of Management Thapar University Patiala

Acknowledgement

We would like to thanks Er. Gaurav Goyal from the core of our heart for giving us the opportunity to work on this project under his guidance. We would also like to thanks him for his constant support, encouragement and very valuable guidance.

Executive Summary
India's oil is progressing fast on its roadmap to emerge as the country's most profitable downstream player, seeking to double volumes and quadruple profits over the next three years. The SCM in IOCL is implemented by an advanced planning & Optimization solution by SAP. The solution is integrated to SAP R/3 (execution system) and BIW (Reporting and analysis system) using SAP standard interfaces. The solution modules include Demand Planning (DP), supply network planning (SNP) and Transport planning and Vehicle Scheduling (TPVS). SCM solution is an end to end solution handling all processes of planning like bulk & packed together, Procurement of products. The project report gives an insight towards the supply chain management in IOCL as a whole. With the help of above projects we compare our theoretical knowledge with allocated projects and held in aid of clear understanding of the Supply Chain Management.

Table of Contents
Acknowledgement ............................................................................................................................................. 3 Companys profile .............................................................................................................................................. 9 Corporate Overview: .................................................................................................................................... 9 Reach and Network ...................................................................................................................................... 9 Innovation is key: ....................................................................................................................................11 Redefining the horizon: .........................................................................................................................11 Venturing into alternative fuels:............................................................................................................12 Vision with values: ......................................................................................................................................13 Logistics & Supply Chain ...........................................................................................................................14 IndianOil bags Supply Chain Excellence Award.........................................................................................15 Indian Oil Improves Supply Chain with Honeywells Supply Chain Management Solution ...............16 Benefits .........................................................................................................................................................16 Background ..................................................................................................................................................16 Challenge ......................................................................................................................................................17 Solution .........................................................................................................................................................17 Honeywell Supply Chain Solution ............................................................................................................19 Supply Chain Management IOCL .................................................................................................................20 Supply Chain Overview ..............................................................................................................................20 Supply Chain Master Data .........................................................................................................................21 Supply Chain Link .......................................................................................................................................21 Exploration (using VLCC) .........................................................................................................................21 Supply chain initiatives ...............................................................................................................................21 Critical Issues in Managing the Supply Chain .........................................................................................23 Greening the Supply Chain.................................................................................................................23 Maximize the reach of consumers .....................................................................................................23 Enhancing Supplier Diversity.............................................................................................................23 Maximizing Operational Efficiency ...................................................................................................24 Supply Chain Strategies ..............................................................................................................................24 Demand Planning ...................................................................................................................................24 Components of Logistics Management ........................................................................................................26 7

MEANING ..................................................................................................................................................26 FUNCTIONING .......................................................................................................................................27 Procurement & Outsourcing Strategies ...................................................................................................27 Industry Logistics Plan ...........................................................................................................................27 Transportation .............................................................................................................................................28 Transportation Planning /Vehicle Scheduling ...................................................................................28 Transportation Planning Inbound Process......................................................................................28 Supply Network Planning (Cross Plant Planning)..................................................................................29 Optimizer .................................................................................................................................................30 Heuristics .................................................................................................................................................31 OPERATIONAL ACTIVITIES (PIPELINE DIVISION) ....................................................................32 Product Handling ........................................................................................................................................32 STUDY OF THE SCADA SYSTEM .................................................................................................33 Layouts and functions at Bijwasan terminal ............................................................................................37 Product Sequencing ....................................................................................................................................38 Day by Day sequencing of the products ..................................................................................................38 Overall plan ..................................................................................................................................................39 The daily plan is shown below ..................................................................................................................40 Conclusion ........................................................................................................................................................41 Bibliography ......................................................................................................................................................42

Companys profile
Corporate Overview:
Indian Oil is Indias flagship national oil company with business interests straddling the entire hydrocarbon value chain from refining, pipeline transportation and marketing of petroleum products to exploration & production of crude oil & gas, marketing of natural gas, and petrochemicals. It is the leading Indian corporate in the Fortune 'Global 500' listing, ranked at the 125th position in the year 2010. With over 34,000-strong workforce, Indian Oil has been helping to meet Indias energy demands for over half a century. With a corporate vision to be the Energy of India, Indian Oil closed the year 2009-10 with a sales turnover of Rs. 271,074 crore and profits of Rs.10,221 crore. At Indian Oil, the operations are strategically structured along business verticals - Refineries, Pipelines, Marketing, R&D Centre and Business Development E&P, Petrochemicals and Natural Gas. To achieve the next level of growth, Indian Oil is currently forging ahead on a well laid-out road map through vertical integration upstream into oil exploration & production (E&P) and downstream into petrochemicals and diversification into natural gas marketing and alternative energy, besides globalization of its downstream operations. Having set up subsidiaries in Sri Lanka, Mauritius and the United Arab Emirates (UAE), Indian Oil is simultaneously scouting for new business opportunities in the energy markets of Asia and Africa. With facilities at multiple locations and ever-expanding market opportunities, Indian Oil is poised to become an integrated energy company with steady forays into Oil Exploration & Production, Petrochemicals and Renewable Energy.

Reach and Network

Indian Oil and its subsidiaries account for over 48% petroleum products market share, 34% national refining capacity and 71% downstream sector pipelines capacity in India. With a steady aim of maintaining its position as a market leader and providing best quality products and services, Indian Oil is currently investing Rs. 47,000 crore in a host of projects for augmentation of refining and pipelines capacities, expansion of marketing infrastructure and product quality up gradation.

The Indian Oil Group of companies owns and operates 10 of India's 20 refineries with a combined refining capacity of 60.2 million metric tons per annum (MMTPA, .i.e. 1.2 million barrels per day). Indian Oils cross-country network of crude oil and product pipelines, spanning 10,652 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner. It has a portfolio of powerful and much-loved energy brands that includes Indane LPGas, SERVO lubricants, XtraPremium petrol, XtraMile diesel, etc. Validating the trust of 56.8 million households, Indane has earned the coveted status of Super brand in the year 2009.

