Leveraging Innovative

TECHNOLOGY & INNOVATION

Leveraging Innovative

Digital Platform

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to Transform & Optimize Petroleum Products Supply & Distribution Chain

Photo Credit: Google

By Genevieve Mbama

n August 9th 2018, a major headline in different national and online news media came screaming…“Federal Government Approves N17 Billion Technology To Track Fuel Consumption” …

This ignited my interest considering that I had

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earlier in 2017 mentored one of my Tech savvy and innovative mentees on a similar idea, which he called Energy Monitor. The idea was on how the regulator DPR/PPMC & Operators (Petroleum Product Retailers) can collaborate to leverage digital technology to optimize the petroleum products supply chain. The focus was on monitoring of petroleum

product consumption and pricing; and how that can be extended to remote monitoring by DPR since part of its regulatory duty is to ensure compliance with price regimes, accurate reporting on daily consumption volumes and so on. The idea was engineered by the problems that bedeviled the sector over decades that include:

TECHNOLOGY & INNOVATION

1. Poor management and high level of corruption 2. Dysfunctional and fragmented logistics and supply chain from import till delivery at points of sale 3. Lack of effective tracking of product distribution vehicles and trucks while on transit 4. Paucity and accuracy of data especially on consumption statistics, which various responsible government agencies have always provided conflicting figures on.

Without vital statistics, the country may have planned and implemented petrol supplies schedule uneconomically 5. Fraudulent claims and payment of subsidies due to inaccurate data, data and figure manipulation and forgery as most transactions are manually handled, creating the loophole for fraud 6. Fraudulent practices and cheating on pricing at the dispensing machines by Retailers 7. Inefficiency and ineffectiveness in monitoring and compliance operations of the regulatory authorities 8. High leverage of human intervention with high propensity to compromise and circumvent established processes and procedures

I decided to mentor him through the process of developing the idea further before moving to the next level, and where we were at it, lo and behold came the headlines above!!

As stated by the Minister of State for Petroleum, Dr. Ibe Kachiukwu; the Fuel Management System & Sensor Network Technology will enable automation, tracking and monitoring of refined petroleum product movement from the point of LC (letter of credit) opening from the vessels that come into Nigeria, up until the point where they are discharged into tanks in Nigeria, and from the tanks into trucks in Nigeria, monitor the trucks till they deliver the products into the storage tanks for the filling stations and they are discharged and sold.

The benefits include:

Photo Credit: Google

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A collaborative system for information sharing that helps proper data repository of consumption, data on all logistics vehicles that operate and ship products, total number of products received, what is sold out of filling station Provides end to end visibility and 100 per cent holistic monitoring of the entire supply chain Ability to identify, track and plug losses and points of leakages, checkmate truck diversions and spurious claims Minimize if not completely eliminate fuel subsidy fraud and corruption

Interesting to note that the federal government was now ready to move away from the old time failed approach to leverage technology to deal with the downstream “Monster”

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TECHNOLOGY & INNOVATION

Downstream Petroleum Products Supply Chain nderstanding the key processes, supply chain network nodes, complexities and key actors (Operators/Importers, Regulators & Other Govt Agencies, Logistics Providers, Depot Owners, Retailers/Gas Station Owners) within the value chain; provide some level

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of insight on how and where innovation and technology can play a significant role in optimizing the sector.

Below is a high level diagram of how the supply and value chain operations in a typical downstream petroleum sector looks like.

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Diagram 1: Source: Kent Group Limited. https://www.kentgroupltd.com

The supply of petroleum products is based on facilities that produce and store petroleum products along the “value chain�, and the facilities that move those products from one point along the value chain to the next.

institutional collaboration & integration that includes sharing of data and information; which is the foundation for value chain optimization.

To the industry Regulator & Operators, what is critical in the value chain are the end to end visibility, transparency and accountability of all transactions and activities; cross

1. end to end tracking and monitoring the movement of the Petroleum Productswith focus on consistency and accuracy of quantity and quality-through multiple

To achieve these, we will require:

TECHNOLOGY & INNOVATION

2.

