SUPPLY CHAIN MANAGEMENT

BHARAT PETROLEUM CORPORATION

LIMITED- BHARATGAS

Submitted By:

Benson Benny 359

Deepti Sharma 361

Gaurav Patni 362

Naveen Jain 390

Om Prakash 397

TABLE OF CONTENTS

Topics Page

no.

Industry Overview 3

Major Market Players in India 4

Company Background- BPCL 5

Factors Affecting Indian Oil and Gas Sector 6

Growth Drivers for the Oil and Gas Sector 6

Supply Chain Drivers 7

Supply Chain Management BPCL 10

Supply Chain Link 12

Supply Chain Management in LPG SBU -Southern Region 16

Demand Planning 16

Procurement and Outsourcing Strategies 18

Supply Network Planning 21

Inventory Management 25

Benefits of implementation of SCM in LPG SBU SR 26

KPIs evolved in Supply Chain Operation Reference (SCOR) 26

References 27

Industry Overview

The oil and gas sector in India is a critical component of the countrys economy, accounting

for 15 per cent of the countrys gross domestic product (GDP). Economic growth is directly

linked with energy demand, and a conservative estimate of 7 per cent growth is expected to

double Indias per capita energy. The oil and gas sector consists of three segmentsupstream,

midstream and downstream. The upstream segment primarily comprises companies that are

engaged in exploration and production activities, while the midstream segment comprises of

players in storage and transportation, and the downstream segment comprises of players that

are engaged in refining, processing and marketing of petroleum products. A countrys

economic growth is closely correlated to the energy demand. Consequently, the demand for

oil and gas, which is one of the main sources of meeting energy requirements, is expected to

increase further. The value of the Indian oil and gas sector is forecasted to grow from US$

117,562.9 million in 2012 (estimated) to US$ 139,814.7 million by 2015. The Indian

government is looking forward to promoting a plan for the sustainable development of the oil

and gas sector, and investments in research and development (R&D) activities in alternative

fuels segment so as to prevent the depletion of the countrys natural reserves.

Major Players

Public sector corporations dominate the Indian exploration and production sector. In terms of

the percentage share in total production Oil and Natural Gas Corporation (ONGC) accounts for

the highest share. The second major player in the sector is also a public sector undertaking

Oil India Limited (OIL). Both of these undertakings account for about more than 70% of the

total market. The remaining share of the pie is cluttered with various private players in the

market.

The key players in the oil and gas industry in India are Oil India Ltd., Oil and Natural Gas

Commission, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd., Bharat Petroleum

Corporation Ltd., Gas Authority of India Ltd., Reliance Industries Ltd., Essar Oil, Adani Gas,

Petronet LNG, Cairn Energy, Shell, British Gas and BP.

BPCL- Company Background

Bharat Petroleum Corporation Limited (BPCL) is an Indian state-controlled

oil and gas company headquartered in Mumbai, Maharashtra. BPCL has been ranked 229th in

the Fortune Global 500 rankings of the world's biggest corporations for the year 2013. Bharat

Petroleum Corporation Ltd was incorporated on November 3, 1952 as a private limited

company with the name Burmah Shell Refineries Ltd. Bharat Petroleum Corporation Limited

(BPCL) is an energy company.

BPCL operates in two segments: downstream petroleum, which is engaged in refining and

marketing of petroleum products, and exploration and production of hydrocarbons (E&P). The

Companys refinery units include Mumbai Refinery, Kochi Refinery, Numaligarh Refinery and

Bina Refinery. The Companys products include gases, which includes poly-propelene feed

stock, natural gas, liquefied petroleum gas (LPG) and bharat metal cutting gas; fuels, which

includes marine fuels, white oils and black oils; solvents and special products; bitumen;

lubricants, and sulphur. Its marketing infrastructure includes installations, depots, retail

outlets, aviation service stations and LPG distributors.

During the fiscal year ended March 31, 2012 (fiscal 2012), it produced crude throughput at

26.72 million metric tons. During fiscal 2012, its subsidiary acquired participating interests

(PI) in two onland blocks under the NELP IX Bid round. The company has lined up investments

of Rs 50,000 crore ($11 billion) to expand their capacities in refining, retail and upstream

projects over the next five years.

Bharat Petroleum produces a diverse range of products, from petrochemicals and solvents to

aircraft fuel and specialty lubricants and markets them through its wide network of Petrol

Stations, Kerosene Dealers, LPG Distributors, Lube Shoppes, besides supplying fuel directly to

hundreds of industries, and several international and domestic airlines.

