The behind of PETRONAS

PETRONAS is well known as the biggest manufactory oil in Malaysia. PETRONAS' Logistics and Maritime Business is mainly undertaken by shipping subsidiary, MISC Berhad. MISC is Malaysia's leading international maritime corporation. The principal businesses of MISC consist of ship owning, ship operating, other shipping related activities, owning and operating of offshore floating facilities as well as marine repair, marine conversion and engineering and construction works. MISC has grown from being purely a shipping line in 1968 to become a fully integrated maritime, offshore floating solutions, heavy engineering and logistics services provider. This was brought about when MISC became a subsidiary of PETRONAS in 1998, a move that produced synergistic benefits especially in the field of oil & gas transportation. As a subsidiary of PETRONAS, MISC adds value to petroleum and LNG business by providing the Group with reliable transport and logistics support as well as the flexibility to trade the products in the international markets. Its modern and well-diversified fleet of more than 130 vessels with a combined tonnage of more than 13 million deadweight tons (DWT) traverses the globe, calling at most major ports around the world. Through its subsidiary, Malaysia Marine and Heavy Engineering Holdings Berhad (MHB), MISC has also built a strong foundation in the marine and heavy engineering industry. Today, MHB is well on its way to become a center of choice for marine repair undertaking the repair and maintenance of LNG carriers, Very Large Crude Carriers (VLCC), Ultra Large Crude Carriers (ULCC) and other marine vessels and marine facilities. Its marine conversion and engineering and construction business also offers a range of construction and engineering services of oil and gas production facilities, contributing in particular to the development of PETRONAS' deep water operations. MISC also offers total logistics services which include Freight Management, Transportation and Warehousing services through its wholly owned subsidiary, MISC Integrated Logistics Sdn Bhd (MILS). MILS' specialized Project Logistics and Supply Chain Management unit serve the upstream and downstream logistics requirements of PETRONAS and the global energy industry.

Downstream (Oil and Petrochemicals)

Oil

PETRONAS adds value to the crude oil produced by their exploration and production operations through their integrated oil business that encompasses refining, marketing, trading and retail operations. Comprising a range of significant grades from various regions, the crudes are traded and marketed internationally as well as processed into petroleum products at their refineries for both domestic and export markets. They own and operate four refineries with a total refining capacity of more than 448,000 barrels per day. The petroleum products from these refineries are marketed through their network of service stations in several countries, including in Indonesia, Malaysia, South Africa, Sudan and Thailand.

Petrochemicals

PETRONAS’ venture into the petrochemical industry adds further value to the nation’s gas resources. They partner foreign multinational companies to acquire the best petrochemical expertise and technological know-how. With adequate feedstock via the Peninsular Gas Utilisation (PGU) pipeline, PETRONAS is positioning Malaysia to be a competitive petrochemical hub with the establishment of two integrated petrochemical complexes (IPCs) with superior logistics and infrastructure capabilities. The Kertih IPC and the Gebeng IPC provide ready sites for petrochemical plants with the provision of industrial gases and utilities via the Centralised Utility Facilities, ports and a railway link for a more efficient delivery system. Since 1992, the IPCs have grown to become home to more than 20 petrochemical plants. The IPCs are aimed to enhance competitiveness through the establishment of synergistic linkages and integration both within plants as well as between common infrastructure and support facilities, making the entire manufacturing process more cost effective and efficient. PETRONAS is also promoting the plastics manufacturing sector by developing the Kertih Plastics Park to take advantage of readily available feedstock from the adjacent IPC. PETRONAS’ subsidiary, PETRONAS Chemicals Marketing Sdn Bhd (PCM), markets and trades their petrochemical products to both Malaysian and international customers.

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RELATIONSHIP MANAGEMENT

                                 
Relationship management is a professional who works to improve a firm's relationships with both partner firms and customers. Relationship management is generally divided into two fields’ customer relationship management and business relationship management. Both fields share the common goal of facilitating good relationships such that the business maximizes the value of its relationships and maintains a good reputation overall.

Relationship management also is one of the most important management systems that should be in place and as such it should be clearly documented both in policy and in practice. It uses its own virtuous action cycle that acknowledges the joint nature of the effort and ensures that performance increases become inevitable.

In relationship management the partners review the quality of their collaborative relationship and its achievements, adjust their way of working to keep their relationship in step, agree improvements to their processes and behaviors and operate together. Many advantage can we get when we implement the relationship management

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Besides that, by formally managing the essential activities of the joint enterprise it becomes proactive and responsible. It must be supported by objective relationship performance measures that create clear joint

understanding between partners to time, cost and quality. This management system has the ability to always capture joint value within your collaborative business relationships.

