Management briefing

Horizontal planning
integrating across the
oil & gas supply chain
Make planning decisions to maximize profit,
increase safety and minimize impact
on the environment

OIL, GAS & PETROCHEMICALS

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

Gaining control of
a volatile product
in a volatile
market

The very nature of the Oil & Gas industry makes it

complex, capital-intensive and risky. Even the most
effective processes, modern machinery and skilled
workforce struggle to keep up with ever-changing
prices, regulations and technology. Reaching new
sources of crude is difficult, expensive and often
controversial. Natural or man-made disasters can
knock the strongest players out of the race.
With so many outside stressors, the last thing an Oil
& Gas company needs is to put further restrictions on
itself. However, many do just that by refusing to see
or take opportunities that would significantly improve
performance. To see these opportunities, all that is
needed is a wider view of the supply chain.

SUPPLY CHAIN PLANNING & OPTIMIZATION

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

The synergy
of integration
Horizontal planning is about seeing and treating
the value chain as a collaborative whole. Because
that is exactly what it is. Even a planning decision
which is good for production, for example, can have
negative repercussions further down the supply
chain. There is little point in optimizing production of
a material which then has nowhere to go.
Worse still, there is the likely danger of a snowball
effect: a decision that causes a smallish delay in one
business can result in bottlenecks and other delays
that add up to great costs.

SUPPLY CHAIN PLANNING & OPTIMIZATION

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

Top reasons companies resist integration

and why they should reconsider
Concern over...

However...

Cost

The Oil & Gas industry understands better than most how to measure return on capital
investment. The best planning solution should be able to demonstrate how it can improve
margins, safety, etc.

Complexity

The question arises how can one solution take into account the hundreds, or even
thousands, of variables that affect every decision. The beauty of the answer is that that is
exactly what the solution was built to do. Technology has long surpassed the human brain
in its ability to process large amounts of data in small amounts of time.

Downtime

An investment of time as well as money is required to implement any new system.

However, a successful implementation causes minimal disruption to operations.

Effectiveness

The best planning solution is able to prove its effectiveness at the demonstration phase,
even before a contract is signed.

Interfaces

The latest information technology allows interfaces between planning and scheduling and
other corporate information systems to be easily implemented and maintained.

Scope

Companies may perceive too high a risk in replacing legacy planning solutions across the
supply chain all in one go. For this reason, it is essential to choose planning software that
is flexible enough to provide a solution for the entire supply chain even if the initial scope is
only for a specific part of it.

SUPPLY CHAIN PLANNING & OPTIMIZATION

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

Just like a single decision

can incur far-reaching costs
and delays, it can also help
reduce costs and speed up
processes. With full visibility
and integration across the
supply chain, companies can
make the best decisions to
maximize profit, maximize
safety and minimize the
impact on the environment.

SUPPLY CHAIN PLANNING & OPTIMIZATION

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

Integration across
the supply chain cuts
costs, lowers risks and
maximizes sustainability

In addition to ignoring interdependence across the

supply chain, the most common, yet fundamental,
gap lies in ignoring two of the industrys three top
business priorities. Planning is made for return of
investment but not for safety or sustainability.
These limitations prevent solutions from even
carrying out their single goal of minimizing costs
because decisions made on incomplete information
often result in more costs than savings.

SUPPLY CHAIN PLANNING & OPTIMIZATION

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

Production

Distribution

Having complete information

when making decisions optimizes
production to minimize the risk of
market volatility.

Optimizing
for industry
KPIs

Costs are saved when opportunities

for product exchange become visible
and routes are optimized.

Scheduled maintenance across the

value chain reduces risks posed by
machine malfunctions, and cuts the
potential costs of delays (snowball
effect).

There is improved customer

satisfaction and less of a chance
of losing customers due to late
or non-delivery (ATP, CTP, PTP
functionalities).

Improved planning helps reduce air

emissions and water pollution.

Emissions are lowered when

opportunities for product exchanges
become visible, when routes are
optimized, etc.

Processing
Optimizing across the
entire value chain increases
throughput.

Exploration
Improved planning and
scheduling of resources can
reduce the risk and cost of
exploration.

Risk is reduced through

better maintenance planning.

Ensuring the right people are in

the right place at the right time
helps to reduce risk.
Improved planning reduces
the risk of polluting marine
environments and waterways.

Balancing production,
processing and shipping
reduces flaring.

Transportation
Improved planning of oil
and gas transportation can
significantly reduce safety
stocks.
Minimizing the amount of
material and the distance it
is transported reduces risk.

Refining
Costs are saved by
processing a higher
percentage of low-cost
crude to satisfy product
demand.
All equipment constraints
are taken into account.
Energy consumption, and
therefore, emissions are
reduced.

Optimizing transportation
reduces associated
emissions.

Priorities of the oil & gas industry

Safety

Sustainability

Return on
capital investment

SUPPLY CHAIN PLANNING & OPTIMIZATION

HORIZONTAL PLANNING INTEGRATING ACROSS THE OIL & GAS SUPPLY CHAIN
OIL, GAS & PETROCHEMICALS | MANAGEMENT BRIEFING

You cant fix

or optimize
what you cant see.
In the Oil & Gas industry, planning solutions fail to
deliver simply because they close their eyes to two of
the industrys most fundamental truths. Not seeing the
full picture is the main reason why planning solutions
fall short.
1. Processes across the supply chain are
interdependent
2. Profit is just one of the industrys top priorities

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SUPPLY CHAIN PLANNING & OPTIMIZATION