Indian Oil Corporation Limited

Lubes Division

Ashmita Mazumder

PGDM – IT

2011-13

Guide –

Prof. Kalpana Kumaran

HOD – IT, ITM Business School

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PROJECT TITLE:

To Study, Analyze and Recommend areas

for Automation of Supply Chain

Management, at all India level, of

Lubricants Division of Indian Oil

Corporation Limited

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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 – world’s 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 India’s

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

IOCL’s Products, after refining from Crude Oil:

Petrol, Diesel, LPG, Petrochemicals, Kerosene,

Bitumen, ATF (Aviation Turbine Fuels), Industrial

Fuel, Lubricants & Greases

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IOCL’S 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:

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WHY GO FOR AUTOMATION?

To streamline Supply Chain Management

operations of IOCL’s 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 JDA’s i2

Technologies’ SCM software, based on the

degree of customization offer & cost benefits.

IOCL’s 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:

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APS MODULES

Objective – Used for Systematic consensus

forecast generation process at SKU-Customer-

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

1. DEMAND MANAGER

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2. FORECAST NETTING

Objective – To profile the ‘Monthly’ forecasts

from Demand Manager, into ‘Weekly’

forecasts, and net them, based on

differentiation and prioritization of orders

Input – Monthly Demand Forecasts from

Demand Manager module & Order-details

Output – Weekly Demand Forecasts fed to

Master Planning & Deployment Planning

modules

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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 module, Customer-SKU-Supply

location mapping, lead times, Buffer group

details

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 schedule to meet customer

demands, considering constraints existing at

plants

Inputs – Demand signals/Firmed Orders from

Master Planning Module

Output – Weekly Production scheduling plan

for each plant

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

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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 isn’t able to schedule

production plan for all demands, it doesn’t

give elaborate reasons for the same.

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THANK YOU!