Indian Oil has a keen customer focus and a formidable network of customer touch-points dotting the landscape across urban and rural India. It has 18,643 petrol and diesel stations, including 2,947 Kisan Seva Kendras (KSKs) in the rural markets. With a countrywide network of 35,600 sales points, backed for supplies by 167 bulk storage terminals and depots, 98 aviation fuel stations and 88 LPGas bottling plants, Indian Oil services every nook and corner of the country. Indane is present in almost 2764 markets through a network of 5095 distributors. About 7,593 bulk consumer pumps are also in operation for the convenience of large consumers, ensuring products and inventory at their doorstep. Indian Oils ISO-9002 certified Aviation Service commands an enviable 63% market share in aviation fuel business, successfully servicing the demands of domestic and international flag carriers, private airlines and the Indian Defense Services. The Corporation also enjoys a 65% share of the bulk consumer, industrial, agricultural and marine sectors.

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Innovation is key: Indian Oil has a sprawling world-class R&D Centre that is perhaps Asia's finest. It conducts pioneering work in lubricants formulation, refinery processes, pipeline transportation and alternative fuels, and is also the nodal agency of the Indian hydrocarbon sector for ushering in Hydrogen fuel economy in the country. The Centre holds 215 active patents, including 109 international patents. Some of the in-house technologies and catalysts developed by Indian Oil are the INDMAX technology (for maximizing LPG as yield), OlivorusS bio-remediation technology (extended to marine applications too), DHDS catalyst, a special Indicate catalyst for Bharat Stage-IV compliant Diesel, IndVi catalyst for improved distillate yield and FCC throughput, and adsorbent based deep desulphurization process for gasoline and diesel streams. Redefining the horizon: In Petrochemicals, Indian Oil is investing Rs. 20,000 crore (US$ 4 billion) by the year 2011-12. It offers a full slate of products including Linear Alkyl Benzene (LAB), Purified Terephthallic Acid (PTA), and an extensive range of polymers. Indian Oil holds a significant market share of LAB in India and exports to 19 countries. A state-of-the-art 120,000 tons per annum Styrene Butadiene Rubber (SBR) unit is underway at Panipat. The SBR unit will further strengthen Indian Oils presence in the specialty petrochemicals sector. In Exploration & Production, Indian Oils domestic portfolio includes ten oil & gas blocks and two Coal Bed Methane blocks. The overseas portfolio includes nine blocks spread across Libya, Iran, Gabon, Nigeria, Timor-Leste and Yemen. Exploration activities are at various stages of progress. In addition, as part of consortium, Indian Oil has been awarded Project -1 in the Carabobo heavy oil region of Venezuela. To boost E&P activities, Indian Oil has incorporated Ind-OIL Overseas Ltd. a special purpose vehicle for acquisition of overseas E&P assets in consortium 11

with Oil India ltd. Natural Gas marketing is another thrust area for Indian Oil with special focus on City Gas Distribution (CGD) business. The Corporation has entered into franchise agreements with several CGD players to market Compressed Natural Gas through its retail outlets. Indian Oils joint venture with GAIL India Ltd. - Green Gas Ltd. has been authorized to take up city gas distribution at Agra. A long term gas supply agreement has been signed with NTPC. Venturing into alternative fuels: Indian Oil has forayed into alternative energy options such as wind, solar, bio-fuels and nuclear power. A 21 MW wind power project is operational in the Kutch district of Gujarat and the cumulative power generation from the 14 wind turbine generators has crossed 6 crore units (KW/Hr) since commissioning in January 2009. The solar power initiative is being spearheaded on a pilot basis in Orissa, Karnataka and the Northeast and an all-India phased roll out are underway. Solar products such as solar lanterns and torches are being sold through the Retail Outlets in rural and urban areas. With a view to investing in the nuclear energy sector in the country, Indian Oil has entered into an agreement with the Nuclear Power Corporation of India ltd. Indian Oil has the largest captive plantation over 1,000 hectares for bio-fuel production in India which is underway in Chhattisgarh and Madhya Pradesh, generating rural employment of over 1.4 lakhs man-days. To straddle the complete bio-fuel value chain, Indian Oil has formed a joint venture with the Chhattisgarh Renewable Development Authority. Indian Oil CREDA Biofuels Ltd. has been formed to carry out farming, cultivating, manufacturing, production and sale of biomass, bio-fuels and allied products and services in Chhattisgarh. In Uttar Pradesh, Indian Oil is establishing a model value chain for the production of bio-diesel. A MoU for collaborating on commercial production of bio-diesel from algae has also been signed with PA LLC.

Indian Oil. The Energy of India: As a leading public sector enterprise of India, Indian Oil has successfully combined its corporate social responsibility agenda with its business offerings, meeting the energy needs of millions of people everyday across the length and breadth of the country, traversing a diversity of cultures, difficult terrains and harsh climatic conditions. The Corporation takes pride in its continuous investments in innovative technologies and solutions for sustainable energy flow and 12

economic growth and in developing techno-economically viable and environment-friendly products & services for the benefit of its consumers.

Vision with values:

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Logistics & Supply Chain

The logistics market in India is estimated to be Rs. 260,000 crores and constitutes 13% of the GDP (as compared to an average of 10% in other developing countries). The global logistics 14

industry is valued at US$ 3.5 trillion. Global Market Analysis firm Datamonitors "India Logistics Outlook 2007" report estimates the Indian logistics industry at over US$ 125 billion. The sector currently employs over 40 million people globally.

Burgeoning trade, increased geographical distribution of incomes and markets, better than expected performance of the manufacturing sector and an explosive growth in the third party logistics segment has contributed to the phenomenal growth of the Indian Logistics and Supply Chain sector. In the Indian scenario, there is an impressive growth of container traffic of over 15% per annum over the last five years.

IndianOil bags Supply Chain Excellence Award

Supply Chain Management of Indian Oil Corporation Ltd. - January 10th, 2011 The Indian Oil Corporation Ltd. operates as the largest company in India in terms of turnover and is the only Indian company to rank in the Fortune "Global 500" listing. The oil concern is administratively controlled by India's Ministry of Petroleum and Natural Gas, a government entity that owns just over 90 percent of the firm. Since 1959, this refining, marketing, and international trading company served the Indian state with the important task of reducing India's dependence on foreign oil and thus conserving valuable foreign exchange. That changed in April 2002, however, when the Indian government deregulated its petroleum industry and ended Indian Oil's monopoly on crude oil imports. The firm owns and operates seven of the 17 refineries in India, controlling nearly 40 percent of the country's refining capacity.

