Work in Progress Marathon THD Night Master

ORGANIZATIONAL ANALYSIS
SOUTHEAST LIGHT PRODUCTS SUPPLY

Vanessa Gonyer
Garry Gross
Judson McCulloch
Zac Shoup
Theodor Stiegler
MARATHON PETROLEUM COMPANY LP
MARATHON PETROLEUM HISTORY
1887 1890 1938 2010
125 YEAR JOURNEY

Several small oil
companies combine
to form Ohio Oil
Company in Lima,
Ohio.
#1 well brought in
brought in near
Findlay, Ohio

Speedway is born in
Michigan.
Marathon
Petroleum becomes
a stand-alone
refining, marketing,
and transportation
company.
INDUSTRY COMPARISON
ORGANIZATIONAL ANALYSIS PROJECT 3
WHAT DOES MARATHON DO?
WHAT DOES THE SOUTHEAST SUPPLY TEAM DO?
Provide LP to 38
Terminals
7 States
Jobbers Pull
From Terminals
Gas Dispatched
to Stations
SERVICES PRODUCED AND PROVIDED
MARATHON MISSION
MPC
4
th
Largest refiner & Marketer
Safety
Environmental Stewardship
Integrity
Corporate Citizenship
SE Supply
Live MPC Values
Provide Consistent & Adequate Supply
Commitment to Product Quality
MARATHONS REFINING SYSTEM
7
Fifth largest U.S. Refiner; largest in
the Midwest
Total refining capacity:
1,593,000 BPD as of Feb 1,2013
Approximately 6% of total U.S.
capacity
Crude throughput in 2010:
1,173,000 BPCD
Feedstock/Blendstock Inputs:
162,000 BPCD
Pipelines Terminals
Refineries
Coastal water
terminals
Inland water
terminals
Marketing Area
Detroit: 106,000 BPCD
Canton: 78,000 BPCD
Catlettsburg 212,000 BPCD
Robinson: 206,000 BPCD
Garyville: 464,000 BPCD
Texas City: 76,000 BPCD
Galveston Bay: 451,000 BPCD
TERMINALS AND TRANSPORT
8
Third largest terminal system among
R&M companies
63 owned and operated terminals and
45 third party gasoline, diesel,
kerosene, jet fuel terminals
21 owned and operated and 12 leased
heavy oil, coke and asphalt
terminals
122 owned transport trucks
263 transport loading racks
ca. 1,760 owned or leased railcars
Pipelines Terminals
Refineries
Coastal water
terminals
Inland water
terminals
Marketing Area
LIGHT PRODUCT SUPPLY CHAIN
Refinery
Terminals
Speedway
Brand &
Wholesale
Exchange
Pipeline
Refinery Rack
Marine
Transports
Renewable
Fuel Suppliers
Transports
MARATHON SE SUPPLY SYSTEM
Environment Outputs

Throughputs

Inputs
Crude Oil
Raw Materials
Refinery Activity
Scheduling
Production
Planning
Communication
Technology
Competition
Economic
Forces
On Time
Delivery
Quality
Lower Process
MARATHON PETROLEUM
MPC DEMAND PULL PLANNING SYSTEM
Light Products
Operations
Planning
Marketing
Planning
Refining
Planning
Trading
Market
SD&P
Feedstock
Planning
Order Placement
Order Fulfillment
Start
End
SWOT
SWOT ANALYSIS
Strengths
Integrated Downstream Operations
Large Refining Capacity
Large Terminal Network
Updated Refineries
Strategic Refining Locations
Close Proximity to Customer Base
Weaknesses
No Upstream Operations
Commodity Price Volatility
Lack of Scale
Segment Overcapacity

Opportunities
Increased Diesel Demand
Increased N. American Oil Production
Continued Split-up of Oil Industry
Biofuels and Natural Gas
Threats
Regulation
Increased Competition
Commodity Price Volatility
Alternative Energy

MAJOR CHALLENGES FACING SE SUPPLY GROUP
External Challenges
Laws &
Regulations
Inclement
Weather
Market
Fluctuation
All Factors Affect MPCs Image
MAJOR CHALLENGES FACING SE SUPPLY GROUP
Internal Challenges
Technical &
Operational
Bureaucracy
Culture
GOALS, STANDARDS & TARGETS
MPC is strategically positioned to capture value from emerging market realities
as they reshape our energy landscape.

