Downstream Out of the Cloud: The Future of Oil and Gas Logistics

Michael Martens, Managing Partner & CEO, Implico
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Michael Martens, Managing Partner & CEO, Implico

Transporting petroleum products is not the only important task in the oil and gas industry. Billions of datasets also have to reach their intended recipients every day. If critical data is missing, then a tank truck won’t be able to pick up fuel at the terminal–or deliver it to the service station on time. Fast, highly transparent, easy-to-use solutions and automated data communication can help save a lot of time and minimize errors. And these days, all of this is can be realized cost-efficiently in the cloud.

Take a tank storage provider, for example. He faces new challenges each and every day. How many tons of diesel does which owner of goods have in which tank? Who’s being delivered what by ship or pipeline, and what quantities are leaving the tank by which mode of transport? Is the quality and quantity right for incoming goods? Nor is it only the tank storage provider who needs to keep track of this complicated state of affairs-owners of goods also have a legitimate interest in being kept informed of stock levels and movements at all times.

 ‚ÄčFast, highly transparent, easy-to-use solutions and automated data communication can help save a lot of time and minimize errors 

The sheer volume of data in circulation is not the only challenge. Different products designations make data communications even more complex. Let’s assume that Tank A is holding heating oil from seven customers. For the tank farm operator, this is all just one single product. But his customers use their own names–seven different ones, in this case. The companies are effectively speaking seven different languages. If they want to communicate with one another, they need a translator.

Data Provision and Data Conversion in the Cloud

A translator such as the iGOS cloud, for example, which was developed specially for oil and gas downstream companies. The companies in the supply chain upload their data to the iGOS cloud, where the data is automatically converted into the correct language. In this way, all of the stakeholders are provided, almost in real time, with precisely the information that they need and are authorized to access. In addition to service stations, tank storage providers, refineries and their customers, other parties also require data in a specific format. Local and European tax authorities are one example-companies have to report their stocks of untaxed petroleum products to the tax office and submit notification when these become taxable.

Once authorized, the various users can go online any time to access the data-using their browser, they can log in to get an immediate overview of which tank farms are storing which products or which orders have come in for the hauliers. Data communication also works fully-automated, however. In this case, the data flows automatically into their systems, where it can trigger other processes at the right place and the right time.

ServiceStation Replenishment Out of the Cloud

The cloud ensures fast, smooth processes not just in terminals, however.More and more service station networks are using cloud solutions for all of their processes, from forecasting for a reliable resupply to invoicing–in other words, the complete order-to-cash cycle.The Irish company DCC is one example of this.

When ExxonMobil announced in mid-2014 that the Group was considering divesting itself of its French retail sites network, DCC saw its chance and took it. It was a huge challenge, requiring the organization of supply and operational processes for around 400 stations in terms of both personnel and technology. Target was to complete the acquisition within a very tight time frame. DCC stepped up to the challenge, finding a reliable partner and a solution that was as spectacular as it was simple-in no time at all, the vast majority of retail station network processes had been moved to the cloud.

When the opportunity for a takeover presented itself, DCC had neither in place the IT infrastructure nor the personnel capabilities of running such a major retail network. Instead of going through the processes of setting up a complex in-house IT system and hiring personnel and thus losing valuable time and investing a considerable amount of CAPEX–DCC simply chose the option of deploying specialized downstream cloud services.

Simple Architecture, Simple Processes

The systems, that DCC has used for servicestation replenishmentsince 2015,run as Software as a Service in the Cloud.SAP ERP provides the necessary operational business processes, while OpenTAS Automated Stock Replenishment (OpenTAS ASR) supplies theretail network forecasting. Using data from tank stock dipping and sales reported by the point of sale cash till system, OpenTAS ASR provides a reliable estimate of stock levels and future sales volume for each tank and every retail station, while also calculating the right point in time for efficient replenishment. An integrated portal gives retailers access to place orders in the cloud, to manage the product ordering demands while executing simultaneously the required credit control.

The order management tool in the cloud uses this data to generate corresponding delivery orders for the retail station before sending these to the associated hauliers. The hauliers merely need to process the orders and deliver the products forecasted at the defined point in time. Hauliers pick up fuel from the tank terminals including cross border activities run by supplier ExxonMobil. These terminals are also connected to the cloud. The same applies for the supplier‘s SAP ERP to retrieve fleet card payments and reconcile purchased fuel orders and to the affiliated banks that handle credit card/fuel card billing, receivables and payments. A cloud-based price management system from a collaboration partner is integrated into the overall landscape.

In just a few months, DCC has processed well over one billion liters of fuel in this way.Furthermore, the cloud solution enables fast, simple and complete scalability.DCC has now laid the foundation for further growth so that it can establish itself as a leading European organization in the changing downstream market.

Flexibility, Low Costs, Lean Processing

Companies benefit in many ways from cloud-based data provision and data management-they don’t need complex IT infrastructure in-house, specialist IT personnel orany softwareto install. Users don’t buy a one-time license before using the service but simply pay a low-cost monthly fee. This minimizes both their capital expenditures and their exposure to commercial risk. The solutions are also very flexible-companies can add or remove services at short notice and don’t need to plan things out years in advance. This makes cloud solutions also suitable for smaller companies, which can’t afford major capital expenditure on IT infrastructure but which nevertheless operate as part of complex supply chains.

Even today, cloud solutions can cover services which no in-house system in the world would be able to provide.One thing is certain- the future of oil and gas logistics lies in the cloud.

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