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Indian Oil Improves Supply Chain with Honeywells Supply Chain Management Solution
With Honeywells help we have set a worldwide benchmark in the area of Supply Chain Planning. -Uttam Kumar Basu, General Manager, Optimization, IOCL

Benefits
Indian Oil Corporation Limited (IOCL) has implemented Honeywells Supply Chain Management solution to integrate and optimize the supply chain of five separate refineries. The project has resulted in the following benefits: Integrated supply chain planning which optimizes the entire supply chain providing higher margins and increased profitability, Crude selection and allocation which takes into account product demands, refinery capabilities and effect of crudes already procured, Optimal refinery production planning considering crude assays, unit capacities, product specifications and demands; and feedstock availability. Optimal distribution planning considering transportation costs, taxes and duties and transportation constraints

Indian Oil experienced major benefits on account of:

Improved visibility into its supply chain process across the five selected refineries Investment analysis for refinery units, pipelines, etc. Analysis to formulate strategies to meet future scenarios like change in specifications Faster, more effective decision making on exchange strategies, imports and exports Improved response and execution capability

Background
Indian Oil Corporation (IOCL) is Indias number one oil company and holds the 189th spot on the famed Fortune 500 list of companies. It is the19th largest petroleum company in the world and has also been recognized as the number one company in petroleum trading among the national oil companies in the Asia-Pacific region.

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As Indias flagship national oil company, IOCL accounts for 56% petroleum products market share among public companies, 42% national refining capacity and 69% downstream pipeline throughput capacity. The company has a countrywide sales network of more than 23,000 retail outlets, including more than 10,000 petrol/diesel stations backed by 165 bulk storage facilities, 95 aviation fuel stations and 85 LPG bottling plants. Its subsidiary, IBP Co. Ltd., has another 3,000 retail sales outlets. IOCL operates 10 of India's 18 refineries with a combined rated capacity of one million barrels per day (bpd). The company also owns and operates the countrys largest network of crosscountry crude oil and product pipelines of 7,730 km, with a combined capacity of 58.62 million metric tons per annum.

Challenge
As a leading oil supplier, IOCL had the multifaceted challenge of maintaining its leadership position and meeting its vision of being a diversified, integrated energy company with a strong environment conscience and national role in oil security and public distribution. As the company looked for ways to maximize profits one thing was clear more visibility into the supply chain and finding ways to optimize this value chain was critical. IOCL evaluated different supply chain management solutions to address this business problem and how best to implement a solution that integrates five separate refineries. A multi-site refining company has various supply chain problems to solve including which crude to buy, where to process it, how much to buy and make, what to make and where and how to transport it, said Uttam Kumar Basu, General Manager, Optimization, IOCL. Traditionally different departments or divisions within one organization manage their own disparate project of this complex process and dont always talk with one another. As a result, decisions are sometimes made based on incomplete data or they cant be applied across the entire corporation. Our challenge was how to plan for various possible breaks that could occur in the supply chain and how to best optimize each specific point to increase our profitability and link activities of five separate refineries, continued Mr. Basu. To put it in perspective IOCL had challenges in the supply chain to integrate, view and make decisions based on 80 crudes sourced from South America to South East Asia, 10 refineries and five detailed models, along with a large network of 200 depots, 40 terminals, 17 pipelines and six transportation modes. The resulting decision was to implement an integrated, multi-plant planning solution.

Solution
After serious consideration and an arduous evaluation process, IOCL selected Honeywells Supply Chain Management solution. At the heart of this solution is Honeywells Refinery and Petrochemical Modeling System (RPMS) known for its integrated planning features, cost effective implementation, passion and people commitment and unique investment modeling capabilities. The models developed with Honeywells solution covered the entire supply chain of 17

IOCL from crude purchases at the refinery gate or ports to product distribution at the terminals. The scope of this problem was undocumented and we knew we needed not just a vendor, but a true partner to invest in and help undertake such a challenging project we found that partner in Honeywell, said Basu. The Supply Chain Management solution provided by Honeywell consisted of the following modules: Demand planning: for demand forecasting and aggregation of the final demand numbers Integrated planning: for the complete IOCL refining supply chain Distribution planning: for generating operational plans for feedstock allocation and product distribution Refinery production planning: for generating operational plans for production

An integrated planning model is actually an aggregation of refinery sub models and distribution models requiring large amounts of data. The refinery models along with the crude assay data are directly embedded into the Integrated Planning Model and supply and distribution structure is obtained from the supply chain database. This provides flexibility to build in more details in distribution models than what is required from the perspective of corporate-wide optimization. Basu commented, We were able to shift our supply chain to a demand-driven one. The Supply Chain Database was truly a paradigm shift within the company and one that could not be taken lightly and needed support from the executives down to the operator level. In order to implement this challenging project a true partnership was formed between Honeywell and IOCL with teams of people involved at each stage including consultation, implementation and support. We knew we were taking on an almost impossible task and something that was unprecedented in our business we had to change our usual way of thinking and plan every step of the way using models that were developed years ago but had to be applied to our specific situation. By using IOCL and Honeywells proven experience and resourcing the appropriate subject matter experts for each specific phase we had an incredibly quick implementation taking only two months to measure its effectiveness, continued Mr. Basu. Amazingly it took only 10 months to have 5 refineries fully integrated. With Honeywells help we have set a worldwide benchmark in the area of Supply Chain Planning.

