CHAPTER-

INTRODUCTION
Supply chain management in the petroleum industry contains various challenges,
specifically in the logistics area, that are not present in most other industries. These
logistical challenges are a major influence on the cost of oil. However, opportunities for
cost savings in logistics still do exist.
Like all other sectors, petroleum sector too facing a lot of competition and how difficult
is it to survive in this competitive world we all know very well. Technological changes,
trends, price fluctuation, government & other norms & many other things derive the
market these days. t !ecomes very necessary for every sector to !e updated every time.
The source of competitive advantage is found firstly in a!ility of the
organi"ation to differentiate its product, in the eyes of the customer, from its competition
and secondly !y operating at a low cost and hence greater profit.
n petroleum industry the product differentiation can !e made !y giving extra services to
the customer#s like$ providing news papers, tea$coffee, lottery, surprise gifts, dust
cleaning at the time of rifling fuel in the automo!iles. %s far as operating at a low cost is
concerned it can !e done mainly !y controlling the wastage & to have a good hold over
logistics.
f we talk a!out competitive success in commercial aspects, it derives from
cost advantage or a value advantage, or ideally !oth. The most profita!le competitor in
any industry sector tends to !e the lowest cost producer or the supplier providing the
product with the greatest perceived differentiated values. &ut situation !ecomes a !it
typical when the selling prices are !eing regulated !y the government. Here other
strategies are applied to hold the customers like extra services, 'uality standards etc.
(ompetitive scenarios pressuri"e the organi"ation to find new
ways to create and deliver value to customers. There is a growing recognition that it is
through logistics efficiency & effective management of the supply chain that the twin
goal of cost reduction & service enhancement can !e achieved. )ain constituents of
logistics are product handling *including storage & 'uality control+, inventory
management & transportation. &eing regulated in selling price of the petroleum products
!y the government, company in petroleum sector need to have product differentiation
through perks to the customers and not !y price differentiation !ecause that#s not in there
hands.
To gain a !etter grasp of the fundamental trade$offs in logistics, will divide logistics
activities into three categories,
-roduction
Storage
Transportation
The term ./esource0 applies to all of the factors of production, including materials *e.g.,
ron, fa!ric, and parts+, e'uipment *e.g., machines or vehicles+, energy *e.g., oil, coal,
electricity+ and la!or.
PRODUCTION, 1undamental logistics 'uestions are,
*2+ 3hen should a resource !e produced4 and
*5+ 3here should a resource !e produced.
The .when0 'uestion includes the topics of aggregate resource planning, and
production scheduling.
The .where0 'uestion includes the topics of facility location and production
allocation.
Some of the important production 'uestions are,
*a+ 3hat outside source should !e used to supply a part6
*!+ 3here should a new facility !e !uilt6
*c+ 3hen should a facility produce different items, taking into account,
Seasonal demand patterns6
7emand uncertainty6
(ost of operating single, dou!le, triple shifts6
La!or costs6
*d+ 3hen should a firm use two or more sources for a part6
5
INVENTORY, 1undamental logistics 'uestions are
*2+ 3hen should a resource *material, machine or la!or+ !e put in inventory and taken
out of inventory4 and
*5+ 3here should a resource !e stored.
The .when0 'uestion includes the general topics of economic$order$'uantity models,
safety stock models and seasonal models, and speciali"ed topics of fleet management,
and personnel planning.
The .where0 'uestions includes the topic of inventory echelons.
Some of the important inventory 'uestions are,
*a+ How much does it cost to store resources in inventory6
*!+ How much .safety stock0 should !e carried in inventory to prevent against running
out of a resource6
*c+ How much inventory should !e carried in order to smooth out seasonal variations in
demand6
*d+ 3here should replacement parts !e stored in multi$echelon inventory system6
TRANSPORTATION, 1undamental logistics are,
*2+ 3here should resources !e moved to, and !y what mode and route4
*5+ 3hen should resources !e moved.
The .where0 'uestion includes the topics of terminal location, vehicle routing, and
shortest path methods and network flow allocation.
The .when0 'uestion includes the topic of distri!ution rules.
Some of the important 'uestions are,
*a+ 3hen should shipment !e sent through terminals, and when should shipment !e sent
direct6
*!+ 3hich, and how many, terminals should shipments !e sent through6
8
*c+ 3hat are the !est vehicle routes6
*d+ 3hen should a vehicle !e dispatched over a route6
-lanning mplementation (ontrol
)anagement actions
/aw n$process 1inished
)aterial nventory 9oods
Logistics management
Customer
Suppiers
:atural
resources
*land,
facilities &
e'uipments
Human
resources
1inancial
resources
nformation
resources
Logistics activities
nputs into logistics
!ig- "#" - CO$PONENTS O! LO%ISTICS $ANA%E$ENT
;
< (ustomer Service
< 7emand forecasting
< 7istri!ution
communications
< nventory control
< )aterial handling
< =rder -rocessing
< -arts and service
support
< -lant and warehouse
site selection
< -rocurement
< -ackaging
< /eturn goods handling
< Salvage and scrap disposal
< Traffic and transportation
< 3arehousing and storage
)arketing
orientation
*(ompetiti
ve
advantage+
Time &
place utility
>fficient
movement
to
(ustomer
-roprietary
asset
=utput of logistics
$EANIN%
The simplest way to descri!e logistics is to say that it is all a!out ways and means of
meeting the demand for materials i.e. satisfying the customer with what he wants, when
he wants, where he wants etc. Logistics is, in itself, a system4 it is a network of related
activities with the purpose of managing the orderly flow of material and personnel within
the logistics channel.
t includes out!ound, in!ound, internal and external movements and returns of material
for environmental purposes. The logistics concentrate on dynamic processes, related to
the flow of materials and the relationship !etween the materials and their use at different
facilities.