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mediums (ships, trains trucks, tankers, pipes and storage) and modes (Water, Rail, Road, Pipeline) to the contracted and agreed locations or Gas/Filling stations/outlets tracking the movement, security and condition of the medium of transportation, which are the ships, trains trucks, tankers, pipes and storages -with focus on the geographic location and routes monitoring and tracking the movement of the products from storage tanks to the Dispensing Machines at the Gas/ Filling Stations monitoring of efficacy and consistency of pricing on Dispensing Machines and quantity of products dispensed accurate and complete documentation of transactions and storage of the underlying data

This is where innovation in the supply chain model and leverage of digital technology come in!

It is better deployed as a “Connected Digital Platform”.

How Digital Technology Can Help

21 Photo Credit: Google

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he need to leverage digital technologies to address the supply chain challenges cannot be overemphasized due to the complexities. This involves transforming the supply chain operations from manual & analogue to automation & digital respectively; delayed to real time/near real time and from reliance on human labour to technology, which covers processes, systems, organization & documents/data. Since these encompass the processes and systems that cut across several independent companies and institutions within the value chain; it is better deployed as a ”Connected Digital Platform”, that leverages Applications web connectivity to connect devices, applications, assets and people to create seamless information flow. It includes: • Digital portal technology supported by Blockchain that enables operators to connect, initiate and capture the transactions and data in a recorded chain of blocks in distributed ledger that is shared among operators for purpose of visibility, transparency and accountability

TECHNOLOGY & INNOVATION

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Machine-to-Machine IOT applications such as GPS enabled tracking devices with sensors and locational intelligence that can be installed on assets such as Trucks, Trains, Tankers, Storage Tanks etc to generate data into business processes to detect, analyze, and respond; hence enable tracking and monitoring Machine-to-Machine IOT applications such as GPS enabled apps with sensors and locational intelligence that can be installed on Dispensing Machines and

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used to monitor pricing and quantity dispensed (see diagram 2) Intelligent dashboards enabled by advanced analytics tools that support remote monitoring and reporting from mobile devices/tablets/laptops and large screens Master data repository on Big Data platform to store all types of data in very large data sets generated from the various applications and tools

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Diagram 2: Source: Novedad Insights & Solutions

The project by the Ministry of Petroleum through DPR, PEF and PPMC encapsulates a significant part of the concept above, except that it is not based on Blockchain Technology and does not cover price monitoring.

Although a Nigerian project, it does not provide an extension of the solution for remote monitoring of pricing and fuel storage at the Gas Stations, it provides a good platform for innovation in the petroleum products

...lead to the creation of central repository... supply and distribution model, with a leverage on digital technology to solve Nigeria’s specific problem in that value chain. Such automation and digitalization lead to the creation of a

central repository comprising digital & analogue data (for products, facilities and assets); managed by the Regulators and can be accessed partly by other governments agencies and

TECHNOLOGY & INNOVATION

Operators depending on which specific data each will require. It is necessary for the Regulators to coordinate and enforce the deployment, since there are several independent companies and institutions within the value chain.

Essentially, digitalization of the petroleum products supply chain is the panacea to the supply chain complexities and bottlenecks with significant economic and business impact for the government and the operators respectively.

It provides significant benefits such as the end to end visibility, transparency and accountability of all transactions and activities; cross institutional collaboration & integration that includes sharing of data and information; which is the foundation for value chain optimization.

This will ensure value for money, avoidance of leakages in products and

Photo Credit: Unsplash

funds across the distribution channels, elimination of price manipulation at Dispensing Machines and Product pilferages at the retail outlets. The integration of the entire value chain is

critical for the Regulators who need access to accurate data and information to enable effective and efficient monitoring, accountability and reporting.

Genevieve Mbama is a Digital Technology & Innovation Solution Specialist; Economic Inclusion Advocate, Blogger and Writer. She holds a B.Sc Economics & Statistics, from the University of Benin and an MBA from the Massachusetts Institute of Technology, Sloan School of Management.

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