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The Supply Chain Operations and Execution for Oil and Gas ES bundle provides services to schedule, sell, buy and move oil-related products at optimized prices. It enhances many services of the Order to Cash and the Procure to Pay bundles, in order to provide an Oil and Gas industry flavor. In addition, services for oil-specific business objects are delivered.

Overall, this ES bundle supports multiple use cases. First of all, it can automate the accounting of physical movements of oil and gas (or any bulk material) so that all accounting documents from such movements are created automatically in SAP ERP. It also delivers services to interface KSS Rack Optimization with SAP ERP, providing price optimization for terminals where trucks and tankers are filled. Furthermore, this ES bundle service-enables bulk commodity scheduling, provides B2B delivery notification and supports the Oil and Gas Business Process Platform.

Physical Movement

The physical movement scenario can be supported by an industry composite xPHM. This composite will implement the enterprise services in future enhancements of this ES bundle. xPHM handles physical movement of any type of bulk material, so in addition to support for the oil and gas industry, it could be used by any industry that deals in bulk materials, such as coal producers. Movement of goods-in this case oil and gas-through a pipeline (or other transport or transfer mechanism, such as a terminal) must be reflected in the accounting system. The data from the device handling the movement (pipeline, terminal, etc.) is transferred via enterprise services and requires minimal operator input to complete the necessary accounting transactions in SAP ERP.

Price Optimization

The terminal where tankers are filled is a completely different business case supported by services in this ES bundle. KSS RackPrice is a third-party solution that handles price optimization for terminal sales; this ES bundle includes services to interface KSS RackPrice with pricing information stored in SAP ERP. By simulating the sales order creation, pricing results and a detailed credit status check are enabled with Enhancement Package 4 for SAP ERP 6.0 (EhP4).

Scheduling and B2B Interaction

Time is money and delays in time may cause significant monetary damages. To avoid those, this bundle provides Services for demurrage handling and bulk scheduling. Demurrage tools can be directly addressed and it is able to schedule and reschedule bulk commodity transports and see there impacts in real time.
For B2B Interactions this ES bundle also provides Enterprise Services for notification of outbound delivery details to a customer or ship-to partner.

Business Process Platform for Oil and Gas 

Further services of this ES bundle support the Business Process Platform for Oil and Gas with operations to schedule, buy and move oil-related products.

Supply Chain Operations and Execution for Oil & Gas (click to enlarge)






How this ES Bundle Leverages Enterprise SOA

This bundle leverages enterprise SOA through the use of enterprise services that translate physical movements of material at the pipeline into accounting transactions in SAP ERP. It also leverages enterprise SOA by providing services that integrate KSS RackPrice with SAP ERP. Services for a potential demurrage tool (xApp) allow to calculate demurrages and to trigger subsequent invoicing / payment. B2B notification of outbound delivery details to a customer or ship-to partner is provided including oil-specific data. Overall, a set of services support the Business Process Platform for Oil and Gas and allow user to schedule, sell, buy and move oil-related products. 

Audience

Any company in the oil and gas industries, where bulk shipments of products occur or terminal prices need to be optimized, will benefit from using this ES bundle. Employees in these companies, such as clerks, terminal operators, accountants, schedulers and demurrage analysts will benefit most directly.

For details on Service Operations, Business Objects and Process Components, please check the ES Workplace.

 

How to Use This Bundle

Physical Movement of Oil and Gas

In the oil industry, bulk movements occur after a long period of scheduling in which the actual volumes, dates, and times are changed frequently. When the product is finally moved, the movement has to be reflected in accounting transactions. Here are some possible physical movements that enhancements of this ES bundle, and the industry composite xPHM, is designed to handle:

  • The loading of crude oil into a tanker in a harbor
  • The extraction of refined oil from the pipeline into a terminal tank
  • The pumping of gasoline from the truck into the service station tanks

For each of these physical movement scenarios, you must consider if-and when-a change of ownership takes place. The ownership might change at the discharge of a ship when the company sells the product to a customer in the destination port.

In some cases, no ownership change takes place; in this case, the goods are being transferred within the company, which again, must be reflected in the accounting system.

Automate your Supply Chain Operations (click to enlarge)

The change of ownership for bulk goods such as oil and gas is handled through contracts between business partners, which are associated with documents such as purchase contracts and sales orders. These documents are linked to the movement of the oil and gas; the physical movement of oil and gas must be accurately reflected by a series of accounting documents.