The most wide spread definition from council of Logistics )anagement says that
.Logistics is the part of the supply chain process and plans, implements and controls the
efficient, effective flow and storage of goods, services and related information from the
point of origin to the point of consumption in order to meet customers re'uirements.0
!UNCTIONIN%
Logistics is responsi!le for all the movement that takes place within the organi"ation
whether it is in!ound logistics of incoming, raw materials or movement within the
company or the physical distri!ution of finished goods, logistics encompasses all of
these. Typical logistics framework mainly consists of -hysical Supply, nternal
=perations and -hysical 7istri!ution of 9oods and Services. To put it more simply, the
material supply logistics starts from the !ase level of .generation of the demand0,
through the .process of purchase0 and .supply of material from the vendor0 right through
to .final acceptance0 and .payments to the supplier0 and .issue to the indenter0 and has
to !e considered as a .one whole activity0 with each stage having an impact on price?cost
of material supply.
@
The logistics network re'uired to supply petroleum products from the refineries to the
end$users is a complex system of pipelines, ships, railways and trucks. =ften several
methods of transportation are utili"ed to move petroleum products from the refineries,
ports and large terminals to tremendously disperse markets all across the glo!e. The long
distances and variety of transportation modes used can pose challenges for the refiners
who must maintain strict product specifications. 7egradation or contamination of
product in transit can result in costly re$processing at the delivery point if the integrity of
the distri!ution system is not carefully monitored. This is increasingly important as
environmental regulations result in cleaner and more stringent product characteristics.
!ig "#& ' (o) c*art s*o)ing t*e mo+es o( transportation
%ir
3ater Surface
nland =verseas
/oad /ail -ipeline
$o+es o( Trasportation
A
$ODES O! TRANSPORTATION IN LO%ISTICS,
n order to transport material from one place to another Logistics )anagers are using
/ail, /oad, %ir, )arine & -ipe Line as the modes of Transportation. Logistics expert
needs to understand these modes !ased on priorities, product type, lead time etc. to
decide the appropriate mode of Transportation.
Rai, )ostly each and every refinery, terminal and depot maintain there own gentry to
handle petroleum product through railways. 7ifferent wagons are used for !lack oil
*furnace oil+ & white oil *petrol, diesel, naphtha etc+ & they do have different gentry. This
mode of transportation is used to transport product from refineries to terminal & depots.
Roa+, Bsed !y suppliers to deliver goods in a cost effective manner and !est suited for
short distances. )any transport companies have expertise for fast delivery. Tank trucks
are !eing used to transport the products from terminals to the refilling stations.
Air, Bsed mostly for delivery of high value and low volume goods from distant
suppliers, usually not connected !y any other mode of Transportation. t is also suita!le
C
for emergent item to !e imported for some specific re'uirement like D additives for
petrol, diesel, and kerosene are !eing import.
-lanes are also used to fulfill the emergency re'uirements in the
hilly areas.
$arine, This mode is ideal for transportation of heavy and !ulky goods and suita!le
for products with long lead times. Bsed for delivery of crude from distant places. t is a
cheap source of transportation for coastal areas with long
distance.
Pipe Line, This mode of transportation is !eing used !y oil sector companies for mass
movement of -etroleum products including gases. 7ue to 'uite low operating cost it is
one of the preferred modes of transportation.
There are some multi product pipelines which are !eing operated in ndia with the help of
intermediate management.
E
C*aracteristics o( +i((erent mo+es o( transportation
Air
< Su!stantial fixed costs
< Faria!le costs depend highly on distance traveled
< /apidly growing segment of transportation industry
< Lightweight, small items G-roducts, -erisha!le and time sensitive goods, 1lowers,
produce, electronics, mail, emergency shipments, documents, etc.H
< Iuick, relia!le, expensive
< =ften com!ined with trucking operations
< Bsed for transporting products in hilly areas
at the time of emergency.
Rai
< Low cost, high$volume
G-roducts, Heavy industry, minerals, chemicals, agricultural products, autos, etc.H
< mproving flexi!ility
< Suites when !ulk is to !e transported to long distances.
< High fixed costs, low varia!le costs
< High volumes result in lower per unit *varia!le+ costs
J
Truc-
< Lower fixed costs *don#t need to own or maintain roads+
< Higher unit costs than rail due to lower capacity per truck
< Terminal expenses and line$haul expenses
< )ost used mode
< 1lexi!le, small loads G-roducts, )edium and light manufacturing, food, clothing,
all retail goodsH
< Trucks can go door$to$door as opposed to planes and trains.
