Procurement Plan

The problem to monthly plan a global value chain for commodities in the chemical industry puts specific requirements considering on the aspects of values, sales, distribution, production and procurement planning in a global network. Recent research related to value chain planning can be clustered into global-oriented, chemical industry-oriented or commodity-oriented research. 

Volume and values in the defined business design with the given business rules are optimized jointly in sales, distribution, production and procurement plans as illustrated in fig. 19. 

Procurement Planning detailing the planning requirements for procurement of raw materials and products for a commodity business by volume and values... 

R13 - Contract and spot procurement planning procurement planning has to be differentiated into spot and contract in analogy to contract and spot demand. Raw materials are procured either based on fixed contracts or on the spot market (see also Seifert et al. 2001). Spot and contract prices can differ as illustrated by an example of Reiner/Jammemegg (2005), pp. 119 in the fig. 51. 

Contract and spot procurement planning confronted with volatile prices specifically in the area of petrochemicals... 

Process throughput smoothing Campaign and change-over planning 5.7 Procurement planning Spot and contract procurement planning... 

Procurement planning of spot and contract procurement quantities is the final planning model element described in subchapter 5.7. 

The procurement quantity here being part of distribution planning is presented in more detail in the procurement planning part in subchapter 5.7. Some distribution indicators are determined in addition to the decision variables as further decision support for the planner. 

Input product quantities like raw material consumption rates can be variable depending on utilization of the resource. Input product quantities are determined by linear recipe function with the recipe factors ap and bP pt on a tons per hour basis V r,s,/> e IPU. This is a key issue of the production and the entire supply model including procurement is to decide on the variable raw material consumption rates in production. Both production and procurement planning are highly interrelated, i.e. high production rates determine the amount of raw material that has to be supplied. In the overall context of value chain optimization, production rates have to comply with decisions reflected by the sales model e.g. on spot sales quantities and prices. 

The procurement planning model part needs to meet the requirements to distinguish spot and contract procurement planning including volumes and values integrated in the overall value chain planning. 

Procurement planning is based on the index set of procurement locations le Im and the product-procurement location combinations e IB1. 

Procurement planning is kept rather simple. However, procurement decisions have key influences on the overall value chain planning as investigated among other things in the following case study evaluation. 

The refinery SC has many sub-processes such as cmde procurement planning, scheduling, oil trading, logistics, etc. At the center of this SC lie the oil refining operations. Refining is a complex process which involves a number of operations to transform crude oil into valuable products. The refinery SC begins from the oil... 

For consequence analysis, we have developed a dynamic simulation model of the refinery SC, called Integrated Refinery In-Silico (IRIS) (Pitty et al., 2007). It is implemented in Matlab/Simulink (MathWorks, 1996). Four types of entities are incorporated in the model external SC entities (e.g. suppliers), refinery functional departments (e.g. procurement), refinery units (e.g. crude distillation), and refinery economics. Some of these entities, such as the refinery units, operate continuously while others embody discrete events such as arrival of a VLCC, delivery of products, etc. Both are considered here using a unified discrete-time model. The model explicitly considers the various SC activities such as crude oil supply and transportation, along with intra-refinery SC activities such as procurement planning, scheduling, and operations management. Stochastic variations in transportation, yields, prices, and operational problems are considered. The economics of the refinery SC includes consideration of different crude slates, product prices, operation costs, transportation, etc. The impact of any disruptions or risks such as demand uncertainties on the profit and customer satisfaction level of the refinery can be simulated through IRIS. 

Moreover, the means of transport differ for procurement and distribution transports. For raw and intermediate transports often pipeline, ship, and rail are used. In contrast, for the distribution of final chemicals rail and road transports are prevalent. As pipeline, ship, and rail are comparatively inflexible and differently organized compared to road transports, an independent planning of procurement and customer transports is justified. Therefore, the procurement planning module encompasses the planning of procurement transports of raw and intermediate chemicals and the planning of their local stocks. In contrast, the distribution transports module comprises the tasks of the classic distribution transport planning module for final chemicals. 

Procurement planning Determination of transport modes and transport capacities for procurement transports as well as planning of inventories of raw and intermediate chemicals at a site. ... 

Network Requirements Planning The network requirements planning should reduce the coordination efforts of the demand-based disciplines demand assessment and make or buy analysis by determining the type, quantity, and time of products to be produced. For that purpose, the requirements of material and components resulting from the sales plan need to be determined and distributed to the partners of the network to assure the fulfilment of demand. The fulfilment of demand is based on the subtasks network capacity planning, network demand allocation, and network procurement planning. 

Procurement Planning and Control Procurement planning and control defines the procurement quantities and dates of parts, assembly groups, and products that need to be purchased. Therefore, the order quantity calculation determines the quantities to be purchased based on the secondary requirements and generates the orders. Later, the supplier evaluation is based on the criteria quality, compliance with delivery dates, prices, and supplier conditions. 

---