While the accounting of physical movements has often been a paper-based process in the past, the services in this ES bundle provide an electronic method for communicating this with SAP ERP and automating the creation of the necessary documents. Those who implement xPHM, an industry composite that uses the services in this bundle, have a simple user interface that allows clerks and operators to easily capture data after the product has been moved.

In the xPHM UI, the operator enters the main data related to a physical movement, such as quantity, unit of measure, date, and time. He must also enter a reference document, like a sales contract. Based on certain data, a movement scenario is identified that corresponds directly to a particular sequence of document postings.

These documents are then created in the ERP backend system while the operator moves on to the next task. If an error occurs in the booking steps, the worklist displays the error and the process can be resumed once this error is corrected. Some errors require reversal of a whole sequence of accounting documents; this bundle provides services to handle such reversals easily.

On request the xPHM composide can be implemented to the customer's system environment.

Another complication for the oil and gas industry is the strong dependence of physically moved quantities on the ambient temperature and pressure of the product. Therefore, this ES bundle includes services to address the QCI (Quantity Conversion Interface).

Services in this ES bundle support both sales and purchasing scenarios.

Sales scenario

A movement of oil or gas is posted with reference to a sales contract. The sales contract usually contains a customer, delivery location, material, quantity, date range, price, and other conditions (such as incoterm).

Typically, oil producers have long-term contracts with their customers that may span several years. Such a sales contract is linked to the transport when a ship is getting loaded and moved to the customer. Once the ship is discharged, this contract is referenced again. Of course, such a contract assignment is also necessary in order to track how much product has already been delivered as part of the contract during the current year or month. In this way, it is possible to tell the system which contract a sale relates to, which determines the price.

Purchase scenario

A movement can also be posted with reference to a purchase contract. The purchase contract usually contains a vendor, a loading location, material, quantity, date range, price, and other conditions (such as incoterm).

Purchase is the mirror image of the sales scenario. The buyer has a contract to buy a certain amount of a certain material and quality grade per year from a vendor. This contract needs to be identified when posting a movement in the system.

Stock Transfer Scenario

With the Stock Transfer Scenario the Physical Movement is enhanced by services to create, correct and reverse transfer movements.

Integration of KSS RackPrice

Oil and gas prices experience such wide fluctuation that daily news often carries these fluctuations as top stories. It is little wonder then that companies have found the need to implement software such as KSS RackPrice to optimize prices for oil and gas at terminals where tankers are filled.

This ES bundle provides services that allow for the optimized prices to be communicated between KSS RackPrice and SAP ERP, which houses pricing information. SAP ERP communicates sales and price data to KSS RackPrice, which then performs optimizations and passes the optimized prices back to SAP ERP, which adjusts the prices accordingly.

Use Cases

This section will explore a series of use cases for the Supply Chain Operations and Execution for Oil & Gas ES bundle. Each use case will show how different outcomes can be achieved by using the enterprise services in different combinations. Note that these examples may refer to users directly invoking enterprise services. This illustrates the flow of the service operations; in fact, service operations are invoked by an application, by an application's user interface (in the case of xPHM), or by another service operation. While these examples illustrate a few of the ways that this ES bundle could be used, the intention is to show the flexibility and reusability of these business objects and enterprise service operations so that you will have a clearer understanding of how to best deploy them in your own environment. This wiki is also a space for you to share knowledge and collaborate with others who are implementing the Supply Chain Operations and Execution for Oil & Gas ES bundle.

Use Case 1: Physical Movement-Sales Scenario

In this use case, the operator is selling oil or gas to a business partner. This process starts when the pipeline operator finds the sales contract item by invoking the Find Customer Contract Item by Elements enterprise service, which uses the Customer Contract business object. He selects the contract from the resulting list, invoking the Read Customer Contract enterprise service.

Having specified the contract, the operator now checks the temperature and quantity conversion in case the temperature has changed. The operator displays and, if necessary, changes the quantity conversion details, which calls the Hydrocarbon Quantity Conversion enterprise service, which uses the Quantity Conversion business object.

This marks the end of the work on the part of the operator; the composite application now communicates with the ERP backend system, creating a sale with reference to a sales contract. This entails invoking the following enterprise services in succession:

Physical Movement Sales Scenario (click to enlarge)

If a sales movement needs to be corrected, the following services will handle that process:

If the operator realizes that he made a mistake and needs to reverse the sequence of documents, perhaps because the wrong contract was specified, he reverses the sales movement, which invokes the following series of enterprise services:

He can then restart the process, ensuring the information is correct this time. As you can see, the necessary audit trail is automatically generated or modified in SAP ERP as needed to account for the physical sale of oil or gas.

