Bill Norton
Equiva
Project Manager
Supply Chain Development
Improving the Bottom Line with eProcurement
Overview
Approximately $70 billion in revenue
13,000 employees
Formed to improve returns in mature markets by managing costs and combining assets
Alliance Business Units
Marketing
22,000 service stations
% US market share
Transportation
Pipeline - own or interest in 29,000 miles pipeline
Distribution - 115 product terminals
Refining
8 Refineries
Deer Park Refinery (joint venture Shell Oil / PEMEX)
Lubes
7 lubes plants
Equiva Services LLC
Shared services company jointly owned by Equilon Enterprises and Motiva Enterprises
Approximately 1500 employees
IT, Human Resources, Supply Chain Development, Legal, SH&E, etc.
Supply Chain
for Direct Goods and Services
Outbound
Inbound
Retail Marketing
Lubricants
Suppliers
Reduce product
& logistics cost
Customers
Customer
Satisfaction
$5B spend on non-hydrocarbon goods and services
Supply Chain
for Indirect Goods and Services
Refining
Marketing
Distribution/Pipeline
Lubes
Equiva Services
Equiva Trading
Suppliers
Inbound
Focus:
Total Cost of
Ownership
$5B spend on non-hydrocarbon goods and services
eProcurement Objectives
Develop common supply chain work processes and utilize a common set of enablers (where possible)
Improve contract compliance
Provide effective tools to find and select catalog items
Provide the ability to capture, summarize and analyze supply chain transactional data by commodity, supplier, organization and time period
Supply Chain Strategy
E Commerce
Data Repository
Analytical Tool
eProcurement
Supply Chain Engine
Common Data
What Have We Done?
Cataloged materials
Common material classification system
Cataloged vendors
Standardized, rationalized & enriched
Sourced cataloged materials to preferred suppliers
Cataloged contracts
Implemented i2’s catalog shopping tool
Implemented i2’s analytical tool (eSource)
Planning to implement i2’s contract management tool
Trade-Ranger
Fifteen global companies with a collective annual procurement spend exceeding $125 billion, have joined forces to build an open, independent marketplace for buyers and sellers of goods and services within the energy and petrochemicals community
The Direction
Note: Other transaction transmission facilities will exist. . EDI, fax, etc.
Supplier
POC
PO Ack
Content
ASN
Trade-Ranger
PO
Shopping
Cart
Content
Remit
Invoice
PO
POC
PO Ack
Invoice
ASN
Remit
ACH
Payment
Payment
Catalog Tool
(Discovery KM)
eSource Tool
(Source)
i2’s Role in Achieving Our Vision
i2’s Data Services
i2’s eOperate (DKM)
i2’s eSource (Source)
Supply Chain Strategy
Common Data
Supply Chain Engine
E Commerce
Data Repository
Analytical Tool
eProcurement
Aggregate spend from disparate work processes
Analyze data across various dimensions
Organization
Supplier
Period
Commodity (When are created in SAP)
Identify opportunities for new commodity & supply strategies
Identify opportunities to enhance existing commodity & supply strategies
Monitor contract compliance - Identify maverick spend
Manages our supplier diversity performance metrics
Value of i2’s eSource Tool
Analytical Tool
eSource Project Timeline
3/01
3/00
4/00
5/00
6/00
7/00
8/00
11/00
9/00
12/00
10/00
1/01
2/01
Assessment
Business Requirements
Data Audit
Solution Design
Deploy Prototype
Training and Rollout
Went Live
11/15/00
Configure, Design, Data Model, Etc.
