S.
McVey - April 28th, 2000
Event
Summary
SCT Corporation announced recently a sale of its Fygir Demand Planning
application to Equilon Enterprises LLC, a joint refining venture of Texaco
and Shell Oil. Equilon will use the software initially to forecast its
gasoline products and it expects that diesel products will follow shortly
after. Future deployment may extend to Motiva, Equilon's sister company
under the Equiva umbrella.
According
to Dennis Gannaway, Equilon manager of gasoline logistics, "thin profit
margins in the chemical industry require an efficient supply chain enabled
by accurate demand forecasts. We chose SCT's Fygir Demand Planning for
its superior forecast accuracy and Web-based collaborative approach."
Petroleum
refiners need the ability to forecast products in multiple dimensions
at different levels. Salespeople who sell to customers in the wholesale
class of trade forecast at a customer level, but other business segments
are concerned only with product level forecasts.
Like
other forecasting applications such as Logility's Demand Planning, Fygir
DP uses a pyramid forecasting technique that allows users to manage forecast
data at desired levels of detail. As Equilon states, "field personnel
are concerned with grades such as premium, regular, etc. Scheduling and
production personnel must be concerned with more detail."
Failure
to make accurate forecasts can have a high price for refiners. The manufacture
and distribution of gasoline is constrained by pipeline and tank storage
capacity, neither of which is a significant factor in discrete manufacturing.
Accurate forecasts are critical to assure efficient use of distribution
and refining capacities.
Market
Impact
Equilon's decision to partner with SCT Corp. for its demand planning needs
seems strange at first, given that Equiva, the services arm for Equilon,
made a huge investment in Aspen Technology's PIMS suite a little over
one year ago. In fact, Aspen highlighted the sale in its third quarter
1999 report as the largest PIMS deal in history, exceeding the typical
$200,000 license fee.
Aspen
PIMS is an application for scheduling and optimization of process operations.
It can be integrated to Aspen's demand planning product, a component of
its MIMI supply chain suite, via a framework that incorporates standard
communication protocols such as XML.
Why
Equilon passed on Aspen's forecasting package is not clear, given that
Aspen Framework houses data elements as objects and creating interfaces
to other Aspen applications is simplified by the ability to use Visual
Basic. MIMI's Demand Management module is well-integrated into the rest
of the MIMI suite and has the ability to reconcile order history with
a user-defined product structure to statistically generate forecasts.
It may be that Equilon, in needing only a point solution for demand planning,
considered an investment in a suite like MIMI to be unwarranted.
When
asked if other demand planning packages had been considered, Equilon stated
that it involved a number of tier one supply chain vendors in a thorough
review process. Fygir Demand Planning was selected primarily because of
the web-based collaborative functionality and emphasis, best-of-breed
statistical engine, and process industry specialization. They added that
SCT possessed superior mathematical and business process approaches.
Besides
Aspen MIMI, another package it might have considered is Logility's Voyager
Solutions, which supports collaborative demand planning in the form of
CPFR (Collaborative Planning, Forecasting and Replenishment). Its CPFR-compliant
software, however, lacks the flexibility of more generic collaborative
approaches.
User
Recommendations
Whatever its reasons for selecting SCT over Aspen, Equilon seems to have
done its homework and other users will want to follow the same diligent
course in selecting demand planning packages.
Fygir Demand Planning is a relatively new product compared to Fygir's
other products, GRIP production scheduling system and FIT supply chain
planner, but has been well integrated into SCT's Adage enterprise execution
backbone.
SCT
has also engineered the capability to provide user-configurable workflow
automation for its integrated planning and execution suite, iProcess.sct.
iProcess.sct should be a short-list candidate for process industry users,
especially those in petroleum and chemicals manufacturing, who need a
broad Internet-enabled enterprise application.