Use Case 2: Physical Movement---Purchase Scenario

In this use case, the operator is handling the purchase of oil or gas from a business partner. This process starts when the pipeline operator finds the purchase contract item by invoking the Find Purchasing Contract Item Basic Data by Elements enterprise service, which uses the Purchasing Contract business object. He selects the contract from the resulting list, invoking the Read Purchasing Contract enterprise service.

Having specified the contract, the operator now checks the temperature and quantity conversion in case the temperature has changed. The operator displays and, if necessary, changes the quantity conversion details, which calls the Hydrocarbon Quantity Conversion enterprise service, which uses the Quantity Conversion business object.

These simple steps mark the end of the work on the part of the operator; the composite application now communicates with the ERP backend system, creating a purchase with reference to a purchase contract. This entails invoking the following enterprise services in succession:

Physical Movement Purchase Scenario (click to enlarge)

If a purchase needs to be corrected, the following services will handle that process:

If the operator realizes that he made a mistake and needs to reverse the sequence of documents, perhaps because the wrong contract was specified, he reverses the purchase movement, which invokes the following series of enterprise services:

He can then restart the process, ensuring the information is correct this time. The necessary audit trail is automatically generated or modified in SAP ERP as needed to account for the physical purchase of oil or gas.

Use Case 3: Physical Movement---Stock Transfer Scenario

Physical movement provides services for a composite xPHM, in order to handle and automate subsequent SAP ERP transactions related to physical movement scenarios.
Within the stock transfer scenario services to create, correct and reverse transfer movements are supplied.

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Calculate hydrocarbon quantity conversion

Hydrocarbon Quantity Conversion

Step 2: Create stock transfer

Create Purchase Order
Create Outbound Delivery with Reference to Purchase Order
Create Inbound Delivery with Reference To Purchase Order
Create Freight Order (optional)
Create Goods Movement with Reference_V1

Step 3: Correct stock transfer

Cancel Goods Movement
Change Freight Order (optional)
Change Inbound Delivery
Change Outbound Delivery_V1
Change Purchase Order
Create Goods Movement with Reference_V1

Step 4: Reverse stock transfer

Cancel Goods Movement
Change Freight Order (optional)
Change Inbound Delivery
Change Outbound Delivery
Change Purchase Order

Step 5: Display stock transfer

Read Purchase Order
Read Inbound Delivery
Read Outbound Delivery
Read Freight Order
Read Goods Movement

Physical Movement Stock Transfer Scenario (click to enlarge)

Use Case 4: Integration of KSS RackPrice

KSS provides pricing systems for a number of industries, including oil and gas. KSS RackPrice deals specifically with pricing at the terminal where tanker trucks arrive to receive loads of fuel.

During any given day, gasoline trucks pull into the terminal. The trucks are filled and then leave to make deliveries to service stations. Much of this is handled automatically; truckers have passports to enter the tanker farm, fill their trucks, and leave, all without staff intervention.

At a scheduled time (often once per day), the aggregated sales transaction data is fed into the ERP system, using the Notify of Point Of Sale Transaction as Bulk enterprise service is called, which uses the Point Of Sale Transaction business object.

SAP ERP then transmits the actual sales prices to KSS RackPrice by invoking the Request Sales Price Information as Bulk_V1 enterprise service, which uses the Sales Price Information business object. KSS RackPrice takes the sales transaction data along with the price and performs pricing optimization. It then returns the optimized price information to SAP ERP by invoking the Create Sales Price Specification as Bulk enterprise service, which uses the Sales Price Specification business object.

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Send aggregated sales transaction data

Notify of Point of Sale Transaction as Bulk

Step 2: Send actual sales prices

Request Sales Price Information as Bulk_V1

Step 3: Receive updated sales prices

Create Sales Price Specification as Bulk

Integration of KSS Rack Price (click to enlarge)

Use Case 5: Pricing simulation and credit check

This use case enables a remote pricing simulation and credit check for oil-related products (e.g. at a terminal automation system). In a first step a sales order simulation inclusive a credit status check can be performed with basic sales order data like customer, oil-related products and quantity. Based on the simulated sales order amount an additional credit worthiness check can be invoked.

