Industry Requirements

Hydrocarbon Product Management and Parallel Inventory

In scheduling and execution processes in the oil industries it is often necessary to manage a parallel inventory, meaning that the inventory needs to be managed with quantities in several units of measures belonging to different dimensions (such as mass and volume) at the same time and quantity conversion may need to use additional parameters, e.g. based on ambient conditions in a tank or properties of a product.

Physical inventory in tanks is often managed primarily in volume units - based on tank dips - and compared to physical volume capacity of the tank.

On the other hand, "book stocks" and goods movements on the total material level are kept in mass units as required for excise duty handling. Bills of material - especially for blending processes - are generally also based on mass units and mass percentage.

Oil and oil products are bulk products in liquid form that are processed and shipped in large quantities by the oil industry. Even the smallest fluctuations in temperature can result in considerable fluctuations in volume.

Because the measured volume of an oil product is temperature-dependent, the density of the same material - which is used to calculate mass from volume and vice versa - can differ considerably in different locations or at different times.

ORSOFT Manufacturing Workbench can use a oil quantity conversion that considers temperature-dependent density. It allows volumes at ambient temperature and densities at test temperature to be converted into densities, volumes and masses at standard temperature. The oil quantity conversion is thus used to convert the quantity of an oil product into various units of measure.

ORSOFT Manufacturing Workbench currently uses a single - material-independent - Alpha correction table based on DIN 51757 by default, which has proved as being accurate enough for scheduling-related processes. However, this may be replaced by a more detailed solution if required, using different conversion groups and API/ASTM tables or external API conversion routines.

Flexible Tank Management

Bulk products in liquid form are stored in tanks and transported in pipelines, containers or tank trucks between tanks. Quite often intermediate tank farms are designed as "non-determined tanks", this means a tank may hold different products at different times.

Typical classic ERP systems, such as SAP ERP, cannot handle this type of tank management well with regards to current and projected stock on the tank level - as required for planning and scheduling processes - because their stock management centers on the material and its dedicated stock locations. If they support tank level management at all, then it is often necessary to assign each material to all potential tanks in master data management, which is not very practicable for large tank farms with high flexibility and for a large material master which is constantly expanded due to new products entering production.

Due to these limitations, companies often use separate Tank Management Systems - based on databases and often closely integrated with production control systems - to handle actual physical stock on the tank level based on tank geometry data (volume correction factors, strapping tables) and tank dips that are taken regularly. From these Tank Management Systems, current material stock levels are calculated and uploaded to the ERP system in order to correct "book stocks". However, this is often only done once per day and sometimes even retrospective, e.g. the "book stock" for today at 6 AM may only enter the ERP system today at 4 PM and thus does not consider any goods' movements that happened since 6 AM.

ORSOFT Manufacturing Workbench allows the definition of "non-determined tanks" as resources in the standard ERP resource master. It creates "tank event lists" for these resources with stock projection on the tank level - with the contained material and stock level in several dimensions at any time. ORSOFT Manufacturing Workbench provides a special graphical visualisation for these "tank event lists" that combines aspects of a Gantt chart - showing allocation of logistics processes on a tank along the timeline - with a stock level histogram.

In addition, ORSOFT Manufacturing Workbench can gather actual tank stock levels from a separate Tank Management System and do a data reconciliation in order to take into account planned vs. actual goods movements to correct the projected stock level for the future.

Planning with extremely volatile material costs

The price for crude oil and its derivatives, which determine the raw material costing of lubricant and wax refineries, is extremely volatile. Due to the large size of the production facilities, the great level of vertical integration, as well as the variation of finished products and the short-term delivery requests of the customers, a high inventory level is required. The decisions of raw material purchases in the right quantity and quality at the right time have substantial economic impacts since raw materials represent by far the biggest costing block. Planning with anticipated price changes in mind can create a significant competitive advantage. The planning and forecasting process to enable these decisions and the realization of an optimum of inventories covers usually a time horizon of nine to 12 months.

ORSOFT Manufacturing Workbench supports this decision process by integrating midterm production and purchase planning - based on latest sales forecast for finished products - with the calculation of prospective material and production costs based on planned production and purchase quantities and forecasted purchase price changes.

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