Renewable Diesel Production and Distribution At Scale
A major US oil refiner optimized its renewable diesel feedstock purchasing through integrated S&OP, resulting in a multi-million dollar uplift in profit and improved adaptability to market changes.
Business Need
A leading US oil refiner with a complex global supply chain, identified an opportunity to leverage tax incentives through investment in the production of low carbon intensity fuels, including renewable diesel. Their existing S&OP software, designed for homogenous crude feedstocks, was not built for the diverse nature of renewable diesel feedstocks, unique processing constraints and consideration of US tax incentives.
This presented a challenge in optimal feedstock purchasing selection, blending and production.
Our Approach
Recognizing a need for a tailored solution, the organization was referred to Biarri, known for harnessing mathematical optimization to help operators make precise planning decisions through algorithm-driven software.
As part of our phased approach, Biarri rapidly stood up a Proof-of-Value (POV) prototype tool to prove the concept’s viability. Internal expertise from the organization paired with the evidence from this POV gave the organization the momentum to move ahead, and Biarri implemented a sophisticated planning tool that models the end-to-end value chain of Renewable Diesel production and recommends optimal feedstock purchasing decisions & benchmark prices.
The solution:
– Allows the organization’s procurement team to make optimal feedstock purchasing decisions without having to understand the complexity of the network.
– Enables production to know what it’s worth to push engineering limits/assumptions and trade-off longer term costs/risks with near term profitability.
– Allows leadership to understand the real return on capex investment in infrastructure.
The software comes with robust scenario planning capabilities and sophisticated reporting. The Biarri team has continuously adapted the software to evolving business requirements like 45Z tax incentives, new pre-treating processes, carbon intensity tracking and sensitivity analysis features.
The software is now embedded in the organization’s overall S&OP function and delivers continuous value.
The Results
- Our client achieved multi-million dollar additional profit through optimal purchasing decisions.
- The solution significantly improved adaptability to market shifts.
- The organization gained enhanced decision making capabilities through scenario planning outcomes.
- The solution has empowered the organization’s chemical engineers to optimize performance, without the need to hire:
- mathematical optimization experts to support a sophisticated model,
- or digital/IT to support a software solution.