ASSIGNMENT ON LOGISTICS AND SUPPLY CHAIN MANAGEMENT

LOGISTICS OPERATIONS OF SHELL

SUBMITTED ON: 13/09/2011

SUBMITTED BY: ARAVIND S. NO: 07 III SEM

Logistics refers to the responsibility to design and administer systems to control movement and geo-graphical positioning of raw materials, work in progress, and finished inventories at the lowest total cost Logistics involves the management of order processing, inventory, transportation, and the combination of warehousing, materials handling, and packaging, all integrated throughout a network of facilities. The goal of logistics is to support procurement, manufacturing, and customer accommodation operational requirements. Royal Dutch Shell plc,commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office at the Shell Centre in London, United Kingdom. It is the second-largest energy company and the fifth-largest company in the world according to Forbes Magazine list for 2011.It is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major energy activities, including in biofuels, hydrogen, solar and wind power. OPERATIONS Shell has five core businesses: exploration and production (the "upstream"), gas and power, refining and marketing (the "downstream"), chemicals, and trading and shipping. Shell has operations in over 140 countries. Shell is a signatory participant of the Voluntary Principles on Security and Human Rights. Oil and gas related activities Shell's primary business is the management of a vertically integrated oil company. The development of technical and commercial expertise in all stages of this vertical integration, from the initial search for oil (exploration) through its harvesting (production), transportation, refining and finally trading and marketing established the core competencies on which the company was founded. Similar competencies were required for natural gas, which has become one of the most important businesses in which Shell is involved, and which contributes a significant proportion of the company's profits. While the vertically integrated

business model provided significant economies of scale and barriers to entry, each business now seeks to be a self-supporting unit without subsidies from other parts of the company. Traditionally, Shell was a heavily decentralised business worldwide (especially in the downstream) with companies in over 100 countries, each of which operated with a high degree of independence. The upstream tended to be far more centralised with much of the technical and financial direction coming from the central offices in The Hague. Nevertheless. there were very large "exploration and production" companies in a small number of major oil and gas production centres such as the United Kingdom (Shell Expro, a Joint Venture with Exxon), Nigeria, Brunei, and Oman. Downstream operations, which now also includes the chemicals business, generates a third of Shell's profits worldwide and is known its global network of more than 40,000 petrol stations and its 47 oil refineries. The downstream business, which in some countries also included oil refining, generally included a retail petrol station network, lubricants manufacture and marketing, industrial fuel and lubricants sales and a host of other product/market sectors such as LPG and bitumen. The practice in Shell was that these businesses were essentially local and that they were best managed by local "operating companies" often with middle and senior management reinforced by expatriates. In the 1990s, this paradigm began to change, and the independence of operating companies around the world was gradually reduced. Today, virtually all of Shells operations in various businesses are much more directly managed from London and The Hague. The autonomy of operating companies has been largely removed, as more "global businesses" have been created. Africa Shell began drilling for oil in Africa during the 1950s. Shell began oil production in Nigeria in 1958. Shell operates in the upstream oil sector in Algeria, Cameroon, Egypt, Gabon where is the giant Rabi-Kounga oil field, Ghana, Libya, Morocco, Nigeria, South Africa and Tunisia; and in the downstream sector in 16 other countries. In Nigeria, Shell told US diplomats that it had placed staff in all the main ministries of the government.

In April 2010, Shell announced its intention to divest from downstream business of all African countries except South Africa to Vitol and "Helios". In several countries such as Tunisia, protests and strikes broke out. Shell denied rumors of the sellout. Shell continues however upstream activities/extracting crude oil in the oilrich Niger Delta as well as downstream/commercial activities in South Africa. Australia In Australia, retailer Coles Group (now part of Wesfarmers) purchased the rights to the retail business from the existing Shell Australia multi-site franchisees in 2003 for an amount less than A$100 million. The purchase was made in response to a popular discount fuel offer by rival Woolworths Limited launched some years earlier. Coles Express' only affiliation with Shell is that Shell is the exclusive supplier of fuel and lubricant products, leases the service station property to Coles, and maintains the presence of the "pecten" and other Shell branding on the price board and other signage. Coles Express sets fuel and shop prices and runs the business, provides convenience and grocery merchandise through its supply chain and distribution network, and directly employs the service station staff. Royal Dutch Shell is currently developing the first floating liquefied natural gas facility, which will be situated 200 km off the coast of Western Australia and is due for completion in around 2017. When it is finished, it will measure around 488m long and 74m wide, and when fully ballasted will weigh 600,000 tonnes.[27] Ireland Shell first started trading in Ireland in 1902. Shell E&P Ireland (SEPIL) (previously Enterprise Energy Ireland) is an Irish exploration and production subsidiary of Royal Dutch Shell. Its headquarters are onLeeson Street in Dublin. It was acquired in May 2002. Its main project is the Corrib gas project, a large gas field off the northwest coast, for which Shell has encountered controversy and protests in relation to the onshore pipeline and licence terms. In 2005 Shell disposed of its entire retail and commercial fuels business in Ireland to Topaz Energy Group. This included depots, company-owned petrol stations and supply agreements stations throughout the island of Ireland. The retail outlets were re-branded as Topaz in 2008/9. New Zealand