.ater
< High terminal *port+ costs and high e'uipment costs *!oth fixed+
< Fery low unit costs
< =ne of oldest means of transport
< Low$cost, high$volume, slow
< &ulky, heavy and?or large items *-roducts, :onperisha!le !ulk cargo $ Li'uids,
minerals, grain, petroleum, lum!er, etc +H
< Standardi"ed shipping containers improve service
< (om!ined with trucking & rail for complete systems
< nternational trade
Pipeine
< Highest proportion of fixed cost of any mode due to pipeline ownership and
maintenance and extremely low varia!le costs
< -rimarily for oil & refined oil products
< Slurry lines carry coal or kaolin
< High capital investment
< Low operating costs
< (an cross difficult terrain
< Highly relia!le4 Low product losses
2K
Ta/e "#0 - Comparison /et)een mo+es o( transportation
!actors Air $arine Truc-s Rai Pipeine
"1 Cost
costiest Less
costier
t*an
air)a2s
Least
costiest
Less
costier
t*an
marine
Huge
in(rastruct
ura
in3estment
/ut c*eap
in ong run
&1Suita/ii
t2
Sma oa+s
4
emergenc2
cases
5u- oa+
4 ocation
)*ere
pro+uct *as
to /e
+ei3ere+ is
near a port
Suits (or
sma
oa+s 4
s*orter
+istances
$e+ium
oa+ )it* a
me+ium
+istance
5u- oa+
)it* ong
+istances6
a3aia/iit2
o(
in(rastruct
ure is a
constraint
01 Sa(et2
Lesser sa(e
t*an
pipeine
Lesser t*an
air
transportat
ion
Least sa(e Lesser t*an
marine
Sa(est
71 Time
$ore t*an
pipeine
more t*an
air)a2s
more t*an
marine
$ost time
consuming
!astest
81capita
intensi3e
Less capita
intensi3e
t*an
pipeines
Re9uires
ess capita
as
compare+
to air)a2s
Least
capita
intensi3e
mo+e
Re9uires
ess capita
t*an
marine
transport
$ost
capita
intensi3e
$o+e o(
transport
22
:1Operatio
na cost
Hig*est
operationa
cost
Lo) as
compare+
to air)a2s
Lo) as
compare+
to
rai)a2s
Lo) as
compare+
to marine
Lo)est
operationa
cost
LO%ISTICAL CO$PONENT IN PYRA$IDAL !OR$
%ENERIC CO$PONENTS
t refers to the logistics mission of customer service, which is a driving force !ehind the
total logistics system. t includes
CUSTO$ER SERVICE
t integrates logistics system with marketing that determines
Logistics service re'uired for products &? or competitive advantage.
Service expectations of customer and there response.
nfrastructure re'uirements.
(orporate vision towards service goals
This can !e seen in the figure !elow
25
1ig 2.; $ Components o( ogistics in p2rami+a structure

PRI$ARY CO$PONENTS
These helps in smooth functioning of the total logistics system, including logistics network
design, order processing, transportation & inventory management. t includes
NET.OR; DESI%N
:um!er, si"e & location of facility network for logistics operations.
/elationships among the facilities at various locations.
nfrastructure of each facility centre &
There cost and customer service capa!ilities.
TRANSPORTATION
(ustomer
Service
:etwork
7esign
=rder
-rocessing
Transportation
nventory
)anagement
Storage &
3arehousing
)aterial
Handling
-rotective
-ackaging
nformation 1orecasting
-rocurement
-rimary
9eneric

28
Supportive
1leet management
Transportation cost & tariff
)odes of transportation and coordination !etween them
/e'uired, availa!ility & regularity of transportation service
Transit insurance & claim processing
Time, speed & intact delivery.
INVENTORY $ANA%E$ENT
Stocking policies for raw material, work in progress & finished goods
/eplenishment policy *just in time & push or pull strategies+
nventory cost
-roduct mix & stocking points
:um!er, locations & si"e of stocking points
ORDER PROCESSIN%
=rder receive & recording
=rder inventory interface procedures
7ispatch scheduling
=rdering and !ack order systems
SUPPORTIVE CO$PONENTS
These components facilitates smooth functioning of generic & primary components, it
includes
STORA%E 4 .AREHOUSIN%
nfrastructure facilities
=perational mechanism
2;
Bp to date recording of goods stock position
-rotecting & preserving the physical attri!ute of goods
-roper loading and unloading system
$ATERIALS HANDLED
Safe, smooth & speedy placing & positioning of goods to facilitate there movement
and storage
)aterial handling e'uipments selection & replacement policies
)aterial handling e'uipments operating cost
Storage & retrieval fre'uency of goods
PROTECTIVE PAC;A%IN%
-rotection from loss & damage
7esign of package re'uired for handling and storage
-ackaging cost
PROCURE$ENT
Fendor selection & management
Iuality specification
Supply schedule
Fendor company relationship
-rocurement cost
IN!OR$ATION
nformation re'uired for the logistics system
Source of data and its relia!ility
7&)S for processing, analysis & storage
2@
nformation cost
(omputer infrastructure
CHAPTER
$AIN DEPART$ENTS AT DEPOT<TER$INAL
%dministration &lock
Lu!es 7epartment
La!s
(ontrol /oom
Loading &ay
Sales & 7istri!ution
Health & Safety
%ENERAL .OR;IN%
Terminals are that part of supply chain which acts as a mediator !etween the refinery and
the refilling pumps. The entire product is dispatched from refinery and transported to the
terminals with the help of pipelines. )any of the 'uality checks had !een done at the
refinery itself !ut for maintaining the standard & to give the !est value to the customer
for the money they are spending, these 'uality checks are performed again. %fter the
product passes all the 'uality parameters it is than transferred to the storage tanks for
gauging and then the engineer intimate the refinery that we had received this much of
product with its specifications.
1or transporting the product from terminals to the refilling pumps, the pump owners
send their re'uirement?indent with a draft filled with the amount of the product, which is
2A
given at the Sales & 7istri!ution 7ept. *S&7 7ept.+. Here a slip known as 1%: is
generated after placing the indent. This fan is given to a T?T driver along with a magnetic
card in which information has !een feed through S%- *(omputer Software+ that which
product is to !e loaded, how much in different compartment of the truck and also on
which loading !ay the truck is to !e loaded. t also gives the time on which the refilling
will star & end as well. The same information is also there printed on the 1%: slip.
%fter taking this 1%: & magnetic card the T?T driver proceed towards the
loading !ay entrance, there at the check post this card has to shown in front of the card
reader which then opens the gate to enter the TT in the loading !ay. %s par the !ay
num!er & time printed on the 1%: slip the T?T driver takes the truck on the same !ay. %
card reader is also there near the loading arm where the card has to !e placed for ;$@
seconds for loading arm to store all the information. Than the loading arm is placed
inside the compartment and start the refilling. The arm is shifted to other compartment
when the first one is filled and than re$start the refilling.
n this way the whole TT is filled and also gauged at the same time
with the help of a dip rod & if necessary action taken immediately when something
seems a!normal. %fter refilling the TT is locked !y the workers at the locking !ay and
than moved out of the loading !ay.