T Thomas J. Usher
President of the Board of Dir. in 2012 Annual Report

MPC seeks to strike a balance between investing in the business and returning
capital to shareholders. The expectations, targets and objectives for individual
divisions and subsidiaries are tied to these targets of profitability and growth.

GOALS, STANDARDS & TARGETS
Availability of Supply
Flexibility
Coordination = Growth
Supply Image + MPC Image = GROWTH
INDIVIDUAL PERFORMANCE METRICS
PERFORMANCE MANAGEMENT
Performance
Objectives

Live Marathon Values
Employee Development
Product Quality Initiatives
Opportunity Management
System
Individualized Goals

Competencies

Adaptability
Business Partner
Communication
Critical Thinking

SE SUPPLY STAKEHOLDER MAP
CODE OF ETHICS
GUIDING QUESTION
When in doubt about what to do, ask
yourself this question:

Would I be proud to explain my actions to
my family or fellow employees
or to millions of people around the world on
tonights news broadcast?
CODE OF ETHICS [cont.]
RESPONSIBILITIES
One
Another
The Public
The
Environment
Marathon Code of Business Conduct
ORGANIZATIONAL ENVIRONMENT
MPC General/Specific
Environment
Light
Products
Supply
PRODUCTS

Marathon Branded Gas: With STP Additive

Distillate
Low Sulfur and Ultra Low Sulfur Diesel
Fuel
Kerosene
SERVICES

Third Party Terminal Throughput

CUSTOMERS
Petroleum products marketed in the Midwest, Gulf Coast &
Southeast Approximately 5,000 Marathon brand locations
owned by independent entrepreneurs in 17 states

CUSTOMERS [cont.]

Exchange Customers: MPC contracts with competitors in differing
geographical locations to supply products on their behalf based on
competitors supply and MPCs need in differing locations.

Whole Sale Discretionary Customers: Independent purchaser of products;
typically represent small vendor mom and pop shops

Trading Partners: Buy large supplies for Global Energy providers; procurement
through overseas barge
MOST INFLUENTIAL FORCES

Marathon Oil Corporation still a main supplier and upstream provider.

Efficiency and effectiveness of the seven refineries and their ability to provide
Light Products Supply the finished products to market and transfer.

Extremely aggressive and continuously evolving competition.

International, Federal, and State regulatory bodies.

Stock Exchange Pricing of Raw Product: Pricing all based on future trading value
and is influenced by social and political forces.

COMPLEXITY
EXAMPLE:
If a new environmental regulation is sanctioned it influences multiple
general and specific forces.

The regulation may create a ripple effect influencing uncertainty in the
environment.

COMPLEXITY
EXAMPLE:
If a new business incentive is sanctioned it influences multiple general
and specific forces.

The regulation may create a ripple effect influencing uncertainty in the
environment.

DYNAMISM

Changes Quickly

Changes Often
RICHNESS
EVERYONE WANTS THEIR SHARE:
THEY WILL TAKE YOURS ALSO

HIGH UNCERTAINTY
Suppliers
Marathon
Petroleum
Company
(Light Products
Division)
Customers
Resellers/End users
18 state marketing area
62 company-owned
terminals
45 third party terminals,
unbranded jobbers,
airlines, transportation
industry, railroads, marine
companies, and utilities

Crude Oil
(53% sour/47% sweet)
-54% US Companies
-30% International
-16% Canada

-Supplier Diversity
Initiative

-Pipeline
-Refineries

SYMBIOTIC INTERDEPENDENCE
Suppliers
Marathon
Petroleum
Company
(Light Products
Division)
Customers
Resellers/End users
18 state marketing area
62 company-owned
terminals
45 third party terminals,
unbranded jobbers,
airlines, transportation
industry, railroads, marine
companies, and utilities

