This document discusses opportunities for optimizing retail distribution in the bulk oil industry. It identifies potential cost savings of up to 20% through automated stock replenishment, transport optimization, and flawless execution. Case studies show companies like ExxonMobil reducing operating expenses by 10% annually through downstream optimization. Even small to medium enterprises can benefit from subscription optimization solutions. Selecting the right vendor solution is important to fully realize the recurring cost savings potential through integrated supply chain planning.

1. Optimal Retail Distribution for Bulk (Oil)
- Realize cost savings up to 20%
Vinodh Soundarajan
Futureshift Consulting Pte Ltd
vinodh@futureshift.com.sg
http://www.futureshift.com.sg

2. Introducing Vinodh Soundarajan
• Global Vice President at Futureshift Consulting, a boutique consulting firm.
• Adviser on Board to various companies in Retail and Education verticals
• Global Vice-President of Engineering at SumTotal Systems, USA
• Transformed Products to the Cloud Computing Model.
• Incubated Engineering in Performance Management and Reporting/BI units
• Leadership team at Manugistics/JDA leading Logistics, Demand, Pricing and
Optimization
• Built Manugistics, India Organization (a team of 220+) in 2005-2006
• Over 16 years experience in global logistics fore Retail, CPG/FMCG,
Government industry.

3. India – a ₨6 Trillion annual market
• World’s top five Oil and Gas producers account $1.3
Trillion of annual revenues1
Revenue
Rank Company name
(USD Billion)
2 Exxon Mobil $301
3 Royal Dutch Shell $278
4 BP $246
5 Saudi Aramco $233
8 Sinopec $197
9 Total S.A. $189
12 Chevron $167
15 ConocoPhillips $152
17 PetroChina $149
• Oil and Gas consumption in India is expected to be around 233 Million
Tonnes in 2011-20122
• Revenue of over $120 Billion (₨6 Trillion )
1 http://en.wikipedia.org/wiki/List_of_companies_by_revenuex
2 http://www.ibef.org/industry/oilandgas.aspx

4. Complex Distribution Model: Opportunity for
Optimization
Diagram 1: (http://www.internationalconference.com.my/proceeding/icber_proceeding/PAPER_139_EvaluatingPetroleum.pdf)

5. Three key Downstream Optimization areas
• Automated Stock Replenishment
– Telemetry Readers
– Vendor Managed Inventory and Inventory Planning
– Static and Dynamic demand forecasting including seasonality
and causal factors
– Optimal generation of orders and dynamic sourcing
• Transport Optimization
– Delivery of the right quantity to the right place at the right time
– Assignment of metered compartments to correct product mix
– Multiple product, capacity, transportation constraints
• Flawless Execution
– Execution feedback and Adaptive Planning
– User experience for dispatchers, planners and location owners

6. a massive 15% Savings on logistics
• Usage of global data (~30 countries)
• Modes - Road, Rail, Pipelines and Barges
• Estimated spend USD 20 Billion annually
• Empirical data suggests 12-18% transportation savings
when optimization solutions are implemented
Example1: ($45M saved via Transport Optimization)
• 10,000 trucks, each travelling ~100,000 miles per year
• Transportation Spend of over $60,000 per truck per year
($600M overall spend)
• 15% Net Savings
1 http://www.ortec.com/about/company_profile.aspx

7. Case Study – Exxon Mobil reduces 10% Opex
• Reported GAAP earnings of $1.8B on $301B revenue
• Refineries produced 5.4M barrels a day
• Invested $3.2B on Downstream spend
• 7% ROI on capital invested in 2009
• Average 23% return on capital employed over 2002-2009
• Reduced operating expenses by 10% annually since 2005
• Able to buy cheaper “challenged crude”
– “can utilize its technology, efficiency and integrated downstream
operations and earn an acceptable margin on this feedstock”
“Exxon Mobil will attempt to continue making a profit in its downstream operations
despite the poor environment that is plaguing the industry. If history is to be a guide,
the company will do better than its competitors here.”
http://stocks.investopedia.com/stock-analysis/2010/Exxon-Mobils-Downstream-Outlook-XOM0326.aspx

8. Even SMEs can save: Ex: Bottom-line Group
• Bottom Line is based in The Netherlands, has a strong customer
base in Belgium and The Netherlands
• Involved in worldwide projects of ExxonMobil, Engen, Petronas
and SEKAB.
On Truck
Computers
Automatic Tank Delivery +
Gauge Systems Software Suite
Delivery+ Delivery+ Delivery+ Delivery+
Planning Tracking Confirmation Information
Inventory Truck Driver Load/delivery Customer
management planning management confirmation reporting

9. There are many vendors – right selection is key
• Bottom-line group – Subscription Solution for SMEs
• JDA – Big Customer Base, High Optimization, used by
ExxonMobil globally
• AspenTech – Mix of Optimization and Execution
• Oracle – Integrated with ERP
• SAP – Integrated with ERP
• Custom solutions from Services Vendors
• Homegrown options
This is where Futureshift can help chose the right partner
based on your needs.

10. Conclusions
• High and recurring cost savings potential (upto 20%) if Retail Bulk
Distribution is managed correctly.
• Deserves a comprehensive review at major Oil Marketing Companies
• Can become a strategic differentiator in highly competitive markets
• High Optimality via Integrated Supply Chain Planning as opposed to
piece-meal improvisation
• Vendor Managed Inventory and Telemetry Readers crucial first step
for good data
• Accurate Demand Forecast is possible and must be followed even in
Small Medium Enterprises
• Automatic Order Generation and Transportation Optimization are
necessary to achieve the cost savings planned
• Adaptive Planning and Analytics are critical to continuous
improvement.

11. Thank You
Futureshift Consulting Pte Ltd
vinodh@futureshift.com.sg
http://www.futureshift.com.sg