This magnetic card is returned at the S & 7 7ept after the refilling. Than at last
the S&7 7ept. will generate the invoice which is given to the TT driver.

2C
There two kinds of product deliveries at the terminal $
2+ 7elivered
5+ >L)
n delivered the responsi!ility of the 'uality of the product up to the dealers end will !ear
!y the terminal?company itself !ut in >L) the responsi!ility will remain just up till the
product is in the premises of the terminal, just when the TT moved out the premise of the
terminal any loss in the 'uality of the product will !e the responsi!ility of the dealer
himself.
9enerally kerosene is given with >L) & petrol, diesel, %T1 etc are on delivered
!ases. 9enerally the tank trucks at the terminal are on the contractual !asis through
tenders with the transporters. Some of the pump owners do have their own TT & some
are also owned !y the corporation.
These days company is using more of transporters TT on contractual !asis, !eing the
reason that it will reduce the cost for maintenance, drivers etc. n nutshell, the company
reali"es the importance of outsourcing the road transportation.
/eceipt of -roduct
Storage &
-roduct Handling
TAN;S
7ispatch
!ig 0#" - !igure s*o)ing %enera .or-ing at Terminas
2E
1or making contracts with the transports the company raises tenders and asks each
transporter to give the 'uotes for three categories of delivering the product,
1or 1ree 7elivery Mone *17M+ with in the radius ;K kms from the terminal.
1or delivery with in the state.
1or delivery with in the adjoining states.
So the 'uotes from the transporters are placed in a ta!ular form starting from the
least in the L2 category than after the one which is more than rtes in the L2 as L5,
likewise up till L;.
%ccording to a rule given !y the government the rates given !y the
transporters in the L2 category could not !e negotiated. So, company first makes the
agreement with the one in the L2 category and moves towards the L5 group if the
re'uirement still lefts. So in this way this way the company prepares the re'uired fleet of
TT. The company also gives instructions like the TT which is under contract with =(L
could not involve in any of the side works as a part time jo!.

2J
9eneral safety checks of TTNs at the entrance of the terminal
ndent placing at the S & 7 7ept.
ssue of 1%: & magnetic card to TT driver
Loading of the TT at the loading !ay !y
showing magnetic card at the card reader
TT moves towards the loading
!ay for filling
Locking of the TT at the locking !ay
>ach compartment is filled !y the staff at the
loading !ay with the loading arm and checks
the 'uantity there after with dip rod
CHAPTER

I+enti(ication o( Pro/em
The petroleum !usiness is very asset intensive, with multiple islands of independent !usiness
units competing for profita!ility. This internal competition drives profit out of the system and
hinders enterprise potential. 1or decades, the solution to this pro!lem was !eyond the reach
of petroleum executives.
The major players in the field are =(L, &-(L, H-(L etc. These days the main area of
concern is logistical cost, !eing the reason that it comes just next to the crude oil cost in this
industry as the various process are involved as a matter of fact the cost is concerned.

personally visited the terminals and understood the whole working and than
after implicated my study in the field, had given some of the recommendations which might
!e the one on which the company would !e working up on is & might !e they are yet to !e
considered !y the company
CHAPTER
RESEARCH $ETHODOLO%Y< DESI%N
The project was completed in two phases,
TT driver takes the TT out of the
loading !ay after filling
TT#s driver returns the
magnetic card at the S & 7
dept.
nvoice generation !y the S & 7 7ept.
&efore generating invoice the officer at the S & 7
7ept. matches the time with the one mentioned on
the 1%: slip & if some strange thing seems,
necessary action it taken immediately
TT moves out of the terminal and moves towards its location
!ig ' 0#& - PROCESS INVOLVED IN TT !ILLIN% AT THE TER$INAL
5K
!IELD RESEARCH, n this phase of project had !een at 5 location s of =(L D
&ijwasan & /ewari terminal. There understood the whole
working done at the terminals including various procedures
involved in TT filling starting from indent placement upto the
invoice generation.
DES; RESEARCH, n this phase had reviewed a lot of data through internet like
e$!ooks, had surf a lot of sites, had read some !ooks than
after all this had got to know various trends in the product
logistics, various modes for transportation, on what !asis the
modes are chose etc.
Data Sources
Primar2, The primary data was collected !y interviewing the officers there in the
operations dept. as well as officers at the terminal, with the help of a
'uestionnaire. %lso the data have !een collected !y visiting the terminals
and !y asking various workers & staff personnel at the terminal.
Secon+ar2, The secondary data is collected !y visiting various nternet sites and
studying !ooks on supply chain management, distri!ution & logistics
management & !y reading articles in the newspapers.
Sample Design
Samples were collected !y visiting various petrol pumps in 7elhi, 9urgaon, & /ewari.
&y visiting them got to know from which terminal they are taking the delivery of the
product. %s far as the 'uestionnaire is concerned had taken views of E people. So my
sample si"e is E.
$et*o+oog2
1or the comparative logistical study of &ijwasan & /ewari terminal, firstly had visited
to !oth these terminals & understood there working with the help of officers and staff
there at the terminal. Than after covering the general working there at the terminal like D
52
safety checks in the T?T, placing of the indent, issuing 1%:, locking$unlocking, refilling,
invoice generation and many more, had collected some information from the officers &
workers like annual through put of products, num!er of T?T regularly loaded, products
handled etc.
=n the !asis of this data have an empirical test and using graphs will !e showing the
results. =ther than that will !e making a 'uestionnaire which will !e more or less a case
study in the end of this comparative study. This 'uestionnaire will !e filled !y the senior
officers in =(L & will give an idea that which area is to focus upon from the options
taken, to make the logistics more effective and efficient.
