It is an absolutely necessary function since the literature review reveals that

It is an absolutely necessary function since the

This preview shows page 49 - 51 out of 70 pages.

It is an absolutely necessary function since the literature review reveals that oil industry it is full of constraints. The oil market is volatile and filled by many uncertainties which are due to two main characteristics, its complexity and inflexibility (Hussain et al., 2006; Gainsborough, 2006). This raises several other issues as well such as price fluctuation, long lead time, rigid procurement processes (Jenkins & Wright, 1998; Ribas et al., 2011). To handle these problems oil companies tend to integrate their different supply chain functions vertically (Stabell, 2001; Hall, 2002; Gainsborough, 2006). It is justified the necessity of vertical integration by allowing the MOL Group to have a greater control over the supply chain. That is why efficient supply chain management through optimization has a main role (Sz. Szabó, personal communication, 2012-04-02). The literature revi ew’s and interviewees’ approach to the problems shows a little difference but the key issues remain similar. The before mentioned constraints are introduced by the interviewees too but through the different functions of the supply chain such as demand forecasting, procurement constraints, refinery constraints, logistics constraints and marketing constraints. Also a few differences can be found in the way how the downstream is divided. MOL Group’s supply chain is introduced in detail, for instance marketing is categorized as wholesale and retail sale which have very different constraints. Regarding supply chain management, Ratliff (2007) states that optimization provides the greatest opportunity to improve cost efficiency. Hasini (2008) adds that optimization serves as a practise to use efficiently the resources. The interviewees also puts optimization in the centre of the MOL Group’s supply chain management. The organisation structure of MOL Group’s downstream supply chain underpins this statement as illustrated by interviewees. The interviewees listed the different units of supply chain management department at MOL: strategic planning, planning and optimization, refinery scheduling, supply and distribution planning and performance monitoring. Even though the name of these units appear with a slight difference, their function covers the optimization steps identified in the literature review proving the significance of optimization at the MOL Group and that its downstream supply chain management is built around it. The optimization steps are based on Bryan and McDougall (1998) who names these steps as follows: planning, scheduling, executing, tracking and adjusting. 5.2 Approaches to the Optimization Hussain (2006) emphasizes that integration has to happen from procurement to the delivery of the final product. Also suppliers and customers should be integrated into the supply chain. It is noted that the MOL Group is different in a
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44 way from the biggest oil companies where the upstream segment of the chain is integrated too. At MOL, upstream supply chain is a separate business segment (Sz.
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