FACTORS AFFECTING THE INDIAN OIL AND GAS SECTOR

1. Dominated by state controlled enterprises: The sector is primarily dominated by state

controlled enterprises, with only a few foreign players. The primary reason for this could be

the countrys regulatory framework, where ventures involving foreign players take longer to

get the required approvals. Further, the participation of foreign players has been limited

during the nine rounds of bidding for exploration rights through the NELP, while the

participation of state owned players has been high.

2. Subsidies on Oil and Gas products: Eliminating subsidies on oil and gas products is proving

to be a major challenge for the government, due to political pressure. These subsidies have

led to large scale under recoveries in the Indian oil and gas sector.

3. Environmental issues: Offshore mining of oil and gas and deep water exploration poses

significant threats to the environment in terms of potential threats of water contamination.

Further particulate emissions of refineries and production plants could have an adverse

impact on the environment as well.

GROWTH DRIVERS TO OIL AND GAS INDUSTRY

1. Growing Demand: India is the fourth largest energy consumer. The ever rising population

and economic growth is fuelling the demand manifold. Apart from this, the growing

industrialization calls for increased consumption of energy. Few industries that use natural

gas are pulp and paper, metals, chemicals, glass, plastic and food processing.

2. Policy Support: To cope up with the high demand, the Indian government has adopted

policies such as allowing 100 per cent foreign direct investment (FDI) in many segments of the

oil and gas sector such as refineries, pipelines, petroleum products, natural gas and

infrastructure related to the marketing of petroleum products. Policies such as NELP (New

Exploration Licensing Policy) and CBM (Coal Bed Methane) have been introduced which offer

huge potential in terms of sustainability.

3. Increased Investments: Investments worth USD 75 billion is expected across the oil

and gas value chain under the 12th plan. (2012-2017). Since April 2000, FDI worth USD

5.4billion has been invested in Indias petroleum and oil and natural gas sectors.

4. Abundant Raw Material: The nation has a large coal, crude and natural gas reserves. Oil

reserves amounted to 5.6 billion barrels in FY 2012.

5. Availability of skilled labor: The country has abundant labor available at competitive

wages.

Supply Chain Drivers

1. Facility: The facilities refer to the actual physical locations in the supply chain

network where the products are stored, assembled, manufactured or fabricated. The

two major facilities could be a production site or storage sites also known as

warehouses. Keeping this in mind, the BPCL has following major refineries.

Kochi:- Established in 1966 with a capacity of 50,000 barrels per day. Mumbai: -Currently processes about 12 Million Metric Tons of crude oil per

annum

Numaligarh: - A 3 MMT refinery situated in Numaligarh, Assam. The Refinery is one of the most technologically advanced and environment friendly refineries

in the country.

Bina: - Bharat Oman Refineries Limited (BORL), a company promoted by Bharat Petroleum Corporation Limited (BPCL) and Oman Oil Company Limited (OOCL),

is setting up a 6 MMTPA grass root refinery at Bina.

ROLE OF FACILITY DECISIONS IN A COMPETETIVE STRATEGY

EFFICIENCY PRIORITY- (Is when there are giant units that aim for economies for scale).

RESPONSIVENESS PRIORITY- large number of smaller facilities.2. Inventory: - Inventory encompasses all the raw materials, work in process, and

finished goods within a supply chain. Changing inventory policies can dramatically

alter the supply chains efficiency & responsiveness.

There are three basic decisions to make regarding the creation and holding of

inventory:

Cycle Inventory: This is the amount of inventory needed to satisfy demand for the product in the period between purchases of the product.

Safety Inventory: inventory that is held as a buffer against uncertainty. If demand forecasting could be done with perfect accuracy, then the only inventory that

would be needed would be cycle inventory.

Seasonal Inventory: This is inventory that is built up in anticipation of predictable increases in demand that occur at certain times of the year.

In our case, BPCL majorly is into highly inflammable products. The transportation of

the petroleum products requires huge amount of safety measures and cost. BPCL has

introduced demand planning and execution by using SAP and BIW. This enables them

to keep the inventory holding cost to the minimum without compromising on the

business opportunity or loss of business at any stage.