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For the year 2004-05, IOCL sold 50.1 million tonnes of petroleum products, including exports of 1.96 million tonnes. Its seven own refineries achieved a throughput of 36.63 million tonnes, and the pipeline network transported 43.03 million tonnes of crude oil and petroleum products. The resulting project has set a defacto standard in Supply Chain Planning. Replacing the traditional planning model, which was sequential and decomposed and not responsive to demand, the new integrated planning approach utilizes the synergies that exist between each functional phase (procurement, manufacturing, sales and distribution) to maximize the corporate profit. Basu added, The investment modeling capabilities of Honeywells RPMS software also provides a unique opportunity for us to look at every investment as a capital expenditure and make decisions based on sophisticated investment analysis. We knew we needed a team approach that demanded committed consultants with proven industry background and models but also had the flexibility and maturity to build a partnership and forge new ground, said Basu. During the project it was difficult to identify who was an Indian Oil employee and who was a Honeywell employee we are a true combined team who look for ways to creatively solve problems and develop a new path. Indian Oil has committed to a five-year contract with Honeywell to provide for ongoing support and enhancements as well as a continuous upgrade of skills and induction of new people and training as needed. We chose Honeywell because of the feature/functionality, cost-effective integrated planning solution and people commitment not once did I hear them tell me how many man-hours they were spending and now we look forward to the future long-end planning in the next 15-20 years with the help of Honeywell, concluded Basu.

Honeywell Supply Chain Solution

Honeywells Supply Chain solution effectively helps manage business complexity and optimize the supply chain. With real-time knowledge collaboration and visibility across the enterprise, decisions are made more quickly and disruptions minimized. Internet-enabled supply chain applications dynamically model the supply chain, and when combined with advanced execution solutions, substantially improve profitability through measurable inventory and product cost reductions. These benefits are realized through faster reaction to market opportunities, improved customer relations, and true collaboration with suppliers and customers. Integrated with Honeywells advanced applications and the Experion control platform, these products offer an integrated suite of advanced forecasting, planning, and scheduling to manage the supply chain. An integrated framework supports various modules and state-of-the art tools for a broad range of business decisions. These enable the business to monitor the condition of the supply chain and provide immediate feedback and exception notices. 19

Supply Chain Management IOCL

IOCL is involved in a global supply-chain that includes domestic and international transportation, ordering and inventory visibility and control, materials handling, import/export facilitation and information technology. Thus, the industry offers a classic model for implementing supply-chain management techniques. In a supply-chain, a company is linked to its upstream suppliers and downstream distributors as materials, information, and capital flow through the supply-chain. A transparent platform with total visibility, it is an integrated package of SAP R3 and BIW. Given its objectives, the SCM has to work through four fundamental sets of complexities which are as follows: It operates in a global context both at the supply side, and at the marketing end. The crude selection and supply is the international arm of the business, and the supply chain needs to drive decisions on exports imports versus domestic sales of different products. The SCM inherently operates as a matrix organization, working across different business units that could have conflicting goals or are used to more vertical ways of working.

The SCM needs to drive value creation for the entire corporation, by creating a sense of passion for the company goal. Short-term versus long term implications of decisions need to be balanced, from a strategic perspective.

Supply Chain Overview

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Supply Chain Master Data

Supply Chain Link

Exploration Production Refining Marketing Consumer (Crude oil procurement)

Exploration (using VLCC)

IOCL entered the upstream sector in 2003 with the aspirations of reasonable supply security of crude, hedging of price risks, to become a vertically integrated oil company and to add to IOCLs bottom line.

Supply chain initiatives

Supply chain initiatives have become a critical part of firms operations (Eskioglu et. al., 2009). Success is increasingly being dictated by how well a company can control its supply base and mitigate supply bottlenecks and liabilities. Such disruptions are a 6-figure to 7-figure expense for companies, with a handful of companies citing that the cost was more than $10 million according to recent reports (see Hendricks and Singhal 2005, as an example). Reengineering (or re-engineering) is the radical redesign of an organization's processes, especially its business processes. Rather than organizing a firm into functional specialties (like production, accounting, marketing, etc.) and looking at the tasks that each function performs, we 21

should, according to the reengineering theory, be looking at complete processes from materials acquisition, to production, to marketing and distribution. The firm should be reengineered into a series of processes. The changes, and subsequent improvements, have been clearly identified by Hammer and Champy (1993) who have claimed originality and conveniently packaged the ideas into the concept of business re-engineering, which has subsequently been called business process re-engineering (BPR). The main proponents of re-engineering were Hammer and Champy (1993). In a series of books including Reengineering the Corporation, Reengineering Management, and The Agenda, they argue that far too much time is wasted passing-on tasks from one department to another. The Business processes pictured as a set of triangles as shown below. The model will be used to define the supplier and process inputs, your process, and the customer and associated outputs. The feedback loop from customers will also be used as shown in Figure 1.

Figure 1: Customer feedback loop Improving business processes is paramount for businesses to stay competitive in today's marketplace. Over the last 10 to 15 years companies have been forced to improve their business processes because we, as customers, are demanding better and better products and services. And if we do not receive what we want from one supplier, we have many others to choose from (hence the competitive issue for businesses). Many companies began business process improvement with a continuous improvement model. The proposed model will attempt to understand and measure the current process, and make performance improvements accordingly. Figure 2 below illustrates the basic steps. The research will begin by documenting what Oil Marketing Companies (OMCs) do today, establish some way to measure the process based on what their customers want, do the process, measure the results, and then identify improvement opportunities based on the data collected. Then implement process improvements, and measure the performance of the new process. This loop repeats over and over again, and is called continuous process improvement and the proposed research will be following this line of action.

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Figure 2: Basic steps in continuous improvement

Critical Issues in Managing the Supply Chain

Based on a literature review, the following are the critical factors in managing the supply chain of an oil company: Greening the Supply Chain How the LPG division can take a proactive posture in requiring a significant level of environmental responsibility in core business practices of their suppliers and vendors. Greening the Supply Chain refers to firms integrating environmental issues which include predevelopment activities, suppliers business practices, product design and development. Environmental responsive companies take proactive posture in requiring a significant level of environmental responsibility in core business practices of their suppliers and vendors (Business and Environment 1993; Sarkis, 2002). Companies are increasingly giving attention not only to the environmental characteristics of their products, but also to the developmental process, paying particular attention to the supply chain activities. Oil Corporations are considered to be in the high environmental impact sector, and hence more attuned and sensitive to environmental issues. Maximize the reach of consumers It is critical to work with supply chain partners to prospect and generate quality customers. Accelerating sales cycles by innovating internet based selling and hence allowing customers to access us 24/7 via web touch settings. It is imperative to educate customers by enabling them to complete routine self-service tasks by themselves (Ashcraft 1992). It also helps to build loyalty by relying on a variety of programs in giving our customers an outstanding use experience. A sustainable business value can be created by offering a tiered approach with distinct marketing, sales, training, and support services for each customer segments. Enhancing Supplier Diversity Expanding the supplier base enables firms to include more diverse suppliers hence encouraging competition, enhancing transparency, and lowering costs for all parties concerned. Increase participation of local and national divisions in seeking out diverse and under-represented categories when seeking out new sources for suppliers and services (Caminiti 2005; Carbone 2005). It is critical to implement enhanced quality training, educational, employment and networking services for the under-represented suppliers, and a successfully implementation of a web based Business-to-Business exchange system, mutually and simultaneously beneficial to many stakeholders. 23

