Supply Chain Integration

1. Supply Chain Integration Summary of discussions SOPE-SEOP-SGSI September-October 2000

2. What happened since July SEOP + SOPE + SGSI • Have clarified • benefits • broader implications • resource requirements • Agreed on ‘step-wise’ implementation • Aligned tools/process improvement initiatives • Agreed on global governance structure to jointly realise vision Business driven OP project

3. From Traditional Supply Chain Operations $ $ $ $ $ $ $ To Supply Chain Optimisation $ Vision • Demand driven supply chain optimisation • Capture full integrated supply chain margin • Enable supply chain collaboration (internal and external) • Transparency into profitability • Visibility of information • Agility • eReadiness

4. How • Common business processes across SEOP/SOPE • One decision support backbone with several integrated modules (in particular integrated planning/scheduling) • Single software architecture, fully Internet-enabled and coherent data-connectivity • Integrated with transaction systems and real time information systems

5. Benefits 10-15 c/bbl in SEOP and 6-8 c/bbl in SOPE50-75 M$/a 18-24 M$/a • benefits are incremental to and dependent on current business and tools initiatives • benefits are difficult to measure (event/opportunity based) • estimates have been discounted for following risks • large sophisticated IT project • the call on key and limited resources • the organisational changes/re-skilling required

6. Opportunity area’s • Crude supply • In-Month Supply Balance • Integrated Scheduling • Supply Chain Churn / Distress • Transportation Costs • Customer Management • Structural Working Capital

7. Broader implications • release of full benefits of a Zonal/Global MSD business model • prepares for new business models based on eBusiness and collaborative supply chain models • enables new eBusiness customer value propositions • enables collaborative approach to margin maximisation between MSD, GTN and the Markets

8. Other options • Web enabling of existing systems ? • Supply chain wide visibility of stocks (supply/demand plans) ? • Best of breed ? • Other SCP vendor? => Integrated coherent framework needed to enable supply chain vision => i2 Technologies clear market leader in terms of vision and ability to execute

9. Step-wise implementation • Vision is fully supported, but given • both technical and process risks • resourcing constraints • a ‘step-wise’ implementation is recommended • discipline will be required to ensure that short term tactical decisions are consistent with the move towards the full i2 solution • full benefits will only be achieved when all the key modules are in place

10. Current initatives Harmonisation SEOP SOPE STEP 1: Basic Data LP planning Marginal Economics CSA / Tasksheet STEP 2: Data Warehouse Demand planning Ship scheduling SAP H/C Mangement STEP 2: Demand planning Sales & Oper. Planning MSD Data Base Ship Scheduling HM Supply Harmonisation

11. Implementation strategy 4 Complete vision Full supply chain optimisation 3 New advanced decision support Integrated refinery and supply scheduling 2 Full alignment other ongoing initiatives Supply chain data model, Demand planning, Supply Scheduling 1 Current common initiatives Basic data, Supply planning, Economic steering • Recource driven: Don’t plan next step before resources for previous step are understood and committed • Milestone driven: Don’t start next step before critical enablers in previous steps have passed toll-gate

12. Status • Step 1 (Basic data; LP/Economics) • fully planned, resource/skill gaps being addressed • Step 2 (Alignment other ongoing initiatives) • definitive plan in first Steering Group meeting December • Step 3 (Integrated Refinery Scheduling) • establish joint team • reconfirm scope, technical feasibility, required resources • start negotiations with i2

13. Governance structure • To implement common vision and strategy for supply chain tools/processes across Zones • Business Sponsors: OEM, OAM, GTN, South ?, North ? • Steering Group Meetings every 3-4 months alternating in London/Singapore, chaired by OEMS/OAMS, involving business & IT staff, SGSI, OXI • Covers whole of supply chain tools programme (not just i2) and associated business processes • Named individuals responsible to the Steering Group for implementation & alignment of specific tools/modules/processes across SOPE/SEOP

14. Big rules • For processes, current differences will be logged and evaluated. Action plans will be developed to align processes where there is no compelling business reason for differences. • All further implementation of tools and systems to be aligned with the i2 strategy unless business imperatives force an alternative tactical solution. This would require endorsement by the Steering Group. • In the instance that tools and/or systems are implemented that are different from the i2 solution, selection will be such as to achieve Zonal convergence. • For any new requirement in either Zone, first approach will be to utilise available solutions from the other Zone. • Work on Supply Management Systems and Business Control Frameworks will be used as a vehicle to drive the work on convergence of processes.

15. Summary Business driven OP project • Clear benefits from Supply Chain Integration • Supports strategic direction • demand driven • eReady Supply Chain • caputuring integrated margin • Step-wise implementation addressing technical/process risks and resource constraints • All tools/process improvement initiatives aligned • Global governance structure to jointly realise vision