3. Transportation: - Transportation entails moving inventory from point to point in the

supply chain. Transportation can take the form of many combinations of modes &

routes, each with its own performance characteristics. There are six basic modes of

transport that a company can choose from:

Shipments: These involve handling of procedures like import custom clearance, documents handling both in case of exports and exports

Road Transport Rail Transport Supplies through pipelines

4. Information: - Information is used for the following purpose in a supply chain.

a) Coordinating daily activities related to the functioning of other supply chain

drivers: facility, inventory & transportation.

b) Forecasting & planning to anticipate& meet future demands. Available information

is used to make tactical forecasts to guide the setting of monthly & quarterly

production schedules & time table

c) Enabling technologies: many technologies exist to share & analyze information in

the supply chain. Managers must decide which technologies to use & how to

integrate these technologies into their companies like internet, ERP, RFID.

5. Pricing: - Pricing determines how much a firm will charge for goods & services that it

makes available in the supply chain. Pricing affects the behavior of the buyer of the

good or services, thus affecting supply chain performance, for example, if a

transportation company varies its charges based on the lead time provided by the

customers, it s very likely that customers who value efficiency will order early &

customers who value responsiveness will be willing to wait & order just before they

need a product transported.

6. Sourcing: - Sourcing is the set of business processes required to purchase goods &

services. Managers must first decide which tasks will be outsourced & those that will

be performed within the firm. Since, BPCL is vertically integrated with exploration

activities running at more than 26 sites in India and abroad, the sourcing of crude oil

which is the major raw input is easily available to it.

The decisions related to the distribution, transportation and order levels are taken

keeping in mind many inter linked factors. For example, a distribution plan will be

framed by arriving at the costs, time and scope involved in transportation of inventory

from the facility to the distributor/ warehousing location. A facility is mapped to a

specific region/ area for supply of its products. Similarly, one distributor may procure

from one or more facilities. The capacity of a facility has to be compared with demand

shooting from the various locations and how they may be fulfilled by incurring the

minimum possible cost. Since, cost is an important factor that affects the pricing

decisions of a BPCL, the market prices are also an important driver in determining the

supply chain.

SUPPLY CHAIN DRIVERS

RESPONSIVENESS

1. FACILITY

2. INVENTORY

3. TRANSPORTATION

4. SOURCING

5. PRICING

6. INFORMATION EFFICIENCY

Supply Chain Management in Bharat Petroleum Corporation Limited

BPCL 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.

Supply Chain Management in BPCL is a part of Project ARYABHATTA which is a component

of Project DESTINY to align initiatives; moving towards customers with new technologies

and enhancing skills of people. The Supply Chain department was developed in November

2006 with the strategic intent of maximizing benefit for the overall corporation, improving

dynamic capability and becoming more competitive in the total business process chain.

A transparent platform with total visibility, it is an integrated package that uses SAP 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

Supply Chain Link

Exploration Production Refining Marketing Consumer

Exploration

BPCL 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

BPCLs bottom line.

Till date, the company has acquired participating interests in 26 exploration blocks; in

consortium with other companies. Of the blocks, 9 blocks are in India, 2 in Australia and UK, 1

each in Mozambique and East Timor and 10 in Brazil. BPRLs total acreage holding is around

86,000 sq.km of which around 73,000 sq.km is offshore acreage.

Refining

BPCL is a proud owner of multiple refinery units.

Bharat Petroleums Mumbai Refinery

(BPMR) is one of the most versatile Refineries in India and excels in all aspects like quality,

technology, fuel & loss, human relations, safety, environmental friendliness and operating

cost. With successful implementation of various projects and de-bottlenecking, our Refineries

currently process about 12 Million Metric Tons of crude oil per annum. BPMR has processed 61

different types of crude in five decades of its operations, making it one of the most flexible

Refineries in the country.

Kochi Refinery

Kochi Refinery, a unit of Bharat Petroleum Corporation Limited, embarked on its journey in

1966 with a capacity of 50,000 barrels per day. Formerly known as Cochin Refineries Limited

and renamed as Kochi Refineries Limited, the refinery was originally established in

collaboration with Phillips Petroleum Corporation, USA. Today it is a frontline entity as the

unit of the Fortune 500 Company, BPCL.

Numaligarh Refinery Limited

Numaligarh Refinery Limited is a public sector oil company set up in the year 1993, with its 3

MMT refinery situated in Numaligarh, Assam. The Refinery is one of the most technologically

advanced and environment friendly refineries in the country. BPCL is the major share holder

with 61.65% of the Companys paid up equity capital; the other shareholders being the

Government of Assam with 12.35% and Oil India Limited with 26 %. Though majority of the

Refinery products are marketed through BPCL and other oil companies, NRL markets a small

amount of its products through its own network of retail outlets aptly named Energy

Stations.

