Post on 28-Jul-2020
Best Practices Sub-committee
RETAC Update March 4, 2009
Susan Arigoni, Xcel Energy, Inc.Alan Shaw, Norfolk Southern RRKent Smith, Arch CoalDavid Rohal, RailAmericaHenry Rupert, CSX Transportation
Best Practices Sub-committee Members
Best Practices Sub-committee Goal
The goal of the Best Practices Sub-committee is to identify best practices in the energy supply chain that promote the efficient and reliable delivery of energy resources.
Best Practice: An activity, process or investment that results in improved reliability, lower operating expense, increased productivity or lower risk for the supply chain.
The current condition of the supply chain is sub-optimal because a common understanding of business practices between participants is not shared, and the benefits across the supply chain are not recognized.
Best Practices Sub-committee
Best Practices Sub-committee Process
Develop common understandingScope of the supply chainTerms
Defined current perspective of producers, railroads and receivers and identified best practices for each supply chain participant
Developed a model that portrays best practices and sub-optimal practices of the supply chain
Developed broad categories that apply to all participantsIdentified strengths, weaknesses, opportunities and threats
Energy Supply Chain Model
ProducerRailroadReceiver
Balanced purchasingAdequate stockpilesUnload upon arrivalDiversified supplyEmploy strong traffic teamPreventative maintenanceCommunication-lead timefor coal sourcing shifts
Supply/demand balanceSufficient resourcesGood execution (crews)Ratable shipmentsMaximize slotsEfficient scheduled network
Balance production and salesLoading on arrival 24/7Computerized batch weighAdequate stockpiles at mine
Coal not availableSpikes in demandShifting coal sourcesForced outagesLimited unloading schedulesUnloading equipment breakdowns
Scheduling conflictsSource change/lane shiftLane congestionMechanical breakdownsCurfewsInterchange coordination
Production problemsStaging limitationsCoal quality deviationsCoal availability
Increase
Decrease
Rel
iabi
lity
Best Practices
Problems
Physical InfrastructureCommunications & Tactical ExecutionOperating PracticesCommercial Practices
Efficient and reliable delivery of energy resources can be promoted by focusing on best practices in the following areas:
Developed Broad Categories That Apply to All Participants
Physical Infrastructure Best PracticesSupply Chain Participant Physical Infrastructure Best PracticesReceiver Adequate space for stockpileReceiver Unload upon arrivalRailroad Supply/demand balanceRailroad Maxamize slotsProduceer Computerized batch weighProduceer Loading on arrival 24/7
Produceer Adequate pile or uncovered coal at mine
Physical Infrastructure SWOT
Uncertainty of the sourcing regions in the futureFunding for reliable energy supply chain infrastructure Technology advancement for CCS
Ext
erna
l
Opportunities: Threats:Long term plans for generation/sourcing Regulatory constraintsDefine reserve capacity requirements Uncertainty in the future demand for coalMechanism to ensure capacity investments
Topography limitationsCoal reserve degradation
Helpful Harmful
Inte
rnal
Strengths: Weaknesses:Shared focus on reliability Older inefficient operationsSourcing flexibility afforded by rail network Fixed Assets limit ability to quickly respondUS coal reserves
Communication & Tactical ExecutionBest Practices
Supply Chain Participant
Communication & Tactical Execution Best Practices
ReceiverCommunicate lead time on incidents restricting delivery
Railroad Supply/demand balanceRailroad Maxamize slots
Railroad Efficient ratable networkProducer Balance production and sales
Communication & Tactical ExecutionSWOT
Exte
rnal
Regulatory constraints
Opportunities: Threats:RETAC structure, processes & output Attracting qualified peopleTrade associations with common goals Ineffective communication with government entitiesLong term plans for generation/sourcing
Untrained personnelStrong industry trade groups Ineffective internal communications
Helpful Harmful
Inte
rnal
Strengths: Weaknesses:Railroad Web Based Communication Platform Reluctance to share operational problemsResources dedicated to efficient supply chain executionInappropriate reaction to operational informationBusiness relationships
Operating Practices Best PracticesParticipant Operating Practices Best Practices
Receiver Adequate stockpile targetsReceiver Unload upon arrivalReceiver Diversified supplyReceiver Employ strong traffic team
ReceiverPreventive maintenance on coal handling equipment
Railroad Maximixe slotsRailroad Efficient ratable networkProduceer Loading on arrival 24/7Produceer Adequate pile or uncovered coal at mine
Operating Practices SWOTHelpful Harmful
Weak coordination within the supply chainLack of understanding of counterparty impact
More restrictive environmental permitting requirements
Inte
rnal
Strengths: Weaknesses:Focus on Safety Rigid labor rulesTechnical competence Internally focused
Lack of universal scheduled maintenance
Ext
erna
Opportunities: Threats:Improve operations planning & forecasting Declining labor forceImprove consistency in loading Equipment availabilityEquipment standardazation Economic cycles
Commercial Practices Best Practices
Supply Chain Participant Commercial Practices Best PracticesReceiver Balanced purchasingReceiver Adequate stockpile targetsReceiver Diversified supply
ReceiverCommunicate lead time on incidents restricting delivery
Railroad Supply/demand balanceProducer Balance production and sales
Commercial Practices SWOT
Inte
rnal
Opportunities: Threats:More transparent information Commodity Price Volatility
Rigid contract termsOver the Counter Trades (linkage to physical)Increasing need for source flexibility
Helpful HarmfulStrengths: Weaknesses:
Long Standing Relationships Orders don't match supply chain capabilityDemand/Sourcing Consistency Not having sufficient buffer for supply volatilityWell developed supply chain infrastructure
Best Practices Alignment MatrixR
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Rai
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dPr
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Best PracticeOperating Practices
Physical Infrastructure
Communication & Tactical Execution
Commercial Practices
Adequate receiver stockpile targetsReceiver unloads upon arrival
Diversified supply sources
Receiver employs strong traffic teamPreventive maintenance on coal handling equipmentAdequate space for stockpileReceiver communicates lead time on incidents restricting deliveryBalanced purchasing month-to-monthRailroad maximixes slotsEfficient ratable railroad network
Capacity supply/demand balanceMines load on arrival 24/7Adequate pile or uncovered coal at mineMine computerized batch weighCoal marketing balances production and sales
Consensus on best practices will be a challenge
Costs – benefits unaligned• sub-optimization of the supply chain can occur when
individual parties attempt to optimize their own cost/risk structure without regard for the impact on the overall supply chain
Communications best practices could be easiest to implementSub-committee input on promoting best practices
Best Practices Sub-committee
Next Steps and Challenges