It is an absolutely necessary function since the

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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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.