TOOLS
will !e using the data had taken from the officers and staff mem!ers at the terminal
and also some of it had also taken from the internet.
(omparing the data of !oth the terminal on the !ases of intakes product wise, out takes,
num!er of T?T refilled on the daily !asis, products handled, transportation charges paid
including (entral Sales Tax, cost per worker & areas covered.
7ata taken from internet and from the officials is than analy"ed and through empirical
methods comparison is made.
Iuestionnaire is developed to have the views of the top officials that which head is more
important to focus from the given, in the logistics to make more effective and efficient.
n last conclusions will !e on the !asis of analysis & recommendations on the !asis of
knowledge of the field.
Survey Questionnaire
n this 'uestionnaire had taken some of the key driving factors of the logistics
industry & implementing those will really make the logistics more effective. The factors
have covered here are D
55
nventory management
7epots machinery automation
/efilling stations machinery automation
>ffective & efficient workforce
Technical advancements
Some of these factors might not !e concerned with the logistics directly !ut attri!utes
a lot in its procurement.
In3entor2 management
nventory management and its concepts are not actually practiced in ndian petroleum
industry !ut work is going on. :ow the days had gone when companies use to invest
around ;KO of its capital in maintaining the reserves, these days strategies are !eing
worked out to reduce this reserves while developing the logistics system in such a way so
as to reduce the reserves which in result also re'uires less space for storage, less
maintenance, less work force etc. in nut shell will reduce a large part of operating cost.
Automation in t*e mac*iner2 at +epots
%utomation in the machinery at depots will reduce a lot of wastage, shortens the time
span to fill?empty a T?T, reduce the num!er of workers etc at the time of loading and
unloading. %utomation will also safeguard the workers for machinery handling up to an
extent. %utomation will also cur! some of the malpractices !y the la!orers on the
terminal like D over filled T?T#s are reduced up to the re'uired mark !y the employees at
the loading !ay manually, so mischief can !e made !y employee if he?she wants to.

Re(iing stations mac*iner2 automation
/efilling station are the last !ut the most important part of logistics !eing the reason that
the ultimate consumer comes in touch of this segment of logistics. t is here in this
segment the !rand name will !e created & if this segment of the company couldn#t a!le
to satisfy the customer than will reduce its sales and vice$versa. %s far as the general
pu!lic is concerned no !ody !other a!out that need to get my car refueled at :7%:
=L or other =L (=)-%:>S !ut the main area of concern is the service they will !e
getting and the 'uality as well as the 'uantity they will !e getting as a value for there
58
money. So if they see that the machines are fully automated at a refilling station, thus will
give the accurate 'uantity so will definitely go for that one.
E((ecti3e 4 e((icient )or-(orce
3orkforce here represents the la!orers at depots, refilling stations & there !ehavior to
the customers, as these are the la!orers only who comes in contact of the consumers & if
he?she treats the customer well than can increase the companies market, !eing the reason
that product differentiation is very hard to make in this area. -erks are re'uired to make
the workers motivated towards there jo! and to make him honest towards his?her duty on
the other hand. (ustomer satisfaction can only !e achieved when the workers work
efficiently and this can only !e happen when he?she is satisfied with there jo!s.

Tec*nica a+3ancements
:ow more and more logistics personnel are using technology to electronically transfer
large volumes of data with speed and accuracy4 improving coordination and customer
satisfaction.
t helps in reducing inventory, systemati"e work, reduce wastage, reduce cost4 all in all it
makes the logistics effective and more efficient.
&y technology mean all those stuff which will !e helpful in making right thing in
right 'uantity to a right person & at a right time. This can also !e a techni'ue or software
which will make the product logistics more efficient, effective & safe.

So these are the options on which my whole 'uestionnaire is !ased.
/ate the following options according to there importance in the given 'uestions from 2 to
@, starting from 2 to the one which should !e focused more & @ to the least focused in
comparison to others.
=ption % D nventory )anagement
=ption & D 7epots )achinery %utomation
=ption ( D /efilling Stations machinery %utomation
=ption 7 D >ffective & >fficient 3orkforce
=ption > D Technological %dvancement
5;
I2$ How to increase the sales of the petroleum product6
%P &P (P 7P >P
I5 $ How to reduce the wastage in the process of logistics like at the time of loading,
unloading etc6
%P &P (P 7P >P
I8 $ How the malpractices like$adulteration, meter setting to reduce the actual refilled
product 'uantity practices at the refilling stations can !e cur!ed6
%P &P (P 7P >P

I; $ How to reduce the overall transportation cost of the petroleum product in the
process of supply chain6
%P &P (P 7P >P
I@ $ How to reduce the overall time taken in the process of transportation of raw material
up till it !ecomes a finished product6
%P &P (P 7P >P
IA $ How to maintain the 'uality of product in the whole supply chain starting from the
raw material to the finished goods6
%P &P (P 7P >P
IC D How to manage the storage re'uirements in the most efficient manner so as to
reduce the cost for storage6
%P &P (P 7P >P
IE D How to minimi"e the reserves maintained6
5@
%P &P (P 7P >P
IJ $ How to reduce the ha"ardous properties in this process of logistics like at the time of
loading$unloading of product, at the time of storage etc6
%P &P (P 7P >P
I2K D How to satisfy the customer for the amount they are paying for the fuel6
%P &P (P 7P >P
CHAPTER
!in+ings on t*e /asis o( 9uestionnaire
%fter evaluating all the 'uestionnaires the result is like
=ption % D nventory )anagement Q 52 marks
=ption & D 7epots )achinery %utomation Q 2J marks
=ption ( D /efilling Stations machinery %utomation Q 2; marks
=ption 7 D >ffective & >fficient 3orkforce Q 2@ marks
=ption > D Technological %dvancement Q 5C marks
These marks are out of 8K marks and the marking is made on the !asis of
'uestionnaire which is filled !y some of the officers at the operations department as well
as the terminal managers. This is !eing evaluated !y taking out that what should !e given
more consideration from the given options is !eing given !y evaluating the
'uestionnaires filled !y some officers.
