Kathy Miller and Whitney Macormic, CITGO Petroleum Corporation CITGO Refined Products Supply Chain Solution Combining R/3, IS-Oil, TSW and BW for an end-to-end solution Introduction Kathy Miller and Whitney Macormic, CITGO Petroleum Corporation

CITGO’s SAP “Evolution” Operating Supply Chain Solution Agenda Introduction CITGO’s SAP “Evolution” Operating Supply Chain Solution The Solution with Supporting Details Questions

3 owned Light Product Refineries 2 owned Asphalt Refineries About CITGO Petroleum Wholly owned by PDVSA Downstream Only $17 Billion in Revenues 3 owned Light Product Refineries 2 owned Asphalt Refineries 3 Joint Venture Refineries 1,025 MB per day Refining Capacity All Business Units on SAP We wanted to share some hard facts about Citgo, so you can understand how we might compare to your organization. Hopefully, you will get a better idea of some of our tremendous successes and challenges to be fully intergrated with SAP.

About CITGO’s Refined Product Group ~ 20,000,000 BBL System 50+ Equity Terminals 350 Exchange Locations 100+ Terminalling Locations 15+ Pipelines used 1800+ Marine moves per year Our Refined Product group alone has many challenges on a daily basis.

About CITGO’s SAP System 4200 named users ~ 500 concurrent Single Instance, 2.5 TB Database 4.6C Oil and Gas All R/3 Modules except QM All Business Units Initial Implementation 1/98 – 11/99 Implmentations: Asphalt and FI – January 1998 Light Oils – June 1999 Lubes – November 1999

“SAP” Core R/3 + IS-Oil (Jan ’98) Traders Schedulers Workbench “SAP” Evolution: ‘98 – ‘02 “SAP” Core R/3 + IS-Oil (Jan ’98) Traders Schedulers Workbench (Jun ’99) Custom Development (Jan ’98-’02) Business Warehouse (Aug ’01) Key here is to clarify that we use the term SAP generically, but our solution is made up of several different products as well as a lot of custom development (mainly for automation.) (Each square has a hot link to the details of each.)

Business Unit Reporting (’99) Profitability Analysis (’99) Core R/3 Financials (’98) Asphalt Logistics (’98) Business Unit Reporting (’99) Profitability Analysis (’99) Full Exchange Processing (’99) Terminalling Agreement Processing (’99) Processing Agreements for Petrochemicals (’99)

Nominations Actualization Rundowns Transportation Pipeline Marine TSW Nominations Pipeline Marine Actualization Includes Distribution Cost Calculations Rundowns Terminal/Prod Level Inventory Projections Transportation Marine Cost Tracking Dock Scheduling

Interfaces to 3rd Party Software Custom Development Interfaces to 3rd Party Software Terminal Automation Petroex Transportation Companies (Pipelines, Truck Freight, Marine Companies, etc.) Demand Planning Enhancing SAP programs Several TSW modifications…much better in 4.6C Functionality extensions in several areas Custom reporting Transportation costs Exchanges Business Unit Reporting

Total System Physical Inventory Projection BW Total System Physical Inventory Projection Gasoline, Distillates, Turbine Region-level projection “Priced” Inventory Projection

A Blast from Our Past…

Rundown with scheduled delivery Scheduler’s “playground” The TSW World Pipeline Nomination Rundown with scheduled delivery Scheduler’s “playground” Immediate updates to rundown Inventory graph from rundown Marine Nomination Event Log Scheduling and RVP Planning tool for destination schedulers. Allows “What If” scenarios w/o disturbing current noms or PO’s and SO’s. Allows these scenarios w/o regeneration of rd. Can graph directly from rd to compare to target inventories. RVP BOM allows us to view all data on one product code. Schedulers, marine folks are required to enter much data.

TSW Nomination Schedule a 20000 barrell delivery into Meridian on June 18th - stock transfer (plant-to-plant).

TSW Nomination on Rundown Quick overview of layout of rundown – daily, SAP book and physical inventory, receipts vs. issues, right most column has truck activity. Rundown shows the receipt and the effect on the inventory projection. Touch on the header numbers on rundown (book, physical, Alternate, Inventory limits). ATAC feeds Rundown now an ALV control in Service Pack 1. Look and feel of spreadsheet and real-time – should be very nice.

Scheduler’s “Playground” Custom built transaction to allow very flexible, very easy replenishment planning. Enter in how you want to change the current scheduling and the rundown is automatically updated to reflect the new inventory position. Nothing is actually changed in SAP (nomination, order, etc.) except for the rundown. Nightly job ‘cleans up’ the playground so the users don’t have to worry about it. In this example, the scheduler wants to determine what will happen if they can’t get the entire 20000 barrells as originally thought, now they may just receive in 15000. So, create a proposal for 5000 to take this out of their inventory projection on the rundown.

Scheduler’s “Playground” Shows the ‘proposed’ schedule change as an issue on the rundown. Notice that the nomination information is still the same. That is because nothing in TSW or SAP R/3 has actually changed yet, except the rundown. The SAP Book inventory projection reflects the proposal.

Inventory Graph From Rundown Inventory graph called from rundown or stand alone. Graphs rundown numbers. Difference in BOOK and physical s/b bottoms – check with Kathy?

Marine Nomination Marine nominations not much different except for UOM and material at item level. Main difference is the event log – next screen.

Event Log Event type link to G/L accounts Configure however you’d like Lots of reporting off of event log Event log becoming more important as more of our Asphalt and Crude business uses TSW. Currently working with several vendors on getting files from them with ‘event’/dock information so that we can automatically update the event log. Drill down capability into SAP R/3 documents (i.e. freight purchase orders). Free form text can be entered too.

