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SAP Trader’s and Scheduler’s Workbench – An overview of IS-OIL Logistics Solution for Oil Movements

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For Oil industry, movement of oil has been one of the critical business operations for its midstream / downstream segment. I have been part of this industry implementing system solutions for more than 15 years. SAP Trader’s and Scheduler’s Workbench (TSW) solution delivers key business value to this segment of the industry. It has been an indispensable toolset for the business to plan, schedule, move barrels and to seamlessly track every oil movement from Crude Procurement all the way to Refined Product sale. I will be covering an overview of TSW’s capability through this blog post.

SAP’s standard modules, Sales & Distribution (SD), Material Management (MM) and Financial Accounting (FI), aid a wide range of ERP activities that occur in the Oil Industry. However, they do not cover one of the critical functions in this industry, i.e. the oil movement for their midstream and downstream operations that needs large scale planning, scheduling and capturing the actual movement executed. This is where SAP’s IS-OIL add-on delivers functionality through TSW to cover this essential business in logistics area. It integrates planning, scheduling and ticketing operations with standard SD, MM and FI modules and allows flexibility to align with business process. TSW follows all modes of transports that are used in the industry like rail, pipeline, marine, barge, and truck.


High-level TSW overview

Let’s start with how the business process would look at a high level for midstream / downstream area of this industry (this is just one of the many possible business process flows):

Purchase of Crude at Vendor Location

→ Movement of Crude from Vendor Location to Refinery

→ Refinery Production

→ Movement of Refined Product from Refinery to Terminal Locations 

→ Sale of Refined Product from Terminal Location

These crude/refined product movements are complex and involve planning and scheduling to link demand and supplies with Purchase and/or Sales Contracts, physical locations, transport systems, scheduled timelines and the partners involved. TSW’s Planning tools (Inventory Planning Workbench- IPW, Three way pegging, Location balancing) and Nomination application allow Schedulers to set up scheduled movements that will tie all the above entities.

The planning tools give Scheduler a visibility of product inventory at relevant locations, available contracts and allows to simulate movements to use contract and fulfill the demand or supply needs between these locations. These tools will let scheduler confirm the simulated movements into scheduled movements. These schedules flow into Nomination, which is the Scheduling application.

Nomination holds the scheduled movement which links load and discharge locations, transport system, vehicle, vendor partners like carrier, shipper, supplier/receiver, product, contract, schedule timeline, movement scenario and number of other details. The nomination can be scheduled directly in the application or can be set up through the planning tools. External interfacing based on business scenario can allow auto-creation of multiple nomination schedules. The interface can also allow auto-communication with vendor partners.

These movements will eventually involve capturing the quality and quantity actuals, and actual event timelines through Bill of Lading that needs to flow into Inventory and Financial accounting. TSW’s Ticket application caters to this requirement. It allows the Actualizer to capture and tie actuals against the scheduled movement, does oil specific quantity conversions, creates automatic call off documents and inventory postings against the linked Contracts.


Business Scenarios

 

I will attempt to go to next granular level of the business process. This will allow us to appreciate how TSW can cover different movement scenarios across different modes of transports (again, these are just few of the many possible business scenarios). Let’s take a dive into how TSW will cover these business scenarios.

Planning and Scheduling Overview

 

Procure Crude from vendor in Alaska onto a Marine Vessel and transport it to Refinery Location in California

Using IPW, crude scheduler sees daily inventory projections for crude at different locations for next 60 days. These projections are calculated by the system based upon many different inputs like actualized and scheduled movements, production numbers, rack liftings that impact the particular location’s inventory.

The crude scheduler spots that there is a drop of inventory level at refinery location. He looks for possible supplies that can meet the demand at this location. He finds a crude purchase contract that was setup with a vendor in Alaska. Then within the IPW tool he creates a simulated schedule of marine purchase for the required barrels at origin from vendor’s Alaska location and transfer at discharge to the refinery location. Since this seems to meet the demand, he publishes this simulation in IPW which flows automatically into nomination schedule.

This scheduler now has a marine nomination with 2 line items – one with purchase at loading of crude into the vessel, another with a transfer of crude from the vessel into terminal at the refinery location.

Nomination 001
Marine Transport System
Item 10 Origin Purchase Crude 10000 BBL Vendor Loc Load Date Contract ##
Item 20 Destination Transfer Crude 10000 BBL CA Ref Loc Discharge Date STO ##

He communicates with vendor partners and updates this nomination with vessel, carrier, event timelines and other details related to the move. If there is an external system for vessel chartering, this system can be directly interfaced to this nomination for data updates.

