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Blog December 2020 Updated July 2023

How the oil and gas industry optimises down-stream distribution

AMCS Fuel Planner replenishes stocks based on forecasts and vendor managed inventory

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Jan Tønder

Intelligent Optimization Solution Advisor

AMCS Fuel Planner replenishes stocks based on forecasts and vendor managed inventory

Downstream oil and gas distribution is where it all comes together: distribution of liquid fuel to tanks and gas stations based on automatic order generation of replenishments and just-in-time deliveries. "These are typical challenges the oil and gas industry has to deal with, says Jan Tønder, who has years of experience in the transport planning and optimisation industry. "Innovative technologies are key to prevent negative consequences such as tanks running dry or stocking too much fuel."

From practice, Jan knows that the solution to tackle these challenges is forecast-driven deliveries. "This balances fill-levels of the tanks with new deliveries while at the same time optimising the utilisation of the assets, vehicles and drivers. The optimum just-in-time delivery for tank refills is based on historical data and registration of fill levels with dipstick or sensor readings, which generates a future consumption forecast."

Solution specifically geared to the oil and gas industry

The orders for the demand-driven deliveries, which he is talking about, are automatically planned and optimised by AMCS Fuel Planner. This state-of-the-art technology combines intelligent optimisation at lightning speed, calculating algorithms with IoT (the Internet of Things). "The industry-specific system covers the entire planning process, from longer-term planning to operational, incremental planning and scheduling, real-time execution of orders and the delivery of operational data for follow-up, reporting and billing or self-billing."

According to him, with its extended range of functionalities, the solution is specifically geared to the requirements of the oil and gas industry. "One of the main features includes the synchronisation of run-dry’s based on forecasting. In one round-trip, tanks either at the same location or close by, are filled-up to a level that predicts they will approach run-dry simultaneously. Thereby the roundtrips are optimised. Other functionalities of AMCS Fuel Planner, he mentions, are compartment planning, part-load goods distribution in cylinders and/or bottles, as well as reconciliation and the possibility to add surcharges to the deliveries.

"Additionally, the solution includes different features for bulk distribution such as re-calculation of deliveries based on real-time data exchange of actually delivered quantities. For the industry, this is of crucial importance", he emphasises. "The systems provides the difference between the planned and loaded orders, and the actual delivered quantities and volumes. This information enables companies to execute extra orders using the remaining quantities."

Stock replenishments based on Forecasting and Vendor Managed Inventory

Also, one of the core essential features of AMCS Fuel Planner is to replenish stocks based on forecasting and VMI (vendor managed inventory), says Jan Tønder. “The consumption is forecasted based on actual dipstick measurements or sensor readings, providing data on the actual consumption and the remaining volume in tanks. The system automatically uses this data for smart, optimised replenishments. Orders are automatically generated and ready for distribution.”

Transport costs reduction and improvement of operational efficiency

Due to the advanced functionalities, AMCS Fuel Planner enables companies to achieve significant benefits. Jan Tønder: “One of them is substantial savings in transport costs and a significant improvement of operational efficiency leading to an increase in turnover and margins.”

As one of the other examples, he mentions reduced manual effort due to the complete end-to-end automation and digitisation of the entire planning process. “One of the other benefits is also the optimisation of the utilisation of the fleet with, as a result, reductions in the number of vehicles and vehicle movements. Furthermore, customer satisfaction is improved due to optimum fill levels, the visit accuracy and improved service. And also, of the utmost importance: employee satisfaction is considerably increased due to a stress-free planning and order entry environment.”

CO2 emissions contribute to sustainable goals of the oil and gas industry

Translated into benefits, this leads to crucial time savings of 25 to 75% spent on planning and resource rostering. Furthermore, there is 30 to 60% less time spent on registration, reporting, administration and follow-up. AMCS Fuel Planner also leads to a reduction of 5 to 10% in the number of vehicles required. “According to Jan Tønder mileage and driving time is reduced by 5 to 20%. “Down the line, this also results in a 5 to 20% reduction of CO2 emissions - a very important net benefit that also contributes to the sustainability goals of the oil and gas industry.”

The results, he sums up, are underpinned by companies’ experiences with AMCS Fuel Planner. For instance, a large Nordic player that has deployed the AMCS solution increased the productivity of the delivered litres of fuel per mile by 10%. Furthermore, there was a 40% reduction in planning time and a 20% reduction in fleet size. Also, a large European player saw a decrease in the truck fleet of at least 10% attributed to AMCS Fuel Planner, while at the same time experiencing a significant improvement in customer service levels. And last but not least; the time spent on planning saw a staggering reduction of 50% - literally cut by half.

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