Competitors
Valero, Exxon, Philips, Shell,
BP, Chevron, Citgo, Tesoro
Competitive
Interdependence
COMPETITIVE INTERDEPENDENCE
INTER-ORGANIZATIONAL LINKAGE MECHANISMS
Reputation
Merger/Takeover
Strategic Alliance
Franchising
RECOMMENDATIONS
Micro
Understand
competitor
pay
structure
Mezzo
Continue to
explore
backward
integration
strategy
Macro
Large-scale
information
sharing
between
stakeholders
CORE COMPETENCY
Logistical Planning
Customer responsiveness and continuous availability of light products. MPC
provides value by establishing a petroleum distribution network that is
continuous and reliable.
Terminal Operations
Safety, Integrity, responsiveness, cleanliness and smooth and reliable
processes
Quality
MPC provides gasoline, ultra-low diesel, and kerosene that are supplemented
with STP additives. These additives increase quality of the petroleum products
and subsequently create a cleaner burning and more efficiently burning
product.

37
FUNCTIONAL-LEVEL STRATEGIES
38

Employee development is emphasized and fostered. They provide
flexibility and financial contribution for their employees to increase
knowledge base and expertise. This improves their functional resources.

Continuous promotion and marketing of their simple roots with emphasis
on quality, values, and trust. MPC continues to build their corporate
reputation in the field of petroleum products.

Functional Resources

Organizational Resources
BUSINESS-LEVEL STRATEGY
39
Logistics
Marketing & Reputation
Control of Resources
COMPETITIVE ADVANTAGE
CORPORATE LEVEL STRATEGIES
Continue Promoting Safety
MPLX 3
rd
Party Terminal Services
Grow Brand & Wholesale Customers
Grow Diesel Export Business
Maintain & Grow Pipeline Space
INTERNATIONAL OPERATIONS
Traders Make
Sale
Customer
Loads at
Refinery
Destination?
GOODS AND SERVICES/UNCERTAINTY
GOODS & SERVICES UNCERTAINTY?
Goods & Services from Light
Products
Lower
Prices
On time
delivery
Quality
Product/
Petroleum
Inputs with greatest
uncertainty
Refinery
Activity
Raw
materials
Crude oil
TECHNOLOGY
Role of Technology
Knowledge
Planning & scheduling to the various
terminals
Depends less on the pipeline or
machinery to achieve
Materials
Process starts from raw materials for
production to final good
Material goes through a process for
the pipeline and for distribution
PIPELINE CUSTOMER SERVICE SITE
VISUALIZATION TOOLS
TECHNOLOGY CONTINUOUS PROCESS
Process production combined with
preparation of a product by large
batch or mass production method
Process production of chemicals
Continuous flow production of
liquids
TASK COMPLEXITY
TASK INTERDEPENDENCE
Refinery
Terminals
Speedway
Brand &
Wholesale
Exchange
Pipeline
Refinery Rack
Marine
Transports
Renewable
Fuel Suppliers
Transports
GROWTH
Founded in Ohio in the late 1880s

GROWTH [cont.]
GROWTH SE Light Supply
Significant presence in SE since 1970s purchase of Garysville, LA refinery.

- 22% leap in branded locations in the past five years
- expansion of Speedway locations in the SE,
- 2009 expansion of Garysville LA refinery for $3.9 billion)
- Recent purchase of former BP Galveston Bay refinery + assets

CHALLENGES & DECLINE

Marathon has been in the oil industry for 125 years, and experienced various
phases of decline often coinciding with or resulting of general economic
decline.

Marathon likes to build consensus before they react!

While some suggest that Marathons managers are reluctant to change, could the
generally conservative and slow moving implementation of changes be a
strong suit, protection from overreactions to minor market fluctuations,
allowing Marathons longevity?

Strong brand image has allowed Marathon to hunker down and weather storms.

DESIGN

Differentiated?
YES
Centralized?
YES
Decentralized?
YES
Mechanistic?
YES
Organic?
YES

Hierarchical?
YES
Direct Contact?
YES!
Mutual
Adjustment?
YES

Standardized?
NO!
STRUCTURE
President
Marketing Sales Scheduling Accounting Inventory Supply
Crude
Feedstocks
Natural
Gas
Refining
MULTI DIVISIONAL PRODUCT DIVISION STRUCTURE
from:
Refining & Transportation to
Marketing to
Speedway Convenience Stores / Product Retail

means:
Refinery Division [7 refineries] to
Pipelines & Transport = Midstream [MPLX] to
Product divisions:
Light Product (Diesel and Gasoline includes marine and air-transport fuels)
Asphalt, Heavy Oil (Fuel Oil)
Petroleum Coke (industrial furnaces)
Specialty products: Propane, sulfur etc.