Relationship management has the opportunity to create positive or negative customer perceptions based on how well the delivery process is performed. Taking these facts into consideration, it is easy to see that managing relationships between buyers and sellers of transportation services is a process that is critical to successfully meeting the transportation requirements of an organization. This section will discuss the different types of relationships that firms can be involved in, with special attention given to contracts and partnerships. Also discussed will be the concepts of outsourcing and third parties.

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THE INFORMATION TECHNOLOGY IN LOGISTICS PROCESS

 In logistic information, there several  types of system is use in order to smooth the logistics operation which is firstly RFID (Radio Frequency Identification) is involved in packaging, handling, storage, and transportation. RFID is an automatic identification method, relying heavily on storing and remotely retrieving data using devices called RFID tags or transponders. An RFID tag is a small object that can be attached to or incorporated into object, person or any appropriate design logistic item. There are several forms of identification, but the most common is to store a serial number that identifies the person or objects, and perhaps other information, on a microchip that is attached to an antenna (the chip and antenna together are called an RFID transponder or an RFID tags).The antenna enables the chip to transmit the identification data to a reader. The reader converts the radio waves reflected back from RFID tag into digital information that can then be transmitted to computers that can make use of it.

          The purpose of an RFID system is to enable data to be transmitted by a mobile device, called a tag which is read by an RFID reader and processed according to the requirements of the specific application. The data transmitted by the tag may provide identification or location information, or other specific about the item tagged, such as price, colour, and dates of purchase. The utilization of RFID in logistics has expanded dramatically because its ability to track objects moving within the logistics infrastructure. Besides, the Electronic Commerce. It is the term used to describe the wide range of tools and techniques utilized to conduct business in a paperless environment. Electronic commerce therefore includes electronic data interchange, e-mail, electronic fund transfers, electronic publishing, image processing, electronic bulletin boards, shared databases and magnetic or optical data capture. Companies are able to automate the process of moving documents electronically between suppliers and customers.

          Next, Electronic Data Interchange. Electronic Data Interchange (EDI) refers to computer-to-computer exchange of business documents in a standard format. EDI describe both the capability and practice of communicating information between two organizations electronically instead of traditional form of mail, courier, and fax. The benefits of EDI are:

1. Quick process to information.
2. Better customer service.
3. Reduced paper work.
4. Increased productivity.
5. Improved tracing and expediting.
6. Cost efficiency.
7. Competitive advantage.
8. Improved billing.

          Though the use of EDI supply chain partners can overcome the distortions and exaggeration in supply and demand information by improving technologies to facilitate real time sharing of actual demand and supply information. Another information technology is a Bar coding and Scanner. Bar code scanners are most visible in the checkout counter of super market.  This code specifies name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants. Data warehouse is a consolidated database maintained separately from an organization’s production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated.

          Next is Enterprise Resource planning (ERP) tools. Many companies now view ERP system for example Baan, SAP, People soft as the core of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data.

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CARRIERS STRATEGIES

                 

    There are five types of carriers’ strategies that are operating strategies, technology and equipment, the hub-and-spoke route system, marketing and coordination. But, I will explain about operating strategies only. The operating strategies are the rule of efficiency states that it is most efficient to move in a continuous straight line whenever possible. This rule describes the most efficient movement of goods and people. (a) Intermediate handlings should be minimized. This rule of thumb bears special attention when a different transportation firm meets as part of a through move. Rail transports often use run-through trains with the engines and cars remaining intact in interline moves to minimize interchanges time loss. (b) The full capacity of the transportation vehicle should be maximized on each run. Transportation costs of trucks, trains, ships and plane are similar in that the costs of personnel, depreciation, licenses and taxes are relatively fixed costs that are incurred for each run. Each trip should be fully utilized by consolidation cargo with other shippers. (c) Consolidation and break-bulk activities should be used to achieve full capacity for long-haul movement. One means of attaining full equipment use is to use a pickup and delivery network to accumulate freight for the line-haul efficiency. Trucking firms do this with city vehicles that bring different shipments to a terminal for sorting, accumulation and shipping in a bulk quantity to the destination city terminals. For example, shipment from Johor Bahru to Perlis must be fully utilized then do break-bulk. It also can save cost, cost per unit become lower and it also can save time. (d) Empty mileage should be minimized. The cost of moving an empty vehicle is almost that of moving a loaded one without the offset of revenue. Energy is a major cost in transportation systems. In very few instances can a firm afford one-way loaded movements with empty return hauls. The truck is fully loaded by cargo. No empty movement and make sure return to Malaysia with a cargo back. (e) Movements should be scheduled and dispatched so as to fully use labour and equipment in line with the market. Transportation service cannot be stored it is because the service must be in place for the market. This rule calls for the optimal equipment levels to be in place with the required personnel. The transportation should be in scheduled. Neither the equipment nor the required labour should delay the move. For example, a waste occurs when crews arrive for work and there is no equipment available for the trip or little freight to be handled that day.

