Shell, i2 Collaborate on Suite

Modular supply chain solution aims to streamline downstream oil value chain

Dallas  December 11, 2002  Shell Global Solutions, part of oil and chemicals company Royal Dutch/Shell Group, and solution provider i2 Technologies have completed the design phase of i2 Downstream Oil, a modular supply chain management suite for the downstream oil industry.

Shell Global Solutions is a network of technology companies within the Royal Dutch/Shell Group, providing technology and consultancy services, primarily to the oil and energy industries, through a staff of 3,000 operational, technology and consulting staff. i2 specializes in supply chain solutions.

Energy and chemicals companies, like enterprises in other sectors, are examining their supply chain practices to find opportunities to improve operational efficiencies and achieve bottom line savings. i2 said that Downstream Oil has been designed to improve business operations from crude oil acquisition to terminal and depot management by streamlining the complex matrix of logistics, manufacturing, marketing and sales activities of the downstream oil value chain.

"The development and successful implementation of a fully functional, integrated supply chain solution for downstream oil could revolutionize the industry and change the face of how the business is run," said David Ritter, leader in downstream oil/supply chain for Cap Gemini Ernst & Young's management consulting practice. "Our work indicates a solution [that] enables complete physical and financial visibility from crude to customer, combined with near real-time decision making, could increase downstream profitability by 50 cents per barrel on average."

Based on i2's platform of supply chain solutions, Downstream Oil will include modules for demand planning and fulfillment, supply chain planning (across a network of manufacturing and distribution sites), and distribution and refinery scheduling. The software has been designed to support collaboration that can lead to improved flexibility across the supply chain and faster decision-making while maintaining visibility over the entire supply chain.

The solution is intended to help companies optimize margins across their supply chain network and within individual refineries, increase revenues thanks to greater flexibility and responsiveness to market opportunities, reduce operating costs through improved stability of refinery and distribution operations, cut crude acquisition costs via improved alignment of crude selection with end product demand and shrink overhead thanks to a synchronized decision-support system.

i2 and Shell began collaborating on i2 Downstream Oil in March 2002. During the initial design phase, engineering teams from i2 and Shell defined the specifications for aligning supply chain operations across multiple countries, demand areas and refinery production centers. Shell Oil Products U.S. is beginning to deploy one of the first elements of the suite, Demand Planner Downstream Oil.

"Traditionally, the supply chain for the petroleum industry has been driven by supply rather than demand," said Greg Lewin, incoming CEO of Shell Global Solutions. "This joint development agreement changes the rules in terms of combining tools and business processes that are designed to help petroleum companies focus their strategy from a demand perspective."

i2 and Shell Global Solutions will jointly market Downstream Oil on a global basis.