These results are !eing worked out !y evaluating separate views of the
interviewee & than after a compiled out look of the entire 'uestionnaire and the resultant
can !e seen in the figure !elow.
(H%/T A.2 D /atings as per the 'uestionnaire
5A
1rom the a!ove !ar diagram it can easily !e make out that technological advancement
means a lot for product logistics efficiency. Than after comes inventory management in
the line. Likes wise depot machinery automation, efficient & effective workforce & at
last !ut not least the refilling stations machinery automation.
So, if the a!ove taken things moved in a right direction will give a
good direction to the whole petroleum industry !y improving its logistics. Some of things
are explained as under D
TECHNOLO%ICAL ADVANCE$ENT
&y technological advancement mean the techni'ues used for the product handling,
data!ase management, making planning on the !asis of data!ase through some speciali"e
software and the !asis of which corrective measures can !e taken in advance if any thing
going wrong in the whole process.
The days are gone when availa!le crude is given to the refineries and refineries
process that crude according to there capacities. This was happening !eing the reason that
there wasn#t any synchroni"ation within the refineries of a company !ut now supply is
made according to the demand. So, in this respect these days the demand of different
product is studied at different locations with respect to the availa!le modes of
transportation in that areas as well as the near !y areas.
5C
Techni'ues are !eing searched to make appropriate projections for sales in a
particular period and on the !asis of which crude oil could !e purchased. Techni'ues
should !e implemented so as to make availa!le the product?material right at the place of
re'uirement and right in time with the least & optimi"ed logistics expenses. Logistics is
given a great privilege after the 'uality crude oil in this industry. The reason !eing it
covers a huge part of cost after the cost of raw material i.e. crude oil.
This is the reason why refineries these days are given a guide lines that what
to produce & how much to produce, some deviation will !e there. Like Din earlier days
suppose a refinery is working out in its full capacity and yielding
)otor Spirit D 2KK T)T
High Speed 7iesel D 8KK T)T
Superior Rerosene oil D ;K T)T
&ut the actual re'uirement is $
)otor Spirit D 28K T)T
High Speed 7iesel D 5CK T)T
Superior Rerosene oil D ;K T)T
So, the refinery should !e given the actual projections and it will work according to that,
so the refinery will not !e short off any product as well as it should not have any product
in excess, some deviations after fulfilling the demands can !e there. f the refinery have
got the projections of product re'uirement in hand, than they can also choose the 'uality
of crude oil that suits them !etter according to there re'uirements.
This demand projection is made keeping in mind the companies owned modes of
transportation first, so as to utili"e them in the full capacity & also in the optimum
manner.
Some synchroni"ation should !e there within the other oil
(ompanies in ndia like the refinery there in northern region should serve the north fully
and if than have the surplus capacity than moved towards the middle region like )adhya
-radesh, (hhatisgarh etc.
Latest techni'ues of data transfer & data maintain should !e used and always work to
improve them. Technical advancement can also !e made with making a contract to the
5E
speciali"e companies in the field of information technology and the developed software
can also !e outsourced. 1or example$
The convergence of 9S and other technologies specially /elational 7ata!ase
)anagement Systems */7&)S+ with the support of spatial information via spatial
cartridges has opened a new era which will allow to manage the spatial components of
these everyday petroleum S!usiness o!jects,S such as leases, wells, pipelines,
environmental concerns, facilities, and retail outlets, in the corporate data!ase, and apply
appropriate geographic analysis efficiently in a desktop$focused application.
1or the purpose of retail outlet management & distri!ution this 9S covers the
distri!ution of refined petroleum products from the production center to various retail
units like petrol pumps, gas stations and other petroleum products retail stores.
This is the area where a lot of 9S developmental activities can take
place. /etail companies can use the power of 9S systems to optimi"e their !usiness with
intelligent analytical 9S tools and planning tools and provide !etter customer and outlet
services.
(overage %nalysis.
1leet management
7evelop Sales territories
Locating =ptimal position of a new outlet
=ptimal routing of -etroleum tankers across the country and across the city.
(risis management
Folume distri!ution of petroleum products
9eographic analysis of distri!ution pattern.
1inding a specific outlet in a city and deriving a route to go there.
These 9S software#s are availa!le with nfotech >nterprises Ltd. )adhapur,
Hydera!ad, ndia. =ther than this 9S many other companies of .T. industry makes a
speciali"e software for the petroleum industry like D &), &- 9L=&%L etc.
=ther than this outsourcing, some trend can also !e make out using the figures of
the last 2K years for the purpose of sales projection & to make the logistical planning on
5J
its !asis. Some mathematical?statistical techni'ues can !e used like$ trend analysis,
transportation model, standard deviation etc.
%fter taking out some trend through the mathematical? statistical tools the
results are shown to the experts who can make necessary changes !eing the reason there
are many calculative things that the computer can#t a!le to judge like D uncertain collapse
of some heavy !uyers from the market, the sales of the product increases !eing the reason
of o festival which happens once in 2K$2@ years. So, these experts will make necessary
changes in the projections which will !e matched with the actual figures after the expiry
of that period. This way the deviations can !e made.
n the same way hi tech machines can !e used to reduce the wastage in product
handling which will also reduce the time of functioning hence, making the whole
working more efficient.