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UNDERSTANDING FREIGHT CHARGES

Freight charges are the costs entailed in transporting goods from one geographical location to another. They can include packaging and insurance costs in addition to various transportation charges. Some types of freight charges are incurred by the seller and some are incurred by the buyer. 

A combination of transport methods is often used in order to move purchased goods from one location to another. For example, when a customer purchases books from an online retailer, he may choose to have them shipped overnight. The seller will often enlist the services of a shipping company that will first use a truck or van to transport the package to an airport facility. A plane will then be responsible for transporting the package to the nearest delivery facility, where it will once again be delivered to the customer's address by van or truck. 

In this type of situation, the seller must pay the shipping company to ensure that its goods reach the consumer by the agreed upon delivery date. Most of the time, the customer will reimburse the seller for the freight charges at the time of purchase. This is what is sometimes referred to as free on board destination, where the seller actually continues to own the goods while they are being transported. If for some reason they do not reach the customer, he is not responsible for payment and the seller must file a claim with the shipping company. 

Sometimes sellers will offer to waive freight charges as a special promotion. This may be done to entice first-time purchases or a certain volume of purchases. The amount of profit that the seller makes from the sale of its goods more than makes up for the shipping costs.   

Certain types of freight charges incur higher costs than others. Ground transportation in the form of rail or trucks is usually considered to be the least expensive, although it can also take the longest. Some retailers offer to waive freight charges if customers choose to have the goods delivered to one of their store locations. They utilize their existing channels of distribution in order to move goods from one location to another, which does not result in any increased costs for the company or the customer. Company owned trucks that are already transporting other goods to the store location may be used to accomplish this. 

When goods are transported, packaging and insurance is a concern. The shipping company may allow customers and businesses to purchase supplemental insurance and delivery verification services for an additional fee. Some companies include these in the standard shipping rate. Packaging and labeling is usually included in the standard freight charge.

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MARKET STRUCTURE

The focus of this post today is regarding the market structure. There are four types of market structure which are pure competition, perfectly monopolistic market, monopolistic competition and also oligopoly.

Let first discuss about the perfect or pure competition. Perfect competition is rare in the real world, but the model is important because it helps analyze industries with characteristics similar to pure competition. Examples of perfect competition are stock market and agricultural industries. There are many characteristics of this type of market structure. The first one is there are having many sellers in this competition. But since they are having enough buyers in this competition, a single seller’s decision has no impact on market price. The products also can be categorized as homogenous or standardized products which mean that each seller’s product is identical to its competitors. The sellers in perfect competition also known as the price takers as individual firms must accept the market price and can exert no influence on the price. Lastly is this type of market structure also offered free entry and exit concept where there is no significant barriers that could prevent firms from entering or leaving the industry.

Next is the perfectly monopolistic market or pure monopoly. Perfectly monopolistic exists when a single firm is the sole producer of a product for which there are no close substitutes. For the examples is Telekom Nasional Berhad (TNB) or Kereta api Tanah Melayu Berhad (KTMB). The characteristic of perfectly monopolistic is, the first one, the perfectly monopolistic structure is conquered by one organization or can be said as single seller where the firm and industry are synonymous. The product also can be categorized as a unique product as there are no close substitutes for the firm’s product. For example is ASTRO , there are no other companies that offered the same service in Malaysia. Next, the firm is the price maker as they are free to fix the price. Lastly, to enter or exit the market, it is very strict or could be said that the entry or exit is blocked. This is due to the high requirements and the large investment needed.

The third market structure is the monopolistic competition. Monopolistic competition is refers to a market situation with a relatively large number of sellers offering similar but not identical products. For example is the fast food restaurant such as KFC or Pizza Hut or clothing stores likes Padini Concept Store or Nike. The first characteristics of this type of market structure is there are many sellers in the market but not as many as perfect competition and each of the firm has a small percentage of the total market. In the term of product, it could be said that this market structure is having a differentiated products where there are variety of the product which makes this model different from perfect competition market structure. The product can be differentiated in style, brand name, location, advertisements, packaging, etc. It is also easy to enter or exit the market but not as easy as perfect competition.

The last one is the oligopoly structure. Oligopoly exists where there are few large firms producing a homogenous or differentiated product dominate a market. The examples are automobile company like Proton or gasoline industries such as Petronas or BHP. For oligopoly, there are having only a few large firms where each must consider its rivals’ reactions in respond to its decisions about prices, output and advertising. In this market structure, they are producing standardized or differentiated products. For the price, it is determine by two ways where the first one is based on price leader. The price leader is the company who dominate the market and the price stated will be follow by the others firms. The second way is based on cartel. Cartel is a non-profit organization or associations. The entry into this market also hard as it needs a huge capital investments which could be said as the main barrier to enter this market.

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