Transcript Motiva and its Refineries
GROUP MEMBERS: HESHAM AL-IKHWAN DANIEL LEON ZEYNEP OZCAN ALBERTO PEREZ AYE AYE PWINT
COMPANY BACKGROUND
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Joint venture owned by Shell ( 35%), Texaco (32.5%), and Saudi Aramco (32.5%).
Headquarters in Houston, Texas Major business - refine and market gasoline and petroleum products under the Shell and Texaco brand names in 26 Eastern and Gulf Coast States and Washington D.C.
It is the third largest retail gasoline marketer in the U.S. and the sixth largest refinery Its refineries are capable of refining approximately 825,000 barrel per day Financial
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Revenue of $12.2 billion, Net Income for 1999 $69 million Atlanta Branch
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Supply Atlanta for 100 miles in radius
Supply Chain of Motiva Facility at Atlanta
Supply Chain for Atlanta Plant (APPENDIX B) REFINERY BY COLONIAL PIPELINE BY EAGLE TRANSPORT AND MANSFIELD TRANSPORT INVENTORY CUSTOMERS RETAILERS MOTIVA PLANT IN ATLANTA OWN TRANS PORTATION MODE WHOLESALERS BY MANSFIELD TRANSPORT COMMERCIAL BUSINESS
Motiva and its Refineries
Port Arthur, TX Refinery Convent Refinery Delaware City Refinery Norco Refining Company
Colonial Pipeline
• Extends from Houston, TX to Linden, NJ •Total Length of Pipeline is 2889 miles •2,271 miles of stub lines serve major cities and airports •Capacity of 2,148,000 barrels per day •89% total utilization
Colonial Pipeline
• Product move in the mainline at 3 to 5 mph •Slower in Stub lines due to thickness differences •Transported in batches of a minimum of 75,000 barrels •Complex Separation of Products through interfaces and pigs •Mixed products at interface are sold for rerefining
Pipeline as a Mode of Transportation
Reasons for using a Pipeline: • Cheaper than any other mode of transportation Transporting twelve 6.4 gallons of gasoline through a pipeline from Houston to New York is cheaper than to mail a one ounce first class letter this same distance •Reduced number of tanker trucks in highways (safety) •Dependable mode with steady throughput •Fewer breakdowns than other modes
OPERATIONS AT ATLANTA PLANT
• • • • • • • Located in Doraville, GA Plant carries four gasoline products: regular, mid-grade, premium, and diesel Refine products are transported via the Colonial Pipeline from Convent Total capacity of 302,000 barrels of product Working capacity is 50% of the entire capacity Three stations at the loading rack 10 to 12 minutes service time in the loading rack
Inventory at the Facility
Mr. George Marlatt (Facility Manager) 21 day lead time from Louisiana to Doraville Order cycle of 5 days Safety Stock of up to 2.5 days 35,000 barrels of Regular 11,250 barrels of Premium 15,000 barrels of Diesel 2 Tanks per product type
Inventory at the Facility
Marketing Department: up to 2.5 days of safety stock Facility Manager: • would like to keep more than 2.5 days of inventory • “High inventory levels promote growth” Our perception: •Not even close to Stockout in 3 years •High inventory levels tie up space and capital •Studied Reduction of inventory levels
Blending Process
Process of adding additives to unblended products Where?
Takes place at the loading rack When?
Right before the product is loaded to a truck Two types of blend: Texaco Blend: used in all Texaco branded products Generic Blend: used for unbranded products
Advantages of Blending at the Rack
Postponement of product differentiation until last step • Lower levels of inventory •Ability to forecast aggregately •Better space utilization
Type of Customers
Inventory Customers 25% of total business Commercial Business 15% of total business Motiva Retail Account 10% of total business Wholesale Account 50% of business
Transportation from Motiva
Motiva is only responsible for transportation of inventory customer’s products Eagle Transportation •Transportation split equally by volume • Total of 74 Gas Stations •60 Texaco •14 Independent • Less than 5 stock outs per quarter get bonus •10 or more stock outs carriers get penalized Mansfield Oil Inventory Customers Motiva
Eagle Transportation
Ben Hall - Operations Manager •Located 1/2 mile from Motiva Facility •Capacity: 100 truckloads/day with 20 tractors and 20 trailers •20 drivers working double shifts •Drivers are paid by trips •Operating at 70% capacity
Procedure at Eagle Transportation
•Receives daily emails from Texaco headquarters with inventory levels at gas stations •Operators enter received data into software •Determine which gas stations have low levels of inventory and require service •Assign driver and truck to fulfill specific order •Driver’s procedure at Motiva
Inventory at Gas Stations
Two types of Gas Stations: •Texaco owned and operated •Independent gas stations with Texaco name Inventory difference: Texaco owned stations like to keep high levels of inventory Texaco already owns this product and is paying for it Independent gas station searching for optimal inventory levels