eSource Core Project Team
Alliance Supply Chain Resources
Brenda Schroeder eSource Sponsor - Part Time
Bill Norton eSource Project Manager - Full Time
Annie Fears eSource Administrator - Part Time
Alliance IT Resources
Four Part Time Resources
i2 Technologies
One Full Time Resource
Two Part Time Resources
eSource Implementation Learnings
Transaction detail determines the quality of the reporting output
Standard vendor master and material master information enhances reporting capability - good content is KEY
Spend adequate time designing your organization, supplier and commodity reporting requirements
Loading data into eSource and building the spending summaries takes time
Understanding eSource Data
Foundational Data
Organization (Business units, Lubes, Marketing, etc)
Supplier
Time
Commodity
Transactional Data
Accounts Payable Accounting Transactions
Fact Table
Accounts Payable Accounting Transaction Rollups
Organization Dimension (example)
Alliance Wide
Division 1
Site
Division 2
Supplier Dimension (example)
Supplier Group (eSource)
Supplier Group - Supplier Group Name (<D&B Global Ultimate Name> - Group or <Supplier Name> - Group)
Supplier - Supplier Number (D&B Number or eSource Generated) & Supplier Name (D&B Name or SAP Name)
Supplier (eSource)
GE Capital
General Electric
GE Information Services
GE Supply
GE Capital
Supplier (SAP)
GE Supply
All Suppliers (eSource)
All Suppliers
GE Information Services
Time Dimension
Account Payable Accounting Transaction Posting Date in SAP
Month
Quarter
Year
Rolling Quarter
Rolling Half-Year
Rolling Year
Commodity Dimension
Material Group (UN/SPSC or Non UN/SPSC) in SAP
UN/SPSC - Commodity
UN/SPSC - Class
UN/SPSC - Family
UN/SPSC - Segment
Non-UN/SPSC
All Commodities
Commodity Dimension (example)
Segment Code - 26000000
*Segment Name - Power Generation and Distribution Machinery and Accessories
Family Code - 26100000
*Family Name - Engines and motors
Class Code - 26101600
*Class Name - Motors
Commodity Code - 26101612
*Commodity Name - Multi-phase motors
* Commodity information can be retrieved at each of these levels in the commodity hierarchy
Concluding Thoughts
Having data opens your eyes to a myriad of opportunities
Contract compliance
Supplier spend segmentation
New leverage opportunities
within a commodity
across organizations
within a supplier family
Good information allows you to move from a reactive mode to a proactive mode - there is time for constructive analysis
Provides the information required to measure the achievement of your spend reduction goals
Thanks
Backup Material
+
+
=
Equilon
Motiva
Equiva Services
Equiva Trading
Key supply chain opportunity
Leveraging $5B spend on non-hydrocarbon goods and services
Organization Dimension
PCA (SAP Term: Profit Center Accounting)
Site
Division 2
Division 1
Alliance Wide (Equilon & Motiva)
Supplier Dimension
SAP Supplier
Supplier
Supplier Group
All Suppliers
eSource - Dashboard Tab
eSource - Class Browser Tab
eSource - Search Tab
eSource - Results Tab
What is the case for change?
People
Employees spend significant amounts of time performing transactional activities outside of their area of expertise
Compliance
Contracts are not well known and poorly utilized throughout organizations.
Process/Technology
The processes and systems are not standardized. Data analysis and compliance monitoring is difficult due to the lack of data.
Changing Marketplace
Procurement is an area where e commerce opportunities abound. Uniform purchasing processes and systems are foundational for our move to the eCommerce arena
Worldwide B2B Revenues
*Gartner Group: Online B2B market reaching 7% of a predicted $105 Trillion in total global sales transactions.
What about the future?
The Next Step
Company
C
C
C
C
Alliance
Exchange
Catalogs Need to Handle
Real-life Enterprise Challenges
5) Legacy Part Number
6) OEM Part Number
7) Bill of Materials/Drawings
Manufacturer Part
Multiple Suppliers
Multiple Plants
Multiple Systems
Multiple Part Numbers
1) Mfr PN
2) Supplier PN (Multiples )
3) Internal PN ( Multiples)
4) ERP PN (Multiples)
Old Description Formats
30030012 Electric motor, 10 horsepower, 1750 rpm, 115/230 volt
30030016 Motor PM-1187A 25 HP 1830 RPM 230/460 VOLT
30030020 Pump driver motor; 100HP; 3Phase; 1760RPM; 240V
30030028 Electric motor, 100 horsepower, 1760 rpm, 240 volt
30030041 Motor PM-2149 10 HP 1750 RPM 115/230 VOLT
30030049 Pump driver motor; 25HP; 3Phase; 1830RPM; 230/460V
30030057 Electric motor, 25 horsepower, 1830 rpm, 230/460 volt
