energy trading and prescriptive analytics
TRANSCRIPT
Energy Trading and Prescriptive Analytics
Chris McManaman
March 2017
Its nice to know the destination. Its awesome to know the best route to get there.
Agenda
Challenges in Energy Trading and Supply Chain Optimization
Why is Prescriptive Analytics such a great solution?
How does Prescriptive Analytics work?
Challenges in developing energy supply chain solutions
Solutions to complex problems
Partnerships and Acquisitions
Collaboration among business functions
Risk Management Preparing for the future
The Excel Supply Chain Optimization Solution
Each asset on the supply chain is optimized using siloed spreadsheets, Access or one off applications
The Excel Supply Chain Optimization Solution
The ability to simulate or optimize a solution across the entire energy supply chain which would include input from both trading and operational models requires the compilations of many spreadsheets into a super massive spreadsheet. The effort required to develop this massive spreadsheet outweighs the value that the spreadsheet provides because of the time its takes and the number of adjustments and assumptions required to merge all the data
Data required to optimize an energy supply chain can get overwhelming…
Agenda
Energy Trading and Supply Chain Optimization
Why is Prescriptive Analytics such a great solution?
How does Prescriptive Analytics work?
The benefits of 5th Generation Prescriptive Analytics Software
• Drag • Drop • Configure • Integrate • Run
*notice the absence of the words: develop, compile, debug or the name of any programming language..
Energy trading supply chain analysts can stop building code to model and optimize scenarios…
…With this
• Each icon is drag and droppable • Each icon is configurable to set up constraints and variables • Each icon can import data
Integration of data and report generation
PnL Report
Income Statement
Balance Sheet
MtM Report
Credit Exposure Report
ETRM
ERP
DW
Excel/Access
Market Data
Prescriptive Analytic Software
Prescriptive Analytics optimizes decision making
Descriptive Diagnostic Predictive Prescriptive
Information Optimization
Hindsight Insight Foresight
Purchased Below normal temperature
Purchase Forecasts
Purchase supply based on forecast
Prescriptive Analytics
Introducing GPS capabilities to your trading, supply and origination capabilities
Descriptive Analytics
You ended up here
Hindsight + Information
Diagnostic Analytics
You were here
You ended up here
This is why you ended up at your destination
Hindsight + Information
Predictive Analytics
You need to be here
Foresight + Information
Prescriptive Analytics
You are here
You need to be here
This is the best path to get to your objective
Foresight + Optimization
Two ways that prescriptive analytics can provide GPS capabilities
Optimization Simulation
Operational Strategic
Balance exposure across industries
Managing natural gas storage
Increase revenue
Determine optimal pipeline route
Purchase additional capacity
Enter new markets
Change pricing index
Divest assets
Sophistication of intelligence
Competitive Advantage
Low market penetration
Agenda
Challenges in Energy Trading and Supply Chain Optimization
Why is Prescriptive Analytics such a great solution?
How does Prescriptive Analytics work?
Objectives
The three key elements used to determine the optimal solution
Decision variables
Maximize Generates Constraints Data
Pipeline capacity
Injection and withdrawal rates
Pipeline routes
Accounts receivable
Credit exposure
Accounts payable
Maximize net income
Hedge 20% of production
Minimize credit exposure
Developing the Optimization Model
What are we trying to optimize?
On what factors will we base our decisions?
What determines the most optimal solution?
What constraints must be honored to be accepted as a feasible solution?
Identify decision variables
Define objectives
Itemize constraints
Understand problem
Data Decision Variables Constraints
Prescriptive analytics is easy to implement
Maximize Net Profit
Purchase Price and Volumes
Production costs
Crude transportation
routes
Prescriptive analytic optimization models combine:
Objectives
Tariffs and Volumes
Pipeline costs Pipeline capacity
Fees and Volumes
Trucking costs Trucking capacity
Sales Price and Volumes
Sales Value Credit limit
How to get started?
Prescriptive Analytics Workshop 1 day in depth workshop on prescriptive analytics for a comprehensive discussion on prescriptive analytics
Prescriptive Analytics Training 5 day training on prescriptive analytics so your company can get hands on experience with prescriptive analytics
Prescriptive Analytics Assessment 2 weeks assessment of how prescriptive analytics can be applied to your company to improve net income
Prescriptive Analytics Proof of Concept 4-6 week proof of concept to demonstrate how prescriptive analytics can speed up decision making and improve revenue and reduce costs
Energy Trading and Supply Chain Analytics
https://www.linkedin.com/in/cmcmanaman/