Shell has had a long-time presence in New Zealand, and partly owns the Maui and Kapuni natural gas fields. In 2011 it completed the sale of its petrol retail division to Infratil and the New Zealand Superannuation Fund, which rebranded the stations as Z Energy. Shell still operates in New Zealand via oil exploration and infrastructure. North America Through most of Shell's history, its business in the United States, Shell Oil Company was substantially independent with its stock ("Shell Oil") being traded on the NYSE and with little direct involvement from the groups central offices in the running of the American business. Such practice also changed in the 1990s when Shell first bought out the shares in Shell Oil that it did not own and then took a more hands-on approach. In Canada, also previously very independent, Shell has completed its purchase of the shares in Shell Canada that it did not own, to apply the new global business model. The Philippines On January 2010, The bureau of customs claimed 7.34 billion pesos worth of unpaid excise taxes against Pilipinas Shell for importing Catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) stating that those imports are bound for tariff charges. Pilipinas Shell denied the claim stating that those imports are raw materials for making their products. The company later emphasized that they are considering to close their local oil refinery if the case continues. Pilipinas Shell informed the public that they will exhaust all necessary steps to meet the demand for fuel. Scandinavia On 27 August 2007, Royal Dutch Shell and Reitan Group, the owner of the 7Eleven brand in Scandinavia, announced an agreement to re-brand some 269 service stations across Norway, Sweden Finland and Denmark, subject to obtaining regulatory approvals under the different competition laws in each country. On April 2010 Shell announced that the corporation is in process of trying to find a potential buyer for all of its operations in Finland and is doing similar market research concerning Swedish operations. Other activities Over the years Shell has occasionally sought to diversify away from its core oil, gas and chemicals businesses. These diversifications have included nuclear

power (a short-lived and costly joint venture with Gulf Oil in the USA); coal (Shell Coal was for a time a significant player in mining and marketing); metals (Shell acquired the Dutch metals-mining company Billiton in 1970) and electricity generation (a joint venture with Bechtel called Intergen). None of these ventures were seen as successful and all have now been divested. In the early 2000s Shell moved into alternative energy and there is now an embryonic "Renewables" business that has made investments in solar power, wind power, hydrogen, and forestry. The forestry business went the way of nuclear, coal, metals and electricity generation, and was disposed of in 2003. In 2006 Shell sold its entire solar business and in 2008, the company withdrew from the London Array which is expected to become the world's largest offshore wind farm. Shell also is involved in large-scale hydrogen projects. HydrogenForecast.com describes Shell's approach thus far as consisting of "baby steps", but with an underlying message of "extreme optimism". In September 2010, Shell agreed to a $12 billion joint venture with Brazilian sugarcane producer Cosan to develop sugarcane-based ethanol and power. LATEST Shell has signed an agreement with supplier information management company Achilles Group to cover its global operations. The oil major operates in more than 90 countries and has over 70,000 suppliers. It wanted to put in place a supplier information management system that would give it a holistic view of its entire supply base with the visibility of constantly updated and validated data on its suppliers. Achilles will now take responsibility for managing Shells global supplier information requirements. The system is designed to mirror the globalization of Shells supply chain, providing one approach to corporate responsibility, compliance and risk management. Shell was one of the original drivers and co-creators of the first Achilles systems during 1990 and helped Achilles develop ways to address regional requirements for supplier pre-qualification in Scandinavia and the UK. One of Shells major drivers was to make the process of doing business easier. A supplier in one geographical region will now gain greater visibility to Shell procurement departments in other regions. Jim Pearson, general manager CP systems and process at Shell, said: This intelligence and insight into our supply base will enable us to continue to form and

maintain strong relationships with our suppliers and together, create key competitive advantages for Shell."