 Maximizing Operational Efficiency How we can maintain cost competitiveness through the restructuring of the supply chain systems for LPG cylinders of the oil marketing companies. Companies are serious about maintaining cost competitiveness or customer service differentiation must re-examine their process, measurement, and technology approaches and seek new areas of supplier performance improvement (Rudberg and Thulin 2009), including: 1. Inserting control points at suppliers to minimize errors. 2. Resolving last-minute supply disruptions based on cross-functional business goals. 3. Using predictive analytics to transform static supplier scorecards into forward-looking risk management instruments.

Supply Chain Strategies

Demand Planning

Through the Supply Chain Management package which is based on SAP R/3, processing of monthly demand is being done. The demand from each distributor is collected by the sales officers. The same is analyzed and then with corrections, if any, it is fed into the integrated planning module that contains representation of supply, production and distribution facilities by 22nd of every month, which would form the basis for the next month. In addition, major bulk 24

customers demand and Industry demand is also uploaded. The demand is uploaded on a daily basis called PDP, (planned delivery programme). The production and the Supply & Distribution(S&D) structure form the basis on which the optimized plan for the entire organization is generated. This corporate plan is communicated to the distribution module and the production planning modules to generate the operational plans.

The demand of various products are shown below in the following figure, this result is obtained in optimization department, which tracks previous sales data MDP TMTs 40.29 15.01 37.80 88.78 55.00 20.00 256.88 25 MS-IV SKO ATF HSD-IV PNCP PXPT TOTAL

PROD.

Components of Logistics Management

MEANING
The simplest way to describe logistics is to say that it is all about ways and means of meeting the demand for materials i.e. satisfying the customer with what he wants, whenhe wants, where he wants etc. Logistics is, in itself, a system; it is a network of related activities with the purpose of managing the orderly flow of material and personnel within the logistics channel. It includes outbound, inbound, internal and external movements and returns of material for environmental purposes. The logistics concentrate on dynamic processes, related to the flow of materials and the relationship between the materials and their use at different facilities. The most wide spread definition from council of Logistics Management says that Logistics is the part of the supply chain process and plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers requirements.

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FUNCTIONING
Logistics is responsible for all the movement that takes place within the organization whether it is inbound logistics of incoming, raw materials or movement within the company or the physical distribution of finished goods, logistics encompasses all of these. Typical logistics framework mainly consists of Physical Supply, Internal Operations and Physical Distribution of Goods and Services. To put it more simply, the material supply logistics starts from the base level of generation of the demand, through the process of purchase and supply of material from the vendor right through to final acceptance and payments to the supplier and issue to the indenter and has to be considered as a one whole activity with each stage having an impact on price/cost of material supply. The logistics network required to supply petroleum products from the refineries to the end-users is a complex system of pipelines, ships, railways and trucks. Often several methods of transportation are utilized to move petroleum products from the refineries, ports and large terminals to tremendously disperse markets all across the globe. The long 8 distances and variety of transportation modes used can pose challenges for the refiners who must maintain strict product specifications. Degradation or contamination of product in transit can result in costly reprocessing at the delivery point if the integrity of the distribution system is not carefully monitored. This is increasingly important as environmental regulations result in cleaner and more stringent product characteristics.

Procurement & Outsourcing Strategies

Industry Logistics Plan The ILP forms a major component of the downstream oil industry. ILP originates at the refineries and terminates the final delivery point the customers. A model is generated in mathematical terms which depict the following ILP gives the overall supply demand position for the country for all the oil industries. Supply sources Indigenous availability of Products Import plan port wise Total availability at each supply source Linkage to bottling plants & customers qty & mode Rail loading slate Plan of supplies through pipelines

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Transportation
There are three types of movement namely transportation through rail, road and pipeline. The cheapest mode is by rail for long distances. The freight charges for rail movements are decided by Indian railways and that for pipeline are decided by GAIL Transportation Planning /Vehicle Scheduling Transport plans & vehicle scheduling of SCM helps in planning loads in line with the demand plan/PDP as well as ensures equal earning to the transporters. This is to take care of creation of shipments based on the availability of vehicles and users run vehicle scheduling optimizers once in every 3-4 hours. The target of the transportation planning process is to optimize the inbound or outbound transportation demand between a Plant and different other locations such suppliers and customers. The Optimization covers the own fleet as well as transportation service provider based on least cost, business share and or priority. Sales orders, Outbound Deliveries and Shipments can be used to create transportation demand in TPVS. TPVS Planning process using sales order data will create planned delivery and shipment documents in the R/3 System TPVS Planning process does not make any changes to the sales documents that are in the R/3 system.

Transportation Planning Inbound Process Purchase orders, Stock Transport orders, Inbound Deliveries and Shipment documents can be used to plan inbound transportation demand. When Purchase orders / Stock Transport Orders are provided to TPVS for planning, TPVS will create the inbound delivery and inbound shipment document data for the R/3 system. Transportation demands from Supply Network Planning can also be created in TPVS for planning.

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Supply Network Planning (Cross Plant Planning)

Cross-Plant Production ensures that medium to long-term planned independent requirements and sales orders are covered by means of receipt elements such as stock transfers, planned orders and purchase requisitions. It is based, for example, on the requirements you have determined in Demand Planning for distribution centers and determines how these requirements are met by distribution centers, production plants and suppliers in your network. Cross-Plant Planning is carried out using the component APO-SNP.