Transfer Refined Product from Refinery location via Pipeline into one of the Terminal locations in California.

Similar to the above activity, a product scheduler uses IPW to see his product inventory’s daily levels for all the relevant locations in his region. He spots from the projections that the product inventory would cross the upper limit for a location at the refinery. He needs to move this product to keep the inventory level within the limit. He spots one of his other locations, a terminal in California, has enough storage to hold the excess product from refinery location. These 2 locations are both on certain pipeline, so he creates a simulation in IPW to transfer product from refinery location to pipeline and from pipeline into the other location.

Sale of Refined Product by moving from California Terminal location to Customer location in Arizona via Rail.

The product scheduler finds that there is a sales contract for delivery at customer location which can be fulfilled from his California terminal via rail. So, he creates another simulation in IPW to do a load transfer onto the railcar and discharge sale from the railcar at customer location.

After confirming that the simulated moves have required impact on inventory projections, the scheduler publishes the simulations.

This automatically creates 2 Nominations, one for pipeline with transfer line items at injection and extraction locations; another for rail with transfer line item at load location and sale line item at discharge location. Product scheduler communicates with pipeline operators, rail carrier, stakeholders and updates/confirms the pipeline/rail nomination. This communication can happen automatically if interfaced with pipeline/rail carrier company.

Nomination 002
Pipeline Transport System
Item 10 Origin Transfer Gasoline 10000 BBL CA Ref Loc Load Date
Item 20 Destination Transfer Gasoline 10000 BBL CA Terminal Discharge Date
Nomination 003
Rail Transport System
Item 10 Origin Transfer Gasoline 10000 BBL CA Terminal Load Date STO ##
Item 20 Destination Sale Gasoline 10000 BBL Customer Loc Discharge Date Contract ##

Planning and scheduling solution sets up the data for the next process which will be to execute the movement and capture the actuals related to the movement.


Ticketing overview

 

Procure Crude from vendor in Alaska onto a Marine Vessel and transport it to Refinery Location in California

During the execution of marine schedule, after the crude is loaded onto the vessel, the vessel inspector will confirm the loaded quantity and quality attributes and the data is communicated to the Actualizer who will create a Ticket document with this data and the actual event timelines. This automatically will post the following documents:

PO Call off → Inbound Delivery → TD Shipment → Load Confirmation

This also updates the nomination item 1 with relevant data like events and actual quantity

Similarly when the vessel reaches the shore, and crude is discharged out, the discharged quality, quantity, and event timelines will be used by Actualizer to create Ticket that automatically will post the following documents:

Outbound Delivery → TD Shipment Update → Material Document

If there is a difference in load and discharge quantities, this will also post a gain/loss material document. In the end this updates the nomination item 2 with relevant data and updates the nomination status as complete.

At this point, if there are any corrections to any of these captured values, Actualizer goes back to the ticket and posts a correction ticket which automatically reverses the original documents and posts same set of documents with new captured values.

Transfer Refined Product from Refinery location via Pipeline into one of the Terminal locations in California.

When the refined product is injected, and is extracted, the pipeline operator will push the actual readings, and if this is interfaced with the TSW system, it creates pipeline tickets automatically. Injection ticket will post the following documents:

Reservation → TD Shipment → Load Confirmation

Extraction pipeline ticket will post the following documents:

Reservation → TD Shipment Update → Delivery Confirmation

 

Sale of Refined Product by moving from California Terminal location to Customer location in Arizona via Rail.

When the refined product is loaded on the railcar, the actuals from guage readings are used by the Actualizer to create the ticket. This will create the following set of documents:

Delivery → TD shipment → Load Confirmation

When the refined product is discharged from the railcar into the terminal at Customer location, the discharge guage readings are used by Actualize to create discharge sale ticket. This will create the following documents:

SO Call off → Delivery → TD Shipment update → Material Document

 

Ticketing solution manages to use the actuals captured during the movement and does auto posting of follow-on documents for inventory and financial accounting.


 

TSW’s embedded configuration flexibility, like all other SAP solutions, allows to cover many more scenarios for midstream / downstream business processes. TSW delivers a seamless integration of the logistic processes. All the data is linked and in one system with less integration overheads and is an outright advantage for tracking and reporting.

In future blog posts, I would like to go in detail in the individual applications of Nomination and Ticketing to address detailed specific scenario, or address the seamless integration that TSW provides. I would love to hear your feedback, topic suggestions, answer queries or just engage in an open discussion.

 

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