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Simulation of sales order creation inclusive pricing results

Check Sales Order Creation

Step 2: Detailed credit check

Check Credit Worthiness

Pricing Simulation and Credit Check (click to enlarge)

Use Case 6: Demurrage Handling

Demurrage handling provides basic services for a potential demurrage tool (xApp) in order to simulate and calculate demurrages and to trigger subsequent invoicing / payment.
Demurrage is an additional cost that represents liquidated damages for delays and occurs when a tanker vessel is prevented from the loading or discharging of cargo within the stipulated lay-time. It constitutes an extension of freight that lies unconditionally with the vessel charterer.

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Notification of Nominations

Notify of Bulk Commodity Nomination
Read Bulk Commodity Nomination

Step 2: Notification Sales Contracts

Read Customer Contract

Step 3: Notification Purchasing Contracts

Notify of Purchasing Contract
Read Purchasing Contract

Step 4: Invoicing of demurrages

Read Customer Contract

Step 5: Payment of demurrages

Create Supplier Invoice

Demurrage Handling (click to enlarge)

Use Case 7: Dispatched Delivery Notification (B2B scenario)

The core B2B scenario Dispatched Delivery Notification is enhanced for oil-related products. It allows notification of outbound delivery details to a customer or ship-to partner. Based on the delivery notification the customer can trigger the inbound delivery creation.

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Send dispatched delivery notification

Notify of Outbound Delivery_V1

Step 2: Create inbound delivery based on delivery notification

Maintain Inbound Delivery based on Dispatched Delivery Notification_V1

Dispatched Delivery Notification (click to enlarge)

Use Case 8: Dynamic Scheduling

Dynamic Scheduling allows users to schedule & reschedule bulk commodity transports, with the ability to see and evaluate real-time all scheduling decisions impact on future projected stock.

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Calculate actual and projected stock of bulk commodities

Simulate Bulk Commodity Inventory Forecast

Use Case 9: Business Process Platform for Oil and Gas

In order to complete the Business Process Platform for Oil and Gas, additional services are provided to schedule, buy and move oil-related products

and

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Service enablement of bulk commodity nomination

Create Bulk Commodity Nomination
Change Bulk Commodity Nomination
Read Bulk Commodity Nomination
Find Bulk Commodity Nomination by Basic Data
Notify of Bulk Commodity Nomination

Step 2: Service enablement of bulk commodity loading report
(TSW Ticket)

Create Loading Report
Change Loading Report

Step 3: A2A services for purchase order

Maintain Purchase Order_V1
Inform of Purchase Order Creation
Inform of Purchase Order Change

Step 4: A2A services for goods movement

Create Goods Movement _V1
Notify of Goods Movement

 

Use Case 10: Lean Sales and Delivery Process - By Command Alkon Incorporated

This use case provides a solution for the Ready-mixed concrete industry when the sales and delivery process is managed in a 3rd party system. On completion of the delivery process the transactions are moved into SAP ERP for billing purposes.
 

The following table summarizes these steps and the associated enterprise services:

Step

Enterprise Service Invoked

Step 1: Create sales order

Create Sales Order_V2

Step 2: Create outbound delivery with reference to sales order

Create Outbound Delivery with Reference to Sales Order

 

 




Certified Partner Applications implementing this ES Bundle

Certified Partner Applications for Supply Chain Operations and Execution for Oil and Gas

Partner Company

Command Alkon Incorporated

Name and Version of the Certified Product

COMMANDseries 3.8

Validity of the certification

October 28, 2012

Brief Description of the Certified Product

COMMANDseries Order Management and Ticketing modules are specifically developed for the Readymix industry fulfilling the specific needs for this.
Order Management allows for creating and changing daily orders based on existing contracts of for non-contract customers. The delivery schedules created from these orders allow the readymix customers to optimize their plant and fleet capacity. 
Delivery Management module provides a schedule for producing and shipping readymix to allow for an un-interrupted pour of concrete while providing a real-time overview of the fleet- and order- status

Implemented Use case(s)

Use Case 10: Lean Sales and Delivery Process - By Command Alkon Incorporated

Future Directions

Future Directions
In the future, this bundle could be enhanced by the addition of enterprise services in the following areas:

  • Production Scheduler's Workbench (PSW) Hub integration
  • Demurrage handling (to minimize demurrage costs)
  • Pricing and credit check to protect the company from customers who make purchase without the ability to pay

System Requirements

Related ES Bundles

SOA Homepage on SDN
Industry xApp Physical Movement (PDF)
Flexible and Automated After-the-fact Processing in the Oil&Gas Industry - ERP Integration via xPHM by Volker Keiner
Industry Composite Applications on SDN

KSS RackPrice