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.
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 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 GasIn 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:
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. |
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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 customers system enviroment.
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
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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: |
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If a sales movement needs to be corrected, the following services will handle that process:
- Cancel Goods Movement
- Change Outbound Delivery
- Change Sales Order
- Create Goods Movement with Reference_V1
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
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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: |
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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
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Physical movement provides services for a composite xPHM, in order to handle and automate subsequent SAP ERP transactions related to physical movement scenarios. The following table summarizes these steps and the associated enterprise services:
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Use Case 4: Integration of KSS RackPrice
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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:
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Use Case 5: Pricing simulation and credit check
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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:
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Use Case 6: Demurrage Handling
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Demurrage handling provides basic services for a potential demurrage tool (xApp) in order to simulate and calculate demurrages and to trigger subsequent invoicing / payment. The following table summarizes these steps and the associated enterprise services:
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Use Case 7: Despatched Delivery Notification (B2B scenario)
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The core B2B scenario Despatched 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:
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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 |
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| 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 Plattform for Oil and Gas, additional services are provided to schedule, buy and move oil-related products
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The following table summarizes these steps and the associated enterprise services:
| Step | Enterprise Service Invoked |
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| 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
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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:
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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 industy fullfilling 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 modudule provides a schedule for producing and shipping readymix to allow for an un-intterupted 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
- SAP ERP 6.0
- SAP enhancement package 4 for SAP ERP 6.0
- SAP Supply Chain Management for Oil and Gas
- SAP Downstream Marketing and Logistics for Oil and Gas
- IS-Oil 604
Related ES Bundles
Links
SDN and SAP Links
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