Bina Refinery

Bharat Oman Refineries Limited (BORL), a company promoted by Bharat Petroleum

Corporation Limited (BPCL) and Oman Oil Company Limited (OOCL), is setting up a 6 MMTPA

grass root refinery at Bina, district Sagar, Madhya Pradesh along with crude supply system

consisting of a Single Point Mooring system (SPM), Crude Oil Storage Terminal (COT) at

Vadinar, District Jamnagar, Gujarat and 935 Km long cross country crude pipeline from

Vadinar to Bina.

MARKETING

BPCL's preferred mode of purchase of the spot cargoes would be through short notice

tenders, which would be invited from panel of suppliers who have signed MSPA

(Matched sale-purchase agreement) with BPCL.

Bharat petroleum was the Indias first implementer of the SAP SCM application. SAP

SCM helped them to switch from executing our production based on available supply

to executing it based on actual demand. It also further reduced the High logistics

costs and eliminate the manual spreadsheet based planning processes. Applications

production planning functionality helps in optimizing monthly and daily production

schedules; that means we can make the most of available equipment, material, and

transportation resources.

With SAP SCM, BPCL does not lose on sales to the competition because they do a much

better job of meeting demand. It also leads to lesser complaints about missing

shipments and lost sales opportunity.

Distribution Location

The Corporation meets its LPG customers' needs through its huge infrastructure and

dedicated team of people. Bharatgas has a all India network of over 2200 +

Distributors and counting LPG Territory Offices to meet the needs of customers

promptly.

The Distributors provide home delivery service of LPG refills as and when the

customers book their refills. Mechanic services are also provided to customers during

the office hours on all working days. Mechanic service is free for any leakage

complaint pertaining to the cylinder and pressure regulator provided to the customer

by the Bharatgas Distributor.

CONSUMER

Bharatgas from Bharat Petroleum has dominated the LP Gas market in India for over

three decades. Today over 25 million homes in India, wake up each morning to enjoy

the cup that cheers prepared on Bharatgas. Similarly, hundreds of commercial and

industrial establishments start their day, confident and secure, having entrusted their

LP Gas needs to Bharat Petroleum.

A pioneer in more ways than one, Bharatgas has brought many innovative offerings to

the customers. To name a few:

Easy access to customers through various modes including online access

Home delivery of cylinders

Value added services to customers by venturing into allied business to meet

consumers household needs

LP Gas supplies through pipeline to mega residential complexes

An innovative solution to reach LP Gas supplies to rural and remote areas

through the Rural Marketing Vehicle

Revolutionizing the metal cutting & brazing industry with the new product

Bharat Metal Cutting Gas.

Supply Chain Management in LPG SBU -Southern Region

In order to explain the supply chain management of Bharatgas, we have specifically studied

the distribution by Bharatgas in the Southern Region. The LPG-SCM were formed which is a

perfect blend of experienced members from LPG and ERP competency centre with long years

of Business experience and process expertise. BPCL has a customer population of about 2.2

crores for LPG, who are scattered throughout the length & breadth of the country. The

demand is met through the distributor net work. In Southern Region, the customer population

is about 85 lakhs and there are about 90 distributors in Kerala, Tamil Nadu, Karnataka and

Andhra Pradesh. Through SCM, it is ensured that the demand of the customer is met totally in

time.

Supply chain management in LPG business optimizes the entire supply chain bulk, bottling,

packed movements and hospitality with a specific focus on significant savings on

transportation cost of LPG.

Demand Planning

BPCL, southern region has an average LPG demand of 80 TMT per month.

There are various types of demands for LPG as under:

Refill demand of existing customers

New connection for domestic , commercial establishments

Additional requirement of existing customers- like double bottle connection or increased

requirement for commercial customers

Mass new connections under various Govt. schemes

Some other factors also do affect LPG demand such as seasonal variations, festival seasons,

etc.

The demand planning is extremely essential and the demand estimate projections need to be

accurate and be based on last year sales/expected sales growth / new customer /distributor

addition / any new business /per capita consumption /system projection etc. Any major

changes in the demand estimate vs. actual may have an impact on the Supply network

planning / Transport planning and vehicle scheduling.

