1. Planning and Scheduling

As the Indian economy opens, companies are facing increased cost competition. The increase in oil prices has also created the raw material cost pressures in most sectors of the industry. This has made companies look critically at their supply chain and scope of optimization. Advanced planning and scheduling (APS) allows a company to optimize its supply chain as a whole and in parts.

The supply chain challenge for any large multi-site production company can be divided into two major parts - planning and scheduling.

At the planning stage most large corporation have to decide factors related to questions such as: Which feed stock to buy? Where to process? How much to buy readymade and how much to make? What to make and where? How to transport?

Once the decisions related to planning are taken, the degrees of freedom available to an organization reduce. The company still has to take scheduling decisions that are related to queries such as: When and in what order feedstock should arrive at manufacturing facility? When and in what sequence or modes to run the equipments? Which orders to meet and what dates to promise?

Traditionally different departments or divisions in an organisation handle these decisions. Some of the involved departments could be: Procurements, Corporate Head Quarters, Production, Marketing. In most cases a department or division optimizes its own operation.

A conventional planning approach calls for minimization of material procurement and maximization of manufacturing capacity and sales. The marketing division would try to meet its demand numbers and respond quickly to market opportunity by purchasing the production shortfall from other players or selling the excess production to them, while the objective of each production unit would be to maximize the throughput and its margin. Procurement would purchase the feedstock with not the best yields at lowest cost.

Supply Chain Planning Solution

The supply chain planning solution, depending on industry segment being considered, can consist of following modules.

Demand planning: For demand forecasting and aggregation of the final demand numbers based on requirements of supply chain

Integrated Planning: Planning for the complete supply chain of the customer based on demand numbers

Distribution Planning: Generating operational plans for distribution

Production Planning: Generating operational plans for production.

These modules are supported by various enablers that facilitate planning activity that include:

(1) Supply Chain Database (SCD) (2) Geographical Information System (GIS) (3)Data Interfaces

To make the supply chain more responsive to demand, the solution has to be driven by the demand numbers. The demand numbers are fed to an integrated planning module that contains representation of supply, production and distribution facilities. The production and the Supply and Distribution (S&D) structure forms the basis on which the optimised plan for the entire organisation is generated. This corporate plan is communicated to distribution modules and the production planning modules to generate operational plans. The optimised plan for the entire corporation is also used as a basis for feedstock selection runs. GIS can be used to obtain the distances between locations, which is used as a basis for freight calculation.

SCD provides distribution related inputs to both Integrated Planning and Distribution Planning models and has these following functions:

Temporal integration: data for yearly and quarterly models available in one place and can be rolled up or down as per requirement.

Hierarchical integration: Aggregation for integrated model is done based on detailed data available for operational distribution models

Calculations: Final linkage costs are calculated using tax logic, current prices, distances and freight rates.

Supply Chain Scheduling Solution:

Based on the planning targets, scheduling solutions optimize the execution of the plan. This is done using various scheduling tools designed for specific scheduling problem.

Utilize the synergies that exist between these functions to maximize the corporate profit. Given the large volumes that are involved small percentage changes translate into huge benefits to the owner.

Hardware, Tools Deployment

As indicated in my opening remarks the hardware in this paper consists of mainly the sensors at every stage in the supply chain. The following sensors are used extensively:

Weight and volume sensors at all stages, which include the supply of raw stock at all the refinery material (mainly liquids) transit points, the finished product at various stages of deployment, be they at the refinery loading end to distribution depots, to the retailers end. Positioning systems that will tell the exact location of any product being carried abroad any transport carrier or the flow through a pipe. These could be GPS or visual spotting reporting at various points along the route through which the product travels.

Density sensors are to be provided at every stage, including the carriers' tankers and the retailers' storage tanks, so that ugly situations such as the recent murder of a quality check inspector in North India do not arise. Ultimately, any tampering at any will show by the difference in density of the supplied product and the product at that stage in the supply chain.

The retailers receive payments through three methods generally- cash, a credit or a debit card and the loyalty card. With the acceptance of plastic cash across even remote locations, this is another aspect that needs looking into, especially if you have a wide retail network. Most petroleum companies have programs to retain customer loyalty, the chief among them being cards, which are a sort of debit card. One has to load the card with a minimum amount and then use this card for payment until the next reload. Currently, there are separate devices for accepting payments by credit/debit cards and through a loyalty card.

In the case of a loyalty card, the transaction is recorded on the chip in the card and the POS device (generally wireless). The dealer then uploads the oil company's server/s in batches. The credit/debit card POS device which until now was wired performed the transaction inn real time. With the spread of wireless technology, Honeywell is carrying out trials for a standalone multi card reader which could be used for Credit/debit card transactions as well as loyalty cards, every transaction would then be in real time. (This is quite similar to the multiple-card reader POS hand held device that Cafe Coffee have deployed since February 2005, the roll out is to be completed by end March 2005 across all their cafes. Read more about this in the article Bean to the Cup )

In the case of a loyalty card, the transaction is recorded on the chip in the card and the POS device (generally wireless). The dealer then uploads the oil company's server/s in batches. The credit/debit card POS device which until now was wired performed the transaction inn real time. With the spread of wireless technology, Honeywell is carrying out trials for a standalone multi card reader which could be used for Credit/debit card transactions as well as loyalty cards, every transaction would then be in real time. (This is quite similar to the multiple-card reader POS hand held device that Cafe Coffee have deployed since February 2005, the roll out is to be completed by end March 2005 across all their cafes. Read more about this in the article Bean to the Cup )