3e can also use tracking system for the trucks which carries the product. The vehicle will
have a$mounted microphone which will locate the truck. t can !e given the features of
9S) & 9-S technologies to ac'uire location data and transmit it to a network command
centre. The received data is authenticated and forwarded to an application server which
provides tracking information through an internet accessi!le user$friendly interface. The
user also has options to receive tracking information via e$mail, mo!ile, fax or S)S
!esides the facility of calling the customer support team on a toll$free telephone line.
Some !asic features of this tracking system would !e
1ully automatic real time system
:o driver intervention
Location details are sent automatically at pre$determined intervals from remote
locations
t will !e a 5; hours service
(an cover a huge area and could !e viewed in a digital map of ndia.
>sta!lishes a low cost communication channel !etween mo!ile assets, owners
and users of the mo!ile assets.
%pplying these types of technologies will help a lot in making the logistics effective
!y $
8K
dle$time reduction through !etter monitoring
Less chance of adulteration within the process of transportation
mprovement in productivity
This way the technological advancement will surely give the !est results.
INVENTORY $ANA%E$ENT
This model is useful to determine the economic si"e of orders if a product is procured at
one stage, stored as inventory & than transmitted to customer. n other words, when the
rate of flow of inventory is greater than the demand rate, this model is most appropriate
for determining the si"e of lots. &ut tis model do have some assumptions
2. %nnual demand, carrying cost & ordering?procurement cost for a product can !e
estimated
5. :o safety stock is utili"ed, goods are supplied at a uniform rate & used at a
uniform rate & goods are entirely used up when the next order !egins to arrive
8. Stock out, customer responsiveness & other costs have no effect
;. Iuantity discounts do not exist
@. Supply rate is greater than the usage rate
Let 7 Q %nnual demand of a product
I Q Iuantity of the product ordered each time
( Q cost of carrying one unit of inventory for one year
*/upees per unit per year+
S Q average cost of completing an order for a product
*/upees per order+
d Q rate of which units are used out of the inventory
*Bnits per time period+
p Q rate at which units are supplied to inventory
*Bnits per time period+
82
$a=imum in3entor2 e3e Q nventory !uild$up rate T -eriod of delivery
Q *p D d+ GI?pH
$inimum in3entor2 e3e Q K
A3erage in3entor2 e3e Q )aximum inventory level U
)inimum inventory level
Q *p D d+ GI?pH U K ? 5
Q I?5 G*p D d+?pH

Annua carr2ing cost Q %verage inventory level T (arrying cost
Q I?5G*p D d+?pH (
Annua or+ering cost Q =rders per year T =rdering cost
Q 7?I T S
Tota annua stoc-ing cost Q %nnual carrying cost U %nnual ordering cost
Q I?5G*p D d+?pH ( U7?ITS
To get the formula of optional 'uantity, the total stocking cost should !e minimum, which
will possi!le when
I
5
Q G57S?(H Gp? *p D d+H
VVVVVVVVVVVVVVVVVVV
EO> ? > ? @ AB&DS<C1 Cp< Bp ' +1DE
This >=I stands for economic order 'uantity. So !y putting actual figures in this formula
we can get the minimum 'uantity of product that we should handle at a time, so that to
reduce the expenses of product handling like D storage, manpower to take care etc. and
also it will reduce the working capital which is !locked in maintaining high inventories.
DEPOT $ACHINERY AUTO$ATION
)achinery automation at the terminals will !e of enormous help in improving the over all
logistics
t will reduce time taken in the process of loading unloading of the product
85
3ill make the process of loading and unloading comparatively safe
3ill result in reduction of wastage also in the process
3ill use less of manpower as compared to the present scenario.
This way !y using fully automatic machineries at the machineries at the loading !ay &
making the locking system we can reduced the time taken in the process, makes the
loading safer when used !y trained workers, will reduce the wastage & also cur! the mal
practices in the process of transportation like adulteration etc.
E!!ICIENT 4 E!!ECTIVE .OR;!ORCE
&y effective and efficient workforce mean the workers at the refilling pumps and
workers at the terminals, there efficiency in work, there !ehavior to the customers, there
honesty level etc.
%ccording to me, customer for a refilling pump can#t a!le to judge which
petrol is !etter !ecause it is very difficult to have product differentiation in this industry
at economical cost in comparison to the other oil majors. )ore or less this industry is
regulated !y the government, this !eing the reason that the competitors could not attract
the customers !y giving them the cost !enefit.
The thing which comes into play here in this kind of services given to the
customer at there ends. This is the only reason why the oil companies are putting up
stores, drinking water, toilets, free air check in tyres, free news papers in the morning,
free cleaning etc. These all are the extra perks which can !e different from company to
company. %t the same time the workers at the pumps also work as the !rand am!assador
of the company !ecause they are the only person who comes in real contact with the
customers. Here if the !ehavior of the worker is not good towards the customer than the
company may lose its customer. Some important points like$
>mployees?3orkers should !e perfectly trained
Should !e educated enough to deal the customer up to his satisfaction level.
They should always !e polite towards the customers
Should !e honest towards his jo!
88
Should ask customer $ what changes he would like to have
%lso the workers at the terminals play an important role. There should always !e surprise
checks at the pumps 'uite fre'uently to check the working of the employees. %nd also
there should !e regular training programs in a time span *let say A months+ to make them
aware of the latest things demanded !y the customers.
They workers should !e rated !y the pump owners and the !est employee will !e
given some perk so as to get him interested in his jo! & also honest towards his jo!.
RE!ILLIN% STATIONS $ACHINERY AUTO$ATION
)achinery automation at the refilling station is really a key factor to attract more and
more customers. n general view, some settings are performed in the machinery at the
loading pumps so that it will always give less 'uantity than the once shown on the meter.
n this type of situation, it will create a good impression on the customers if the machines
are fully automatic.