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Optimizer The optimizer uses linear programming to consider all relevant factors simultaneously. The optimizer compares alternative solutions using costs that would be incurred. It determines the most cost-effective solution based on the constraints and objective function defined in the system. Penalty costs are used to prioritize demands. If a product brings high sales revenues, you set high penalty costs. If a product has no penalty costs, you cannot meet the demand for this product. Control costs are used to select procurement alternatives. You can determine the procurement costs from the SAP R/3 system using purchasing information records, scheduling agreements, and contracts. The optimization run results in an optimal solution for the objective function (minimum costs or maximum profit), taking into account constraints for transportation, production, storage, and handling. The result of the optimization run might be that due dates are violated or that safety stocks are not replenished. Due dates and safety stocks are considered to be soft constraints. Violation of soft constraints also incurs costs, which means that the optimizer only determines a solution that would violate these constraints, if no other cost-effective solution was available.

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Heuristics Heuristic processing groups all existing demands for a given product at a location into a total demand for the period. The Heuristic run then uses the lot-sizing procedure and quota arrangements for each source to determine the valid sources of supply and the quantities to be procured. The demands are then passed through the supply chain to calculate a plan. However, this plan is not necessarily feasible. To create a feasible plan, the planner uses capacity leveling. The Heuristic performs the following functions: Plan supply to meet demand Integrate purchasing, production, and distribution in one consistent model Model the entire supply network Synchronize activities and plan the flow of material through the entire supply chain

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The deployment Heuristic calculates a replenishment plan for a product at a delivery location. If the available quantities are not sufficient to meet the demand, the system determines the distribution plan based on fair-share rules. If supply exceeds demand, the system uses push rules to determine the distribution plan. Fair-share rules and push rules are defined in the deployment profile. Deployment optimization has an integrated view over the receipt situation of all delivery locations and the demand situation of the receiving locations. The deployment optimization run calculates a replenishment plan for a product in all locations within the network. If the available quantities are not sufficient to fulfill the demand or supply exceeds demand, the system uses minimum cost flow optimization to determine an optimum distribution plan for the entire network at once. Master data is made available in the SCM system. Beginning every month, forecast reorganization is done to delete the existing forecasts and to generate the new ones. Planning is done in monthly buckets annually, 4 months for raw material planning and within 30 days horizon with daily buckets for FG/SFG planning. A location heuristics is run To propagate customer demands to a staging godown. To propagate requirements to bottling plants. To fulfill the requirements. Deployment and TLB executed for daily products, monthly products and BMCG to create VMI Sales orders and these orders are sent to SAP ECC system for execution. NOTE: Reports are generated and then sent to every department for execution of the operations in the REFINERY, PIPELINE DIVISION, R&D DIVISION AND MARKETING DIVISION.

OPERATIONAL ACTIVITIES (PIPELINE DIVISION)

1. PRODUCT HANDLING 2. DATABASE MANAGEMENT 3. PLANNING

Product Handling
Product handling is obtained with the help of SCADA system

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STUDY OF THE SCADA SYSTEM SCADA stands for Supervisory Control and Data Acquisition. It generally refers to an industrial control system: a computer system monitoring and controlling a process. The process can be industrial, infrastructure or facility based as described below: Industrial processes include those of manufacturing, production, power generation, fabrication, and refining, and may run in continuous, batch, repetitive, or discrete modes. Infrastructure processes may be public or private, and include water treatment and distribution, wastewater collection and treatment, oil and gas pipelines, electrical power transmission and distribution, civil defense siren systems, and large communication systems. Facility processes occur both in public facilities and private ones, including buildings, airports, ships, and space stations. They monitor and control HVAC, access, and energy consumption. A SCADA System usually consists of the following subsystems: A Human-Machine Interface or HMI is the apparatus which presents process data to a human operator, and through this, the human operator monitors and controls the process. A supervisory (computer) system, gathering (acquiring) data on the process and sending commands (control) to the process. Remote Terminal Units (RTUs) connecting to sensors in the process, converting sensor signals to digital data and sending digital data to the supervisory system. Programmable Logic Controller (PLCs) used as field devices because they are more economical, versatile, flexible, and configurable than special-purpose RTUs. Communication infrastructure connecting the supervisory system to the Remote Terminal Units

Supervision vs. control There is, in several industries, considerable confusion over the differences between SCADA systems and Distributed control systems (DCS). Generally speaking, a SCADA system usually refers to a system that coordinates, but does not control processes in real time. The discussion on real-time control is muddied somewhat by newer telecommunications technology, enabling reliable, low latency, high speed communications over wide areas. Most differences between SCADA and DCS are culturally determined and can usually be ignored. As communication infrastructures with higher capacity become available, the difference between SCADA and DCS will fade. 33

System concepts The term SCADA usually refers to centralized systems which monitor and control entire sites, or complexes of systems spread out over large areas (anything between an industrial plant and a country). Most control actions are performed automatically by remote terminal units ("RTUs") or by programmable logic controllers ("PLCs"). Host control functions are usually restricted to basic overriding or supervisory level intervention. For example, a PLC may control the flow of cooling water through part of an industrial process, but the SCADA system may allow operators to change the set points for the flow, and enable alarm conditions, such as loss of flow and high temperature, to be displayed and recorded. The feedback control loop passes through the RTU or PLC, while the SCADA system monitors the overall performance of the loop.

Data acquisition begins at the RTU or PLC level and includes meter readings and equipment status reports that are communicated to SCADA as required. Data is then compiled and formatted in such a way that a control room operator using the HMI can make supervisory decisions to adjust or override normal RTU (PLC) controls. Data may also be fed to a Historian, often built on a commodity Database Management System, to allow trending and other analytical auditing. 34

SCADA systems typically implement a distributed database, commonly referred to as a tag database, which contains data elements called tags or points. A point represents a single input or output value monitored or controlled by the system. Points can be either "hard" or "soft". A hard point represents an actual input or output within the system, while a soft point results from logic and math operations applied to other points. (Most implementations conceptually remove the distinction by making every property a "soft" point expression, which may, in the simplest case, equal a single hard point.) Points are normally stored as value-timestamp pairs: a value, and the timestamp when it was recorded or calculated. A series of value-timestamp pairs gives the history of that point. It's also common to store additional metadata with tags, such as the path to a field device or PLC register, design time comments, and alarm information.