Effect from April 2008, the demand projections are being captured in the SCM solution at the

distributor level.

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 customers demand and auto LPG 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 above demand numbers are picked up the HQ team for tabling the same in the Industry

Logistics Plan meeting which is conducted every month by 28th wherein the supply demand

scenario for the next month is formulated.

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 LPG Import plan port wise Total availability at each supply source

Linkage to bottling plants & customers quantity & mode Rail loading slate Plan of supplies through pipelines

Hospitality

Once the ILP numbers are fixed, the SNP through the Supply Network program, orders are

created in the system for execution during the entire month. Similarly, orders are created in

the system for daily execution of loads to the distributors. The following are the supply

sources with the quantities where the orders are created in line with the ILP.

Transportation of Bulk LPG

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. For road movements,

the oil industry finalizes rate contract with bulk LPG fleet owners. Currently, BPCL SR LPG has

a fleet of about 750 bulk LPG tank trucks. The bulk movements are planned din the ILP in

such a way that the most economical movements are undertaken.

BPCL SR moves about 12 TMT by rail to Coimbatore and Cherlapally plants in a month. By

pipeline about 18 TMT is transported to Cherlapally, Vijayawada & Mangalore plants and the

balance movement is made by TTs. Source bottling is done Kochi refinery, for which no

transportation cost is incurred. In line with the increase in demand, BPC undertakes

augmentation of tanks and facilities also. The current tankages at its SR plants are as under.

Once the bulk reaches and bottling is carried out, the packed LPG moves to the distributor

end by packed cylinder transporting trucks. For each bottling plant, separate contracts are

entered into with the packed fleet owners by BPCL for a period of 2 years which can be

extended for another one year. Currently there are about 800 packed trucks are plying in SR

contract.

Transportation Planning /Vehicle Scheduling

Transportation 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.

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. (Advanced

Planner and Optimizer- Supply Network Panning).

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

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.

BPCL incur about 700 crores per annum towards LPG freight charges. The optimizer for

logistics as well as production capacities is expected bring about 5% to 10% savings per annum

once implemented in total as the packed transportation rates and bulk transportation rates as

well as the employee costs / fixed costs etc have got lot of dynamics with respect to the

location, other competitors and the overall industrial growth.

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.

Inventory Management

The inventory of an LPG SBU relates itself to the bulk LPG, cylinders and associated

equipments. The inventory management is a part of SCM and it is followed up through SAP

R/3 and BW on a daily basis from the transportation of bulk to the stock at the distributor

end. Project WIN was launched in January09 which has identified specific high impact areas

across businesses and devised metrics for improving existing processes and practices. It has

built greater sensitivity in the company to costs, inventory, receivables, etc and has

successfully transformed and infused competitive cost structures.

Benefits of implementation of SCM in SR LPG SBU

Reduction in cylinder transportation cost by re- alignment of markets between plants Change of bulk supply sources while determining the rescue supplies and shutdown of

refineries etc.

Capacity optimization of bottling plants with respect to overall cost including transportation

Decision making on Relocation of LPG bottling plants. Decision making on Construction of bottling plants at strategic locations Decision making to put up huge investments on infrastructure jetties etc.

KPIs evolved in Supply Chain Operation Reference (SCOR)

Demand KPI for Sales Officer and the Territory Manager

Demand fulfillment at the distributor -product level. (+/- 5 % variance)

Weighted average Forecastaccuracy at all levels

Supply KPI for HQ / Regional Logistics Bulk availability at Source locations

KPI for Regional Logistics Plan Vs Actual dispatches from Source

Inventory norms for product in transit

Bulk T/L Vehicle performance

KPI for Plant Weekly production Dispatch plan adherence

Territory Managers Equipment inventory norms for cylinder, DPR and SC valves

Transportation Planning

KPI for LPG Bottling Plant Cash outflow a/c Packed transportation

Vehicle performance: Availability of Packed TT Vs placement

Costs KPI for HQ / regional Logistics Bulk procurement cost, bulk placement cost.

KPI for LPG Bottling Plant Plant Operating cost

Procurement KPI for CLEM On time delivery for LPG equipments

Cylinder circulation factor

References:

Book on Supply Chain Management: Strategy, Planning and Operations by Sunil Chopra

www.researchgate.net

www.bharatpetroleum.in/ www.ibef.org website for India Brand Equity Foundation

www.iimb.ernet.in/publications/review/.

https://www.wikipedia.org