The concept like self service can give a good response when the pumps are company
owned & company operated *(=(=+.
Here the company can issue prepaid cards to the customers like in metro trains
and also can give some discounts on that cards.
% token service could also !e worked like taking tokens from the counter and
refilling the vehicle
(an also have the com!ination of !oth the token & the prepaid card.
f this concept works out than the workforce can !e reduced !ut would need to
have fre'uent checks and some guards will have to !e there on 5; hours !asis.
n this type the customer will !e satisfied in comparison to the present
scenario, for the meter settings, mixing at the pumps etc !eing the reason the pumps are
owned & operated !y the company itself.
!INDIN%S !RO$ THE CO$PARETIVE STUDY
8;
&y studying !oth these terminals in detail & also !y comparing the product logistics
within these two get to know many things which will !e discussing as under
/ewari terminal has captured more land area as compared to the &ijwasan
terminal !ut could not a!le to give more !usiness as compared to the &ijwasan
terminal.
n /ewari terminal, automation is less as compared to the &ijwasan terminal. So
automation in machinery will surly enhances the working & as a result through
put will also improve.
7ue to the (entral Sales tax on the inter state transfer of petroleum the product,
the pump owners have to !e take the product from the locations which are far
away as compared to the which is very near !y !ut is in another state.
&- pumps in 9urgaon & 1arida!ad have to go to the /ewari terminal to get filled
either than the &ijwasan terminal which will result in more transportation cost.
f permission for setup of pipeline infrastructure to the nearest pumps could !e
granted than much of the transportation cost could !e saved !ut will re'uire huge
capital in its initial stage.
&io$diesel and ethanol projects should !e given more importance as these things
are profita!le & environment friendly to. Like D &io$diesel project is under trial
for the last 5K months on the /ewari terminal & no action to implement the same
on the other terminals, had !een taken yet. n the same way ethanol re'uirement
for @ O which had given green light !y the government couldn#t !e a!le to fulfill
yet and the government is in a mood to further extend it to 2KO in the surgarcane
producing areas.
8@
/efilling pumps are allotted the terminals where the transportation should !e the
cheapest on the !asis of the distance from the terminal like most of the pumps in
the 9urgaon & 1arida!ad should !e filled at &ijwasan rather than /ewari terminal
Like the terminals account the deliveries under three categories D
2. 17M *free delivery "one+
5. 3ith in the state
8. n the adjoining states
So, after calculating the cheapest distance for transportation within the different
terminals pumps would !e allotted for filling at that terminal from where it will !e
cheapest to him.
The pumps under &- should also !e given the permission to get refill on the
=(#s terminal also, so that the overall transportation cost can !e reduced, if the
other option is availa!le at the nearest.
)ostly trucks used at !oth these terminals are of capacity with 25 RL. These
trucks covers around J@O of the traffic at the terminal, if some trucks of high
capacity are taken on contract than much of the time will !e saved when delivered
at the pumps which carries 8 $ ; TT#s at a time & also will save a lot of time as
well as money.
%t &ijwasan terminal %T1 is pumped through to 9 %irport & is marketed and
handled !y &-(L & refueling system is again of =(L.
The additives which are used for kerosene, Ltra premium & Ltra mile are taken
from :eo$-etcorn. t has got its distri!utors?agents all ndia.
A++iti3es 5en+e+ )it* >uantit2
PFF7
&lended with )S to
convert it into
Ltra premium
AKK ml per RL
8A
E$D!A
&lended with HS7 to
convert it into
Ltra )ile
;KK ml per RL
Dor( "77G
&lended with ethanol as an
anti corrosive agent
5KK ml per RL
$ar-er
&lended to check the
adulteration in kerosene
5ue D2e
&lended with kerosene to
give it !lue color
TA5LE :#" ' various additives !lended with products to improve there 'uality
The additives used with the products have to !e transported through the plans and
comes first to the 9 airport than stored in the warehouse in the Wanakpuri *:ew
7elhi+, than after again supplied to the &ijwasan terminal which if transported
directly would reduce a lot of cost for transportation.
%enera Recommen+ations
2. Terminal?depot on the highway should have a pump for general pu!lic at its out skirts
which is to !e managed !y the terminal itself, will increase the profit as it will utili"e
the empty space & also gives more coverage and sales too, !eing the reason that,
according to the general mass of pu!lic, its one of the company owned as well as can
have the usual check of the terminal officers 'uite fre'uently, so these pumps
o!viously provide good fuel as well as service.
5. 3orkers at petrol pumps should !e well trained !ecause they are the only one who
comes directly in contact with the customers & here they plays the role on the
companies !ehalf.
f we think from the point of view of the general pu!lic, there is nothing
like product differentiation in companies in the pu!lic sector, so that#s why it#s just
the service & treatment which !uilds the whole image.
8C
8. %s the guidelines had !een given for new pumps like space factor, toilets provision,
drinking water provision, !everages stall etc all these things should !e applied to the
older refilling stations also, as they are also a part of chain.
;. )o!ile testing la!s should !e there. % group have to !e formed to check the mal
practices at the petrol pumps & they should make surprise visits to the refilling
stations and take tuff action against them so that to create an example for others.
@. )ore of high capacity T?T should !e used for the pumps of usually high
throughputs like those once which use to take 5$8 T?T at a same time. This will
reduce transportation cost, time, 2 truck will !e used instead of 8 etc, in nut shall
it will make transportation 'uite cheaper.

8E
8J
Re(erence,
5oo-s
"# Logistics 4 Supp2 C*ain $anagement
BStrategies (or re+ucing cost 4 impro3ing ser3ices1
52- $artin C*ristop*er
&# Logistics 4 Supp2 C*ain $anagement
52- Rag*uram 4 RangaraH
0# Logistics $anagement 4 Distri/ution
Presentations
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