GROUP MEMBERS:

HESHAM AL-IKHWAN

DANIEL LEON

ZEYNEP OZCAN

ALBERTO PEREZ

AYE AYE PWINT

COMPANY BACKGROUND

• Joint venture owned by Shell ( 35%), Texaco (32.5%), and Saudi Aramco (32.5%).

• Headquarters in Houston, Texas

• Major business - refine and market gasoline and petroleum products under the Shell and Texaco brand names in 26 Eastern and Gulf Coast States and Washington D.C.

• It is the third largest retail gasoline marketer in the U.S. and the sixth largest refinery

• Its refineries are capable of refining approximately 825,000 barrel per day

• Financial– Revenue of $12.2 billion, Net Income for 1999 $69 million

• Atlanta Branch– Supply Atlanta for 100 miles in radius

Supply Chain for Atlanta Plant (APPENDIX B)

REFINERY

MOTIVA PLANT INATLANTA

BY EAGLETRANSPORT ANDMANSFIELDTRANSPORT

INVENTORYCUSTOMERS

RETAILERS

WHOLESALERS

COMMERCIALBUSINESS

BYMANSFIELDTRANSPORT

BY COLONIALPIPELINE

OWNTRANS-PORTATIONMODE

Supply Chain of Motiva Facility at Atlanta

Motiva and its RefineriesMotiva and its Refineries

Port Arthur, TXRefinery

Delaware City Refinery

Norco Refining Company

Convent Refinery

Colonial Pipeline

• Extends from Houston, TX to Linden, NJ•Total Length of Pipeline is 2889 miles•2,271 miles of stub lines serve major cities and airports•Capacity of 2,148,000 barrels per day•89% total utilization

Colonial Pipeline

• Product move in the mainline at 3 to 5 mph•Slower in Stub lines due to thickness differences

•Transported in batches of a minimum of 75,000 barrels•Complex Separation of Products through interfaces and pigs

•Mixed products at interface are sold for rerefining

Pipeline as a Mode of Transportation

Reasons for using a Pipeline:

• Cheaper than any other mode of transportationTransporting twelve 6.4 gallons of gasoline through a pipeline from Houston to New York is cheaper than to mail a one ounce first class letter this same distance

•Reduced number of tanker trucks in highways (safety)•Dependable mode with steady throughput•Fewer breakdowns than other modes

OPERATIONS AT ATLANTA PLANT

• Located in Doraville, GA

• Plant carries four gasoline products: regular, mid-grade, premium, and diesel

• Refine products are transported via the Colonial Pipeline from Convent

• Total capacity of 302,000 barrels of product

• Working capacity is 50% of the entire capacity

• Three stations at the loading rack

• 10 to 12 minutes service time in the loading rack

Inventory at the Facility

21 day lead time from Louisiana to Doraville

Order cycle of 5 days

Safety Stock of up to 2.5 days35,000 barrels of Regular11,250 barrels of Premium

15,000 barrels of Diesel

2 Tanks per product type

Mr. George Marlatt (Facility Manager)

Inventory at the Facility

Marketing Department: up to 2.5 days of safety stock

Facility Manager:• would like to keep more than 2.5 days of inventory

• “High inventory levels promote growth”

Our perception:•Not even close to Stockout in 3 years

•High inventory levels tie up space and capital•Studied Reduction of inventory levels

Blending Process

Process of adding additives to unblended products

Takes place at the loading rack

Where?

When?

Right before the product is loaded to a truck

Two types of blend:

Texaco Blend: used in all Texaco branded productsGeneric Blend: used for unbranded products

Advantages of Blending at the Rack

Postponement of product differentiation until last step

• Lower levels of inventory•Ability to forecast aggregately•Better space utilization

Type of Customers

Motiva

Inventory Customers25% of total business

Retail Account10% of total business

Wholesale Account50% of businessCommercial Business

15% of total business

Transportation from Motiva

Motiva

Eagle Transportation Mansfield Oil

Inventory Customers

Motiva is only responsible for transportation of inventory customer’s products

•Transportation split equally by volume• Total of 74 Gas Stations

•60 Texaco•14 Independent

• Less than 5 stock outs per quarter get bonus•10 or more stock outs carriers get penalized

Eagle TransportationBen Hall - Operations Manager

•Located 1/2 mile from Motiva Facility•Capacity: 100 truckloads/day with 20 tractors and 20 trailers•20 drivers working double shifts•Drivers are paid by trips•Operating at 70% capacity

Procedure at Eagle Transportation

•Receives daily emails from Texaco headquarters with inventory levels at gas stations•Operators enter received data into software

•Determine which gas stations have low levels of inventory and require service•Assign driver and truck to fulfill specific order

•Driver’s procedure at Motiva

Inventory at Gas Stations

Two types of Gas Stations:•Texaco owned and operated •Independent gas stations with Texaco name

Inventory difference:Texaco owned stations like to keep high levels of inventory

Texaco already owns this product and is paying for itIndependent gas station searching for optimal inventory levels

ANY QUESTIONS?