Scheduling and RVP Handling of RVP from scheduling/actualization perspective works very well. Master data setup makes most if not all of the process happen automatically. Date driven – so if schedule slips and/or for year to year RVP changeover.

And that’s TSW at CITGO…(the quick version) We can honestly say that at CITGO: his tuff orks

Business Warehouse Example One of our biggest frustration at Citgo has been that we are required to enter so much data into SAP, but we can’t get the data out as we need it, and as it makes sense for Operations. However, BW (Business Warehouse) has become that solution in extracting data from this monster data base. We have successfully been able to pull out of SAP all of these data points that give Citgo our total system inventory current and projected. Used for our Risk Mgmt purposes, inventory control, year-end inventory planning, etc.

AS OF MORNING OF LAST DAY OF MONTH Gasoline – Finished & Unfinished Improvement in Process Inventory Projection Improvement AS OF MORNING OF LAST DAY OF MONTH Gasoline – Finished & Unfinished July 926 MB January 45 MB August 625 MB February 614 MB September 1024 MB March 477 MB October 220 MB April 75 MB November 292 MB December 168 MB This number represents the barrels of last days inventory versus financial close. Key: Keep data clean, up-to-date, valid, etc. so that the projection is more useable. Along with being able to get our data out. We now have a way to keep our data clean. BW allows Citgo to find go deeper into the data quickly to keep our data cleaner. This chart represents how we continue to improve on a monthly basis in keeping our data cleaner. This data is the barrel volume difference our projection was to our financial close. We started using BW for this activity along with Mgmt requirements in October

AS OF MORNING OF LAST DAY OF MONTH Improvement in Process Inventory Projection Improvement AS OF MORNING OF LAST DAY OF MONTH Distillate October 107 MB November 582 MB December 802 MB January 241 MB February 227 MB March 156 MB April 65 MB

AS OF MORNING OF LAST DAY OF MONTH Improvement in Process Inventory Projection Improvement AS OF MORNING OF LAST DAY OF MONTH Turbine October 79 MB November 117 MB December 274 MB January 145 MB February 160 MB March 5 MB April 515 MB

Supply and IT analysts always have the latest technology…

SAP Supply Chain Solution: ’98–‘02 Refineries Refineries Core R/3 TSW Custom Development Demand Planning Demand Planning “CITGO” Terminals CITGO” Terminals BW Suppliers/Partners Suppliers/Partners Hot links to each area for details. Information Brokers Information Brokers

Production Yields (Actuals) Refinery Interfaces Production Forecasts Daily data feed 30-60 days out Reliability of information has been an issue Production Yields (Actuals) Weekends and holidays cause some “spiking” problems We capture actuals and forecasts from all of these data points.

Demand Planning Interfaces SAP to Demand Planning Actual Liftings for historical trending Demand Planning to SAP Terminal/Material for TSW Rundowns Customer/Material for Exchange reporting Forecasts then fed to BW for Inventory Projection reporting

CITGO Terminal Interfaces SAP to Terminals Customer Master data Allocations Terminals to SAP Rack Liftings Physical Inventory Levels Bulk Issues and Receipts Gains/Losses

Pipeline Companies Other Suppliers Supplier Interfaces Tickets Schedule Updates “Schedule dates” for pricing Other Suppliers Invoices from Product Suppliers Invoices from Trucking Companies Logistical data to/from Marine Companies

Information Broker Interfaces Petroex (Exchange liftings) TMS (Exchange Allocations – manual) Transport4 (Pipeline data)

For those of you heading to the beach this summer…

Commitment from IT & Business Change Management Key Success Factors Commitment from IT & Business Change Management Communication Power-user Development Training Decision Making Test, Test, Test Timely and Accurate Data “It ain’t over ‘till it’s over” Commitment from IT & Business Availability of key IT & BU personnel, Realize the running the business must come first, BU driving the design work, IT driving the development, This is going to be difficult! Change Management Communication Communicate Early & Often Reduces chance of miscommunication Reduces stress associate with uncertainty When people feel involved, they take ownership Power-user Development Builds system expertise in BU for future enhancement work Speeds transition period after go-live Reduces dependency on Tulsa IT Training Training development On-line help development Training delivery Decision Making? Business must own, Clear decision-making process, Advantage over Products because of size, Impacts to system, processes, and people Test, Test, Test Must have user involvement, Close to parallel as possible, Reduces the risk of business interruption, Reduces post go-live heartburn Data More data required, Automated feeds provides better results, Establishes the foundation for optimization It ain’t over till it’s over Incremental approach, Project doesn’t end at go-live!, this will be HARD, not plug and play, There will be startup issues, Post go-live optimization

“We changed SAP from being a barrier to a tool”. Famous Quote at CITGO… “We changed SAP from being a barrier to a tool”. Commitment from IT & Business Availability of key IT & BU personnel, Realize the running the business must come first, BU driving the design work, IT driving the development, This is going to be difficult! Change Management Communication Communicate Early & Often Reduces chance of miscommunication Reduces stress associate with uncertainty When people feel involved, they take ownership Power-user Development Builds system expertise in BU for future enhancement work Speeds transition period after go-live Reduces dependency on Tulsa IT Training Training development On-line help development Training delivery Decision Making? Business must own, Clear decision-making process, Advantage over Products because of size, Impacts to system, processes, and people Test, Test, Test Must have user involvement, Close to parallel as possible, Reduces the risk of business interruption, Reduces post go-live heartburn Data More data required, Automated feeds provides better results, Establishes the foundation for optimization It ain’t over till it’s over Incremental approach, Project doesn’t end at go-live!, this will be HARD, not plug and play, There will be startup issues, Post go-live optimization

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