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Supply Chain Assessment Project

Supply Chain Assessment Project. Goal of the Assessment project…. To get experienced Hess staff to “turn the corner” into supply chain thinking and trading responses. SUSTAINED COMPETITIVE ADVANTAGE. Global Trading. Integrated Terminal - Rack Network. Standalone Manufacturing.

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Supply Chain Assessment Project

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  1. Supply Chain Assessment Project Goal of the Assessment project… To get experienced Hess staff to “turn the corner” into supply chain thinking and trading responses.... SUSTAINED COMPETITIVE ADVANTAGE Global Trading Integrated Terminal - Rack Network Standalone Manufacturing Traditional Measures “Degree of Operational Excellence” Breakdowns between organizations can overshadow excellence inside any cube face….

  2. Agenda Goal for today – review projects/benefits identified by Hess SME’s… • Discussion of 15 improvement projects identified in Assessment • SC approved project plan development for 4 projects • How we got where we are today • Detail each project and benefits –with Hess Team • Open discussion of results • Next steps for Steering Committee and Project Team

  3. Discussion of 15 Improvement Projects Identified Hess M&R Supply Chain Review Workshop Results Hess M&R Supply Chain Review Project Deliverable Will cover only 4 Supply Chain Recommended projects today… • 4 Supply Chain Recommended Projects • Terminal Lifting Forecast Improvement • Hess Inventory Level Optimization • Terminal Asset Optimization • Align Incentives to Provide End to End Economics • Run Hovensa More as a Merchant Refinery • 6 High Value Projects • Hovensa Maintenance Projects • Hovensa Tank Optimization • Manage Hovensa Performance vs. Pla • Hovensa Longer-Range and Rolling Plan • Port Reading Longer-Range Plan • Investigate Caribbean Bunker Market • 4 Tangible, Low Risk (Contained) Projects • Hovensa In-Line Blending Improvements • Re-validate Pt. Reading Naphtha Max API • Port Reading Slurry Upgrade • Improve Pt. Reading Gasoline Blending

  4. How we got where we are today Hess Project Charters Hess Project Charters Hess Project Charters Hess Project Charters 4 3 2 1 SC approved: Project summary, benefits and complexity… Assessment Project Results Framing Team Benefits • SC recommended projects • High value projects • 4 Low risk tangible (contained) projects • Doug Hambor • Paul Tuttle • Angela Mirandi • John McConville • Craig Kenkelen • John Price • Owh Kian Ong • Mike Gebhardt • Jill Anderson Session I: Projects – 11/2/09 Session II: Benefits – 11/12/09

  5. Project-by-Project Discussion Hess Project Charters presentation order – with focus on scope & benefits… • Optimize Hess inventories – Dennis Eklof • Measure end-to-end economics – Lynn Sievers • Terminal asset optimization – Dennis Eklof • Improve terminal forecasting - Marty Stetzer

  6. Next Steps... Following items recommended to close the loop on Assessment Study • Project Team feedback of results to participants • Distribute the documents used by Framing Team • “Mine the data” for other Steering Committee actions • Steering Committee disposition and assignment of: • High value projects • Tangible low risk projects • Other items ????

  7. Projects are Interrelated Go-no-Go Decision Core analysis activities for all projects… Terminal Lifting Forecasting Map monthly forecast processes Map intra month adjustment process Evaluate current performance Quick hit -Contract system Estimate supply costs Define measures and options Define future costs-benefits. Implement Optimize Hess Inventories Map inventory management processes Review inventory “policies” Select pilot locations Gather current data Set new inventory levels Develop model: - Simulation - Less rigorous Define measures. Monitor pilot performance Implement staged rollout plan Terminal Asset Optimization Select pilot locations Map current processes Conduct market study Evaluate supply cost Conduct competitive analysis Identify strategic alternatives Estimate CAPEX Define Measures. Monitor pilot performance Implement staged rollout plan Improve Transfer Prices & Cost Allocations Measure end-to-end economics Quick hit: Map ST&T and EM deal Map example from each Business Line Develop Hess TSPM Conduct Competitive Analysis Re-evaluate each BL Example Review current system Include PMP metrics Evaluate options, costs a& benefits Implement new system

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