COST AND INVENTORY MANAGEMENT OF CRUDE

REFINED PRODUCTS

Arnab Kr ChatterjeeMudit Kansal

Riddhima KartikKoustav Naha

Mentored By: Dr. Sudhir Yadav

Group - 6

Table of Contents■ SCO’s Pronged Strategy ■ PIMS Model ■ Demand Forecasting

Improvements ■ New Approach for

– Term Crude Purchasing – Spot Crude Purchasing– Refinery Monthly Production

Plan■ Crude Optimization ■ Inventory Management

■ BPCL Best Practice for Inventory Management

■ SCO, investment in PIMS ■ Refinery Wise Costing Comparison ■ Year Wise Comparison ■ E-Revolution ■ Evaluating Petroleum Supply Chain

Performance■ Products ■ Technologies Imported

SCO’s Four Pronged StrategyTo Manage Attendant Complexities and Drive Successful Transformation

PIMS Model : Based on LP Principles

BPCL Moving Towards Best Practice In Demand Forecasting Through Four Improvements

New Approach For Term Crude Purchasing

New Approach For Spot Crude Purchasing

New Approach For Refinery Monthly Production Planning

Crude Optimization

Inventory Management■ To set location-wise Inventory Norms, using Statistical Tool. ■ Objective to maintain optimal levels of Inventory and Release Blocked Working

Capital. ■ Every fortnight, the overall inventory being reviewed with Logistics for taking

corrective actions. ■ Export plans can be drawn based on the Supply Demand Scenario and the

Inventory Situation.

Challenge – Reduction of Dead Stock

BPCL Plans Towards Moving Into Best Practice In Inventory Management

SCO, Investment in PIMS Linear Programming Technology, with Surrounding Modules

BPCL Refinery-wise Costing ComparisonMumbai

Refinery

(2013-14)

Kochi Refinery

(2013-14)

Mumbai Refinery

(2014-15)

Kochi Refinery

(2014-15)Throughput 13.03 MMT 10.32 MMT 12.96 MMT 10.40 MMT

GRM 3.95 USD 4.80 USD 3.97 USD 3.17 USD

Overall Gross Margin

Rs. 2340 Cr Rs.2249 Cr Rs. 2363 Cr Rs.1514 Cr

Capacity Utilization

108.6% 108.65% 108% 109.46%

Year-wise Comparison Particulars 2013-14 2014-15

Cost of raw materials consumed

Rs.94424.39 Cr Rs.109197.43 Cr

Raw material Inventory

Rs. 3538.35 Cr Rs. 3439.66 Cr

Finished goods Inventory

Rs. 8,986.00 Cr Rs. 6,065.55 Cr

E- Revolution:- ■ Bharat Petroleum, the $9.5 billion petroleum refining and marketing

company, was the first public-sector oil company in India to implement SAP® R/3® cross-industry solutions, along with software from the SAP for Oil & Gas portfolio.

1. SAP: By making an early entry into ERP, BPCL has reaped the reward of this futuristic model. Benefits accrued are:

a) Operational Efficiency b) Enhanced Fiscal Discipline

SAP: Up to 10,000 credit is accepted, above that not accepted. BPCL is the first to upgrade SAP/R3 in its scale in the country

Benefits to BPCL by SAP ■Reduction in days in inventory (average) : 56%■ Improvement in demand fulfillment index : 14%■ Reduction in logistics Costs : 2.5%

Evaluating petroleum supply chain performance

ProductsProduct Name Selling Unit Mumbai Delhi Chennai Kolkata

SPEED LITRE 65.46 59.84 58.60 63.10SPEED 97 LITRE 79.70 74.38 73.84 76.14Hi SPEED DIESEL LITRE 56.64 49.87 50.51 51.93

MOTOR SPIRIT LITRE 62.70 56.69 55.90 61.11

HSD(0.05% Sulphur) LITRE 53.03 46.48 47.06 49.09

Product Name Selling Unit Mumbai Delhi Chennai Kolkata

AVIATION TURBINE

FUEL (DOMESTIC)

KL 38,425.94 39,301.30 41,991.64 46,038.15

Products (Contd.)Product Name Selling Unit Mumbai Delhi Chennai Kolkata

LPG PACKED -(19 Kg’s) -

COMMERCIAL

CYLINDER 984.50 932.00 1097.50 1006.50

Product Name Selling Unit Mumbai Delhi Chennai Kolkata

LPG PACKED -(14.2 Kgs) -

Non Subsidized

CYLINDER 522.50 513.50 525.50 541.00

LPG PACKED -(14.2 Kgs) CYLINDER 454 419 406.50 421

Product Name Selling Unit Mumbai Delhi Chennai Kolkata

LSHS MT 15,250.00 15,860.00 15,770.00 16,040.00NAPHTHA MT 26,490.00 27,200.00 26,900.00 27,120.00

URNACE OIL MT 13,750.00 14,460.00 14,270.00 14,540.00

City Petrol DieselMumbai 62.70 53.03Delhi 56.69 46.48 Kolkata 61.11 49.09Chennai 55.90 47.06

Technologies Imported■ Fixed bed plat forming process for production of high Octane Motor Spirit blend

stock and for increasing capacity.

■ Iso-dewaxing / Hydro-finishing technology for production of Group II Lube Oil Base Stocks

■ DHDS Reactor catalyst change to new generation HDS catalyst TK 576 BRIM as a part of the unit revamp for producing Euro IV Diesel.

■ Naphtha HDS Catalyst.

Group - 6

Arnab Kr. Chatterjee

Koustav Naha

Mudit Kansal

Riddhima Kartik