30030069 Motor PM-3033 100 HP 1760 RPM 240 VOLT 3 PH
30030077 Pump driver motor; 10HP; 3Phase; 1750RPM; 115/230V
Standardized Material
Description Formats
30030012 MOTOR ELECTRIC 10 1750 115/230 3
30030016 MOTOR ELECTRIC 25 1830 230/460 3
30030020 MOTOR ELECTRIC 100 1760 240 3
30030028 MOTOR ELECTRIC 100 1760 240 3
30030041 MOTOR ELECTRIC 10 1750 115/230 3
30030049 MOTOR ELECTRIC 25 1830 230/460 3
30030057 MOTOR ELECTRIC 25 1830 230/460 3
30030069 MOTOR ELECTRIC 100 1760 240 3
30030077 MOTOR ELECTRIC 10 1750 115/230 3
MI # KEYWORD HP RPM VOLT PHASE
Final items in catalog with a
common classification system
80030012 MOTOR ELECTRIC 10 1750 115/230 3
80030016 MOTOR ELECTRIC 25 1830 30/460 3
80030020 MOTOR ELECTRIC 100 1760 240 3
MI # KEYWORD HP RPM VOLT PHASE
i2’s eOperate linked to R/3
Plant Maintenance
Materials Management
Project Systems
Catalogs
Classification System
Search Engine
eOperate
Supply Chain Engine
Shopping via PC Client & Web Browser
Shopping by Material Specifications
Command Buttons
Class Property Label
Class Property Field
Pick List Icon
Search
Frame
2. Select Add to Cart
1. Select items to
add to the shopping cart
3. Select ViewCart
1. Enter desired Qty,
2. Select “Order Save”
to send items to ITS
Equipment BOM and Quicklist Shopping
Project Timeline
Jun Jul Aug Sep Oct Nov Dec Jan Feb
Detailed Implementation Planning
Infrastructure Preparation
Design and Develop Information Model
Create Catalogs
Stock Part Legacy Data Migration
Establish Process for Supplier Data
Implement SAP Interfaces
Configure User Views and Dashboards
Perform System Test
Deployment
Current Capabilities
Spend data for the following Alliance business units:
Refining
Marketing
Pipeline/Distribution
(Pipeline will be included after their 5/1/01 SAP Implementation)
Lubes
Equiva Services
Equiva Trading
Spend Analysis is available across the following dimensions:
Time
Supplier
Organization
Commodity (When are created in SAP)
eSource - Dashboard Tab
eSource - Class Browser Tab
eSource - Search Tab
No 42
Equiva/Norton
No 42
The two companies have 9 refineries with a combined capacity of about million barrels per day, and interests in approximately 45,600 miles of pipelines.
This Alliance combines major elements of Texaco and Shell mid-western and western . refining and marketing businesses and nationwide trading, transportation and lubricants businesses.
Equilon Enterprises LLC refines and/or markets gasoline and other petroleum products under the Shell and Texaco brand names in all or parts of 32 states, providing product to 9,000 Shell- and Texaco-branded retail outlets.
Equiva/Norton
No 42
Equiva/Norton
No 42
Texaco and Shell branded service stations.
Equiva/Norton
No 42
We do have a shared services company….. Of which I work for. It is not the type of services company that you normally think of as an external group to the business unit. We are tightly aligned with the business units - we develop supply strategies with them.
Many of our resources are deployed co located with the business unit.
One face to the supplier….
Equiva/Norton
No 42
Level setting.
In our company as I am sure in yours - we deal with direct goods and products and indirect goods.
Direct goods are products - make it to the end customer.
Indirect goods - used in maintenance, repair and operations of units that make product.
Depending on which area you are working in, direct or indirect, there are different value propositions and different elements that are important.
Inbound supply chain for direct goods
Focuses on maximizing customer service while minimizing inventory and logistics costs
Lubes - packaging & additives
Retail - e Source
Equiva/Norton
No 42
Inbound supply chain for indirect goods and services
Focuses on the total cost of ownership (product cost, acquisition cost, life cycle cost)
Typically there is a lumpy demand
Our work has mainly been in the indirect area - although in our Lubes business we have automated additives, packaging materials.
Equiva/Norton
No 42
With three different companies coming together we had different supply chain tools and processes - data in many different formats.
Contract rationalization.
Equiva/Norton
No 42
One of the things we have deal with is integrating different cultures. When you say words they have different meanings to others. contract…
Say the word e procurement… many different things pop into folks heads. JOKE
We put together a picture that describe our e procurement strategy. This is a very well known picture throughout our company.
