SCITe Project MSD Validation Workshop August 6, 2001

1. SCITe Project MSD Validation WorkshopAugust 6, 2001 EXTRA SLIDES

2. Your Role - Linkages to the Future Business • Other initiatives • Organisation • System MSD T&R Update Customer driven & “e” initiatives Global strategies Shell Initiatives Underway Trade Crude and Feedstocks Refine and Process Trade Products & Intermediates Market & Distribute Commercial Products Sell Retail Products SCITe “To-Be” Scenarios Need your help to keep SCITe project focused on the business

3. PDS Discovery: Preliminary Envelopes

4. Extend scope of SCITe project (?) Based on work of teams to date, we recommend the following scope... 1. Bulk supply, crude, feedstocks, bulk products, chemicals, base oils, bitumen 2. Bulk / rack customers / not retail driveway 3. Interface (only) with Secondary Distribution 4. Incorporate partner supply chains where appropriate: • Exchanges, Tolling facilities,Trading partners 5. Global perspective, defined by: • Envelope • Country

5. Project Health Check Project implementation critical success factors…today you have assisted where noted 4 1. Business buy-in 4 - COMMENT 1 2. Resource availability 3. Technology risk management 4. Scope clarity 4- COMMENT 2 5. Change management 6. Value / Benefits clarity 4- COMMENT 3 7. i2 Development capability 8. Clarity on costs 9. Oil products alignment 4 - COMMENT 4 10. Clarity of concept and opportunities 4- COMMENT 5

6. PARIS Discovery: Benefit Pointers The PARIS team allocated benefits gathered to date... Risk pointers identified • High percentage of implementation failures are attributed to people, organisation and skills - ranging from “silo mindset”, to inadequate performance measures to resource conflicts • Risks around “application capability” were significantly high on being the first mover • Modelling complexities of pricing and margin was also a high risk in application capability • A high degree of risk is associated with the inability of obtaining accurate data from Shell legacy systems • Given the track record on smaller Shell projects, the ability to achieve benefits and successfully implement is seen as a risk

7. Units:Kbd Equity Production (60) Discretionary Demand (40) 100 100 100 100 Refinery Scheduling Terminals Customers Crude Supply Term Purchase (20) Base Demand (60) Spot Purchase (20) Traditional - Supply Driven Vision Bulk crude & products is the MSD business…. Classic: LP asset optimisation focus on “non-discretionary” demand

8. Additional - Demand Driven Vision Fuels optimisation must include chemicals, base oils, bitumen... Lube oils and bitumen as “traded commodities” • Lube oils • Bitumen Equity Production Discretionary Demand 100 100 100 100 Refinery Scheduling Terminals Customers Crude Supply Term Purchase Returns Feeds Base Demand Chemical offtakes Chemicals

9. 110 100 100 100 Step out - Supply Web Vision A classic view does not tell the whole story… Units:Kbd Exchange Deliveries (20) Term Sales (10) Spot Sales (30) Spot Sales (30) Intermediates (20) Discretionary Demand (40) Equity Production (60) Refinery Scheduling Terminals Customers Crude Supply Term Purchase (20) Base Demand (60) Spot Purchase (50) Feedstocks (20) Spot Purchase (30) Term Purchase (10) Exchange Receipts (20) …100 Kbd system needs 240 Kbd of trades to meet demand Challenge: Focusing on “discretionary” demand to define the new supply chain

10. Scenario 1: SCITe Paris discovery Setting the three major planning cycle modes SCITe Scope - The Shell Triangle GTN 3rd party customer/supplier e.g. Trading houses, other oil companies, Marine shipping companies • Within planning cycle update • Who sells it? • What price? 3rd party customer MSD e.g. Retail, Commercial, Aviation, Marine, Chemicals (LO & Aroms), Base oils, LPG, Bitumen Shell Sales Organisations Sec Distr 3rd party delivered customer 3rd party customer/supplier e.g. Domestic, Export, Supply Sales, Exchanges

11. The SCITe vision Strategic planning The optimisation layer $ Planning Time horizon Programming Scheduling Supply Trading Refining Supply chain The data layer Basic refinery data Supply sources Distribution options and costs Sales data Demands Stocks Prices SAP/JDE Legacy systems

12. Gap Analysis - Sample Pre-requisites • Demand data • Accurate and timely automatic feed of actual sales volumes • A means of systematically factoring in the effects of events such as holidays or market intelligence such as competitor supply outage • A means of recording seasonality • A means of recording and appraising historical forecasts • A means of gathering 3rd party forecasts and actuals (exchanges) • A means pf predicting the effect of price on discretionary demand • A means of comparing forecast and actuals (drill down by location, product CoM etc)

13. Business Entity Framework Data sources Availability Timeliness Quality • Stocks • Attributes: • Opening, closing, targetOwnership (Shell or 3rd party) • etc. • Prices • Attributes: • Platts ex OTIS • Freight rates • Tranching • etc.

14. Information Layer: Data Quality & Features • Seamless - especially across boundaries • Based on believable data • reconciled to actuals • clear ownership • Includes reference & transaction data • Includes economic awareness - across supply chain • Committed vs non-committed volumes (ATP) • Event centric and dynamic Significant benefits to be captured here

15. APS Information Layer Focus - Debate Multiple Network Optimization Transportation Management Profits Inventory Management Supply Planning Demand Planning Supply Chain Infrastructure

16. Information Layer - Where MSD lives Single Network Optimization with Crude & Products Integration Position Management Demand Forecasting Profits Exchange Management Inventory Management Collaboration & Integration Supply Chain Infrastructure

17. Data Layer Focus - Where the vendor lives Multiple Network Optimization Transportation Management Profits Inventory Management Business Release Centric - Global Supply Planning Demand Planning Supply Chain Infrastructure

18. What problem should SCITe work? • Problem definition: • Sets the benefits • Defines the solution Problem Level “Optimise all networks” 1 Maximise potential of one individual network 2 “Make Things Happen Right Every Day” inside each operating unit of an individual network 3

19. Picking an implementation scenario Global View Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Envelope(s) Scenario 2 Refinery 1 Mktg 1 Mktg 2 Refinery 2 Refinery 5 Scenario 1 Envelope(s) Scenario 3 Refinery 3 Merchant or spot market outlet Refinery 4

20. Trade Crude and Feedstocks Refine and Process Feedstocks Trade Products & Intermediates Market & Distribute Commercial Products Sell Retail Products Planning Stages - examples Strategic planning is the process of defining the business in which a firm intends to operate, guiding the way it performs individual activities and organises its entire value chain, including: Competitive advantage differentiation, Core competencies definition, Investment strategy and Business Goals Strategic Planning The decisions from a tactical plan define the deployment of the business assets and must accommodate the range of business operations over which the plan was created. Including: the configuration of the supply chain, the ownership of the nodes and links, the standard business rules associated with the nodes and links and the normal flow of the supply chain Tactical Planning The objective of an operational planning system is to develop a plan for the usage of the assets of the business (manufacturing equipment, DCs, warehouses, private fleet, raw materials etc.) in performing the daily work of the business Operational Planning Execution systems serve the purpose of collecting and managing large quantities of data for the purpose of evaluating deviations from the operational plan and selecting the appropriate course of action Execution