Indian Oil Corporation Limited Lubes Division

Ashmita Mazumder PGDM IT

2011-13
Guide Prof. Kalpana Kumaran

HOD IT, ITM Business School

PROJECT TITLE:

To Study, Analyze and Recommend areas for Automation of Supply Chain

Management,
Lubricants

at

all

India
of

level,
Indian

of
Oil

Division

Corporation Limited

ABOUT INDIAN OIL CORPORATION LIMITED:

Indian Pubic-Sector Oil Company, under

Ministry of Petroleum & Government of India Began as a merger between Indian Refineries Ltd. and Indian Oil Company Ltd. in 1964 Now, a Maharatna Company worlds 98th largest company by revenue, according to Fortune Global 500 list of 2010-11

Is

into

both

Upstream

&

Downstream

operations. Owns and operates 10 of Indias 21 Petroleum refineries

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IOCL operations are in the following verticals:

Exploration & Production Refining

Pipelines
Natural Gas Research & Development Marketing International operations

IOCLs Products, after refining from Crude Oil:

Petrol, Diesel, LPG, Petrochemicals, Kerosene,
Bitumen, ATF (Aviation Turbine Fuels), Industrial Fuel, Lubricants & Greases
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IOCLS LUBES DIVISION

IOCL manufactures about 1500 formulations with over 600 commercial grades branded & marketed as SERVO 15 Lube Blending Plants in India, spread across all the four regions, including one Grease manufacturing plant, producing approx. 440 thousand metric tons per year Sales is mainly categorized as Institutional, Retails & Exports Distribution is through 4 CIPs, 22 CFAs & about 180 terminals & Depots
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GENERIC SUPPLY CHAIN MODEL OF LUBES DIVISION:

WHY GO FOR AUTOMATION?

To streamline Supply Chain Management operations of IOCLs Lubes production and distribution activities To reduce manual intervention For overall cost reduction To reduce wastage in processes To meet demands in time To maintain market leadership & drive volume growth
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WHY i2?
PwC advised IOCL to go for JDAs i2

Technologies SCM software, based on the degree of customization offer & cost benefits. IOCLs Systems dept. developed in-house a production scheduling software APS i.e. Advanced Planning & Scheduling, that uses the i2 modules Other SCM software application competitors in the market, considered by IOCL
SAP Manugistics
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OVERALL APS ARCHITECTURE:

APS MODULES
1. DEMAND MANAGER
Objective Used for Systematic consensus forecast generation process at SKUCustomer-Month level Input Sales history of past 2-3 years, categorized monthly, Sales targets Output Annual and Monthly Demand

forecasts, which is then fed to Forecast

Netting, Inventory Planning, Master Planning and Deployment Planning Modules
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2. FORECAST NETTING
Objective To profile the Monthly forecasts from Demand and Manager, net into Weekly on forecasts, them, based

differentiation and prioritization of orders

Input Monthly Demand Forecasts from

Demand Manager module & Order-details

Output Weekly Demand Forecasts fed to Master modules

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Planning

&

Deployment

Planning

3. INVENTORY PLANNING
Objective To arrive at Safety Stock targets at different supply locations like Plants, CIPs, Depots, Terminals, DOLGs, etc. Input Demand Forecasts from Demand Manager details module, Customer-SKU-Supply location mapping, lead times, Buffer group

Output Safety Stock suggestions for each

SKU at different supply locations
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4. MASTER PLANNING
Objectives Cost Optimization, have min.

inventory & max. demand satisfaction, reduce

safety stock violation, track materials produced Inputs Netted Forecasts, Orders, Safety stock requirements, Finished good & WIP, Plant & Filling line capacities Outputs Annual & monthly raw material procurement plan, weekly production plan, and inventory plan, shipment plan

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PRODUCTION SCHEDULING
Objectives Generate feasible optimized

production
plants

schedule

to

meet

customer

demands, considering constraints existing at

Inputs Demand signals/Firmed Orders from Master Planning Module

Output Weekly Production scheduling plan for each plant

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5. DEPLOYMENT PLANNING
Objective Reduce safety stock violations,

excess storage, backlogged demands and

maximize demand satisfied by a layer Input Daily production schedule, Inventory at plants, inventory targets, Demands, Orders & Netted Forecasts Output Distribution plan, Updated weekly Inventory plan

6. TRANSPORTATION PLANNING
Objectives Timely dispatch of required SKU

to CFA/Customer, Improve utilization of trucks,

reduce logistics costs and timely evacuation of material Input Shipment/Dispatch plan, Inventory constraints, Truck details, lead times, load plans, distance & transit times between locations Output Truck assignment, confirmed

shipment plan, load plan, operational statuses

RECOMMENDATIONS

i2 modules run only on systems with XP

operating systems Huge drawback.

All the module-runs are independent of other modules. Dependencies must be created. Data from SAP is fed into i2 databases everyday at a scheduled time, but its validity & correctness can be verified by checking logs. This can only be done by system admins.

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DM The accuracy for demand forecasts is only about 40-50 %, resulting in losses for the company. It must be improved.

IP After every run, export data (safety stock

information) is sent to Lubes division for review and then loaded for further processing.

PS This module cant handle pre-checks at plants like labour availability, working hour constraints, etc. currently done manually. Whenever PS isnt able to schedule

production plan for all demands, it doesnt give elaborate reasons for the same.
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THANK YOU!
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