Strategy - working with business units/ cross functional teams & supplier, Final product is a commodity strategy that is executed/enforced in the other five boxes.
Common data
Supply Chain Engine - this is tool where people go to order things. This is where we enforce the commodity strategies Purchase only Dell computers…. Commerce One.
E commerce - is the tools and technology to get information to and from suppliers
Data Repository - this is where you gather data about the transaction that was execute in the supply chain engine. Use an in-house data warehouse that Star Enterprises had.
Analytical tool - this is where our commodity managers go to to determine if their supply strategies were effective, are we getting the results we expected, are the suppliers performing as we expected….. If not, reevaluate, begin work. Or more exciting as we learn from other companies - where are the areas where we are spending money but we weren’t aware of … what are the new opportunities.
Equiva/Norton
No 42
Equiva/Norton
No 42
Equiva/Norton
No 42
Content & Communication
Trade-Ranger is more than just a VAN.
Equiva/Norton
No 42
Our own data warehouse was not meeting our information needs…. Didn’t have all of the data nor the flexibility.
Not all of our business units are using our SAP/e Operate Solution and realized moving them to that platform would take a long time.
Mid February this year we purchase e Source to serve as our analytical tool.
Equiva/Norton
No 42
Equiva/Norton
No 42
Equiva/Norton
No 42
Equiva/Norton
No 42
Five levels on UNSPSC
Two levels on non UNSPSC
Equiva/Norton
No 42
Equiva/Norton
No 42
Equiva/Norton
No 42
In 1998, Texaco, Shell Oil Co., and Saudi Refining, Inc. completed two historic . downstream joint ventures. The combination of the two joint venture companies, Equilon Enterprises LLC and Motiva Enterprises LLC, was estimated to be the largest retail gasoline marketer in the , with a combined % share of the US domestic gasoline market.
In addition, Shell, Texaco, and Saudi Aramco announced the formation of two jointly owned units, Equiva Services and Equiva Trading, which will support the operations of both Motiva and Equilon.
Equiva/Norton
No 42
Equiva/Norton
No 42
Equiva/Norton
No 42
Equiva/Norton
No 42
As I am sure you have in your company….
Equiva/Norton
No 42
This is a real extract from one of our legacy materials management systems.
As you can see the descriptions are in no consistent format.
Equiva/Norton
No 42
We standardized the description….assigned consistent key words,
commodity coding system
mined specifications and put in spec fields.
Data is more usable - easier to search/sort/etc.
Equiva/Norton
No 42
Functional locations… in this effort we we learned that really the ten items on the previous page were in reality, three items.
Key learning here was that on engineered equipment - items with a model number serial number… need to involve the engineering community. There were some commodity groupings where we merely did the common descriptions in one format - and not the functional locations.
This was another area where it is important to understand the quality and completeness of your existing data…..If the data is not there - you can’t mine specifications or you spend a lot of time finding it.
Talking about data… Norco.. It’s like putting lipstick on a pig….
Equiva/Norton
No 42
With this implementation we also implemented eOperate. This is a bolt on tool to SAP that allows better shopping/requesting utilization.
We didn’t like the shopping capabilities in SAP
Nor did we want to build the complex SAP material classification system.
Equiva/Norton
No 42
A little about the functionality
We installed the PC Client version which is within SAP….. Functionality includes the dashboard of which we built with our users.
We designed this tool for our “power users” super users who probably had more needs to be within SAP.
For the majority of our users - whose normally job did not require them to be in SAP, we implemented the web browser version. . Explorer….
Equiva/Norton
No 42
This demos some of the functionality.
Ability to shop for specifications…. Sorted fields you saw on the previous slide.
Equiva/Norton
No 42
Shopping cart functionality..
Equiva/Norton
No 42
View of the Shopping Cart In Aspect
Equiva/Norton
No 42
Equiva/Norton
No 42
Our goal was to have one stop shopping.
We have our equipment Bill of materials in Operate.
Also built what we call quick lists which are frequently used items.
Safety
Tank cleaning
Equiva/Norton
No 42
Equiva/Norton
No 42
Our project began 4/1/98 -
Prior to purchasing the Aspect tool, we did a road trip to every site - have our users view the tool - give us input - insure it would meet their needs. Not just with managmeent - real folks…
Real work began in July 1998
Went live six months later.
First implementation was 1/1/99.
Equiva/Norton