Typical Basic SCADA Animations

Human Machine Interface A Human-Machine Interface or HMI is the apparatus which presents process data to a human operator, and through which the human operator controls the process. An HMI is usually linked to the SCADA system's databases and software programs, to provide trending, diagnostic data, and management information such as scheduled maintenance procedures, logistic information, detailed schematics for a particular sensor or machine, and expert-system troubleshooting guides.

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The HMI system usually presents the information to the operating personnel graphically, in the form of a mimic diagram. This means that the operator can see a schematic representation of the plant being controlled. For example, a picture of a pump connected to a pipe can show the operator that the pump is running and how much fluid it is pumping through the pipe at the moment. The operator can then switch the pump off. The HMI software will show the flow rate of the fluid in the pipe decrease in real time. Mimic diagrams may consist of line graphics and schematic symbols to represent process elements, or may consist of digital photographs of the process equipment overlain with animated symbols. The HMI package for the SCADA system typically includes a drawing program that the operators or system maintenance personnel use to change the way these points are represented in the interface. These representations can be as simple as an on-screen traffic light, which represents the state of an actual traffic light in the field, or as complex as a multi-projector display representing the position of all of the elevators in a skyscraper or all of the trains on a railway. An important part of most SCADA implementations are alarms. An alarm is a digital status point that has either the value NORMAL or ALARM. Alarms can be created in such a way that when their requirements are met, they are activated. An example of an alarm is the "fuel tank empty" light in a car. The SCADA operator's attention is drawn to the part of the system requiring attention by the alarm. Emails and text messages are often sent along with an alarm activation alerting managers along with the SCADA operator. Bijwasan is also the central hub of Telecommunication of the pipeline. It also functions as the central control station which has the ability to monitor as well as control the operation of each and every valve present on the pipeline through the use of SCADA (supervisory control and data acquisition system).

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Layouts and functions at Bijwasan terminal

The flow diagram shows basic inlet and outlet Products enter Bijwasan station from Mathura refinery and exits to Panipat refinery. The inlet pipeline is further divided into three pipelines The first one is an outlet to Panipat refinery. So if there is a product which is not used at Bijwasan terminal storage (Not sent to Marketing division). Then it is further sent to Panipat refinery. The second pipeline is used for pumping of the products if the pressure is low at the receiving end then these pumps can be used to provide necessary pressure. The third pipeline which further splits into two pipelines are used to extract the products and then again send them to marketing Division, so that they could be carried further to retail outlets or industry and the other part is Naptha tank which stores Naptha and this is further sent to Panipat Division. Such that it could be empted when the ATF is being received from Mathura as the outlet pipeline is free at that time.

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Product Sequencing
When IOCL-Bijwasan receive the products from Mathura refinery transported product through Multi product pipeline. It is received in a sequence which is called a batch sequencing.there is a minimum amount of a product which is transported in TKls..There is a proper procedure to maintain the order of various products through single pipeline which is given below:-

This sequence is strictly followed because if we send HSD after ATF due to pressure they get mix with each other to solve that problem a SKO is sandwiched in between them. SKO is called superfine kerosene oil, which act as a interface in between the two different products. Multi product pipe line is totally pressurized with product to reduce the corrosion inside the pipe. While receiving the ATF (Aviation turbine fuel) at Bijwasan .they stored in a tank for the Supply department on the other hand the sending pipe line is free to use at that time to optimize the operation they send Naptha to the Panipat refinery.

Day by Day sequencing of the products

After discussing the procedure of sequencing the most important job of Operation Manager is to check out the daily demand for the outlet of the products into Marketing division. This is very important aspect for operation manager as demand may not be constant obtained from marketing, but it may also fluctuate due to different requirement from Industries and Retail Outlets Fluctuation in demand can cause a bottleneck for the operation. Therefore we will discuss about change in demand. We take a topic how Branding can enhance sales of the organization by taking case on Xtramile Diesel performance. The monthly demand obtained from the optimization department of Head Office as discussed in supply chain management.

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MDP TMTs 40.29 15.01 37.80 88.78 55.00 20.00 256.88

PROD. MS-IV SKO ATF HSD-IV PNCP PXPT TOTAL

This is monthly demand (June-2012) obtained from optimization department of Head Office. This monthly demand is further divided into daily plans. Although, this is optimized quantity may differ from actual quantity.

Overall plan
MDP TMTs PROD.

40.29 MS-IV 15.01 SKO 37.80 ATF 88.78 HSD-IV 55.00 PNCP 20.00 PXPT 0.00 HSD-III
TOTAL

MATHURA TKTS TMTS 55.00 40.01 15.86 12.46 54.00 42.66 106.00 88.41 63.00 44.10 26.00 19.76 0.00 0.00 319.86 247.40

DELHI TKTS 48.00 0.00 46.00 49.50 TMTS 34.92 0.00 36.34 41.28

MEERUT BPPL PMC/PB TKTS TMTS TKTS TMTS TKTS TMTS 7.00 5.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 24.50 20.43 0.00 0.00 63.00 44.10 26.00 19.76 31.50 25.52 89.00 63.86

RWR PAJ KRN TOPS TKTS TMTS TKTS TMTS TKTS TMTS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.00 6.32 32.00 26.69 0.00 0.00

143.50

112.54

32.00

26.69

8.00

6.32

TOTAL MDP TKTS TMTS TMTS 55.00 40.01 55.38 0.00 0.00 19.11 54.00 42.66 47.85 106.00 88.40 106.45 63.00 44.10 78.57 26.00 19.76 26.32 0.00 0.00 0.00 304.00 234.93 333.68

So the demand from Matura and Optimized demand is almost same. This demand is then further divided into Delhi Meerut, and other stations.