STRUCTURE
MPCS HIERARCHY OF AUTHORITY
Gary Heminger
CEO
Mike Palmer
VP SD&P
Functional VPS
Dave Wikehart
Director SD&P
Refining Marketing
Brad Levi
LP Optimization
Light Products
Organizations
LIGHT PRODUCTS HIERARCHY
Brad Levi
Lt Product Optimization
Jim Roche
MW Scheduling
Jon Allison
SE Scheduling
Mark Zeto
Infrastructure Planning
Angela West
Operations Planning
SOUTHEAST LIGHT PRODUCTS HIERARCHY
Jon Allison
SE Scheduling Manager
Judson McCulloch
Gasoline Destinations
Distillate
Destinations
Garyville Refinery FLA Destinations
Texas City
refinery
Galveston Bay
Refinery
Gas Origins &
Vessels
Diesel Origins
& Vessels
CONTROL, INNOVATION & EFFICIENCY
Control:
Risk Management
Safety Protocol & Procedures
vs. challenges of
Regulatory & Geo-political changes
Crude supply / feedstock pricing
Seasonality
Innovation:
Refining [specifically of non-standard crude]
Safety Equipment (video)
Efficiency:
MPC aims to meet the needs of energy consumers
in the most efficient ways possible.
Gary Heminger, CEO
AUTHORITY & CONTROL
24,000
Employees
130 in SD&P
10 in SE Scheduling
AUTHORITY & CONTROL
Tasks Strategy
COMMUNICATION SE SUPPLY GROUP
SE
Mission
Pricing
Marketing
Supply Trading
Refining
EMPLOYEE SENTIMENT SURVEY
EMPLOYEE SENTIMENT SURVEY [cont.]
CULTURE & DECISION MAKING

Survey clearly shows a committed workforce:
For SE Light Supply it appears that an attitude of purely Me myself and I is NOT
an option; as scheduler depends on marketing depends on supply depends

Additional SURVEY FINDINGS:

POSITIVES
- coworkers & relationships
- Sense of achievement
- Opportunity for growth / education
- Benefits & pay
- Variety

CULTURE & DECISION MAKING [cont.]

CONCERNS:
- constant pressure to perform, work never shuts off
- Work life balance is askew / strain of on-call status
- Bureaucracy divisional rivalries
- At times unclear/ ambiguous communication and
- Unclear contract changes merits

OPPORTUNITIES/ SUGGUESTINS:
- Motivate younger employees to reduce turnover
- Reduce Bureaucracy
- Empowering lower level employees to understand processes they are part of

WHAT IMPROVEMENTS & CHANGES?

I. IMPROVING RELATIONSHIPS
cross training and building communication so that each group is able to
understand the whole-systems impact of decisions

II. POSITIVE APPROACH
introducing a more positive/appreciative inquiry attitude. Refocus the
approach to problem solving to hopefully result in less blame game and
more focus on building skills

III. COMMUNICATION
Create forums for employees to share ideas that may be outside the box or
outside their department/ division

QUESTIONS?
WORKS CITED
MPC 2013 Profile Book
www.marathonpetroleum.com/content/documents/investor_center/fact_books/2013ProfileBook.pdf
MPC 2012 Annual Report
http://www.marathonpetroleum.com/Investor_Center/Annual_Report_10K/
History of Marathon
http://www.marathonpetroleum.com/About_MPC/Corporate_Profile/History/
News article: Marathons Brand Promise
www.cspnet.com/news/fuels/articles/marathons-brand-promise
Marathon
http://www.toledoblade.com/Energy/2011/08/21/Marathon-Petroleum-works-to-add-to-retail-side.html

72

Work in Progress Marathon THD Night Master

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Work in Progress Marathon THD Night Master

Uploaded by

Copyright:

Available Formats

ORGANIZATIONAL ANALYSIS

SOUTHEAST LIGHT PRODUCTS SUPPLY

You might also like