CASE STUDY

DOWN STREAM STRATEGIC NETWORK OPTIMIZATION (DSNO)
FOR THE OIL & GAS INDUSTRY


The oil and gas industry is characterized by low profitability, fluctuating prices, and large and complex supply and distribution chains.

The low margins in the downstream sector require companies to be very accurate in their ongoing management and assimilate best practices together with breakthrough technologies for greater efficiency.

Oil and gas companies need to make fast, well-informed supply decisions. Network optimization can help companies maximize their profits simply through the right set-up of their network, namely the optimal choice of agreements and proper allocation of terminals and vehicles. Optimization across integrated supply chains helps ensure safety and minimizes environmental impact while adhering to regulations and maximizing return on investment

C&G DOWNSTREAM SUPPLY CHAIN OPTIMIZATION SYSTEM

Downstream Strategic Network Optimization (DSNO) Highlights
  • Specifically designed for the oil & gas field, C&G’s Supply Chain Optimization system enables fuel companies to get a full view of the supply chain.
  • C&G’s supply chain optimization system has been successfully used by leading industry players in Benelux and France, covering over 1300 petrol stations, with an improvement of over 10% EBIDTA.
The system takes into account various rules, variables and constraints throughout the chain
  • Temperature of fuel in each terminal / refinery
  • Cooling rate during secondary distribution
  • Annual supply agreements with refineries
  • Primary and secondary distribution agreements
  • Regulations (such as: CSO – Compulsory Stock Obligation, Bio Fuel blending)
  • Nature of the commercial agreement with each site (Company Owned- Company Operated; Company Owned- Retail Operated; Retail Owned- Retail Operated)
  • Seasonal demand of each station
  • Range of prices of each potential supplier for every phase in the supply chain, such as kickbacks of different terminals in the network
  • And many other business rules and constraints…
The result

Minimized supply chain costs

Main DSNO outputs

Network setup – supply agreements, primary distribution, terminals, sites Optimal production locations (procurement)

  • Site allocation for terminal or refinery per season
  • Support split of deliveries for different products for the same site
  • Support volume discounts
  • Primary distribution method: pipe, barge/ barge size, train
  • Vehicle allocation in distribution warehouses / terminals
  • Average stocks per terminal based on safety stock, demand and replenishment cycles
  • Total costs and budgetary allocation
  • What if & sensitivity analysis tools