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The daily plan is shown below

MONTHLY PUMPING AND DELIVERY SCHEDULE FOR JJUNE 2012(EX-MATHURA) MATHURA-JALANDHAR PIPELINE
START DATE START TIME 1-Jun-12 7.0 1-Jun-12 11.4 1-Jun-12 14.2 1-Jun-12 22.8 3-Jun-12 6.6 3-Jun-12 7.3 3-Jun-12 8.1 5-Jun-12 11.9 5-Jun-12 12.2 5-Jun-12 12.5 6-Jun-12 8.9 6-Jun-12 21.8 7-Jun-12 18.5 7-Jun-12 20.7 7-Jun-12 21.1 7-Jun-12 21.4 8-Jun-12 3.4 10-Jun-12 8.2 10-Jun-12 8.7 10-Jun-12 13.3 11-Jun-12 6.4 11-Jun-12 11.6 11-Jun-12 12.3 11-Jun-12 13.1 14-Jun-12 3.3 14-Jun-12 3.6 14-Jun-12 3.8 15-Jun-12 0.2 15-Jun-12 13.2 16-Jun-12 9.9 16-Jun-12 12.1 16-Jun-12 12.4 16-Jun-12 12.7 16-Jun-12 18.7 18-Jun-12 2.8 18-Jun-12 3.3 18-Jun-12 12.5 18-Jun-12 21.8 19-Jun-12 15.0 19-Jun-12 15.7 19-Jun-12 16.5 21-Jun-12 20.3 21-Jun-12 20.3 21-Jun-12 20.3 21-Jun-12 20.3 21-Jun-12 20.3 21-Jun-12 20.6 21-Jun-12 20.9 22-Jun-12 17.3 23-Jun-12 6.2 24-Jun-12 2.9 24-Jun-12 5.1 24-Jun-12 5.5 24-Jun-12 5.8 24-Jun-12 11.8 25-Jun-12 19.9 25-Jun-12 20.4 26-Jun-12 5.5 26-Jun-12 14.8 27-Jun-12 8.1 27-Jun-12 8.8 27-Jun-12 9.5 29-Jun-12 2.3 29-Jun-12 2.6 29-Jun-12 2.8 29-Jun-12 15.8 30-Jun-12 1.1 30-Jun-12 4.8 30-Jun-12 5.0 30-Jun-12 5.3 1-Jul-12 0.8 1-Jul-12 9.4 PROD. SKO ATF ATF ATF SKO SKO HSD-IV SKO SKO PNCP PXPT PNCP PNCP SKO SKO MS-IV MS-IV SKO SKO ATF ATF SKO SKO HSD-IV SKO SKO PNCP PXPT PNCP PNCP SKO SKO MS-IV MS-IV SKO SKO ATF ATF SKO SKO HSD-IV HSD-IV HSD-IV HSD-IV HSD-IV SKO SKO PNCP PXPT PNCP PNCP SKO SKO MS-IV MS-IV SKO SKO ATF ATF SKO SKO HSD-IV SKO SKO PNCP PXPT PNCP SKO SKO MS-IV MS-IV BATCH 0S QTY IN TKL DUR. IN HRS 1.862 1.200 2.500 14.300 0.400 0.400 28.000 0.150 0.150 11.000 7.000 6.000 1.000 0.150 0.150 2.700 15.300 0.300 2.500 9.200 2.800 0.400 0.400 28.000 0.150 0.150 11.000 7.000 6.000 1.000 0.150 0.150 2.700 9.300 0.150 2.650 2.700 9.300 0.400 0.400 28.000 0.000 0.000 0.000 0.000 0.150 0.150 11.000 7.000 6.000 1.000 0.150 0.150 2.700 9.300 0.150 2.650 2.700 9.300 0.400 0.400 22.000 0.150 0.150 7.000 5.000 2.000 0.150 0.150 19.400 2.500 4.4 2.8 8.6 31.8 0.7 0.7 51.9 0.3 0.3 20.4 COMP TIME 11.4 14.2 22.8 DELHI 11.4 14.2 22.8 1.20 2.50 6.30 6.50 13.00 11.00 7.00 6.00 1.00 8.50 MRT BPPL PMC/PB RWR PAJ KRN TOTAL 1.20 2.50 14.30 0.00 15.00 13.00 0.00 11.00 7.00 6.00 1.00 0.00 0.00 0.00 2.70 23.80 0.00 0.00 9.20 2.80 0.00 0.00 28.00 0.00 0.00 11.00 7.00 6.00 1.00 0.00 0.00 2.70 9.30 0.00 0.00 2.70 9.30 0.00 0.00 28.00 0.00 0.00 0.00 0.00 0.00 0.00 11.00 7.00 6.00 1.00 0.00 0.00 2.70 9.30 0.00 0.00 2.70 9.30 0.00 0.00 22.00 0.00 0.00 7.00 5.00 2.00 0.00 0.00 10.50 2.50 FLOW 425 425

8.00

0S PCK PCK NS

NS PCK

2.70 9.30

6.00

8.50

PCK 0S

9.20 2.80

0S PCK PCK NS

13.00

6.50

8.50

11.00 7.00 6.00 1.00

NS PCK

2.70 9.30

PCK 0S

2.70 9.30

0S PCK

13.00

6.50

8.50

PCK NS

11.00 7.00 6.00 1.00

NS PCK

2.70 9.30

PCK 0S

2.70 9.30

0S PCK PCK NS

10.50

5.00

6.50

7.00 5.00 2.00

NS PCK

10.50 1.50

1.00

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Conclusion
Supply chain factors are most critical in the success of any firm. Planning was divided in to four time periods for improving the efficiency of planning. Planning started with the forecast of demand for products. A mathematical model was developed to improve the accuracy of forecasting. Product demand has bearing on selection of crude oil and crude oil selection is based on many factors. Bringing crude oil to the port of unloading is the next major bottleneck. Separate planning models for inbound logistic, internal logistic, and external logistics are also developed. Information technology being the backbone of supply chain management, tools available for use in SCM as well as the suitability of each tool was discussed. An information system model for integrated refinery supply chain management was presented. The whole system was divided into small operational sub modules and information system for each sub module was developed. Finally all the sub modules were joined together to get the integrated information model for SCM.

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Bibliography
(2006, January 19). Retrieved Dec-Jan 2012-13, from http://www.businessgyan.com/node/996 IOCL. (n.d.). Retrieved Dec-Jan 2012-13, from http://www.iocl.com

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