Slajd 1

1
e-Course
ELOMPRES
LdV Transfer of Innovation
Logistic Management in Renewable Energy Industry
This project has been funded with support from
the European Commission under the Lifelong
Learning Programme. This publication
communication reflects the views only of
the author, and the Commission cannot be held
responsible for any use which may be made of the
information contained therein.
Introduction
2
Introduction
Course is divided into three main Modules
Module 1 - Energy, Module 2 Logistics and
Transportation, Module 3 - Business. Each Module
consists of learning Units.
Logistic management means management of all
interconnected flows of information, finance and
materials from raw resources through energy
production to distribution. Today logistic
management skills and competencies are crucial
for development of renewable energy sector and
especially for cost-effective energy generation
as well as power plant management. This course
provides the knowledge to understand the
principles of operations and management of energy
plants that use almost all known alternative
energy sources except nuclear energy. The
students will become familiar with the logistic
management of renewable energy sources
harnessing, conversion, energy production and
distribution and will be able to apply acquired
knowledge in management practice. More
information you can find in Study Book a
supplement to this course.
Module 1 consists 2 learning Units, Module 2 has
five Units and Module 3 consists of 2 learning
Units. Module 2 and Module 3 ends with quizes to
test and consolidate acquired knowledge.
NOTE If you are familiar with the knowledge
presented in Module 1, you may skip Module 1 and
go to the Module 2.
NEXT
Skip to Module 2
3
Module 1 - Energy
MODULE CONTENT

• Module 1 provides general overview about energy
  market and describes main technologies used today
  for power generation from renewable sources, that
  are relevant for an understanding of logistic
  management issues.
• Unit 1 Renewable energy production and
  consumption an overview, covers the following
  issues
• - Energy market structure
• Energy generation trends
• Economics of renewable energy market
• Introduction to energy economics and
  econometrics.
• Unit 2 Renewable energy technologies review,
  covers the following issues
• Wind energy
• Biomass and biofuels
• Hydropower
• Geothermal energy
• Solar energy
• Ocean energy tidal and waves.

START
Skip to Module 2
4
Module 1
Unit 1 Renewable energy production and
consumption an overview
Energy sources
Energy market actors
Sustainable energy supply is based on eight basic
technologies available in the market biomass,
geothermal energy, hydropower, photovoltaic
systems, solar thermal collectors, and wind
energy Modern renewable energy systems rely on
local renewable sources and intelligent
interchange of energy between regions

1. Main activity producers- generate power (heat
   and/or electricity) for sale to third parties.
   The sale need not take place through the public
   grid
2. Autoproducers- generate power for their own use
   as an activity which support their main activity

Types of energy producers

1. CHP - (combined heat and power plant) produces
   both heat and electricity, sometimes it is
   referred to co-generation although the term often
   refers to combustion of fossils and renewable
   sources, coal and biomasses for instance, despite
   of the kind of energy output
2. Heating plants - heat plant generates heat only
3. Power stations - electricity plant generates
   electricity only. This division does not take
   into account the type of energy sources (fossils
   or renewable) used for energy production

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Module 1
Unit 1 Renewable energy production and
consumption an overview
Energy conversion diagram
Energy losses
Primary energy
Conversion losses Distribution losses Self
consumption
solar, wind, hydropower, biomass, waste
Secondary energy
Useful energy
Energy losses
Biofuels (solid, liquid), biogas, power, district
heating
Heat, electricity, light, etc.
Conversion losses Distribution losses Self
consumption
Final energy
Energy losses
Biofuels (solid, liquid), biogas, power, district
heating
Conversion losses Distribution losses Self
consumption
Consumer losses
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Module 1
3
Unit 1
Unit 1 Renewable energy production and
consumption an overview
Demand fluctuations
Electricity supply needs to be adjusted in order
to match demand fluctuation Usually reserve
margins for electricity generation are 15 - 20
higher than planning demands what provides
appropriate balance between supply and costs
This condition is crucial for effective logistic
management across a whole supply chain
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Module 1
5
Unit 1
Unit 1 Renewable energy production and
consumption an overview
Classification of renewables
According to International Energy Agency
renewables and wastes are classified into three
main groups for market research purposes
Group I
Group II
Group III
Technologies that are used for direct
electricity generation (hydro, photovoltaic,
tidal/wave)
Sources that can be used directly or indirectly
for transformation to electricity and can not be
stored freely (geothermal and solar thermal)
Products that can be stored and used for
transformation or final consumption (wastes,
biomasses, biogas and liquid biofuels)
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Module 1
9
Unit 1
Unit 1 Renewable energy production and
consumption an overview
Economics of renewable energy market
Geothermal energy
Market
Costs
Geothermal energy is applied in four areas heat
pumps, energy storage, direct use and district
heating. From a technological point of view in EU
the vertical heat pump systems represent about
80 of all installations
Heating cooling Costs range Average
Deep geothermal 2 - 40 7,2
District heating 40 - 80 50
Shallow geothermal heating 10,8 - 320 1923
Shallow geothermal cooling 7,2 - 270 61
Market trend
Heating cooling 2010 2020
Geothermal heat pump (MWth) 11 500 30 000
Geothermal direct use (MWth) 4 500 9 000
Total installed capacity (MWth) 16 000 39 000
Heat cold production (Mtoe) 2,6 10,5
Costs of geothermal heating cooling (in /MWh)
Today only marginal part of underground heat
reservoir potential is used for electricity
generation, district heating or for heating and
cooling of individual buildings
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Module 1
1
Unit 2
Unit 2 Renewable energy technologies
The structure of energy system
Photovoltaic
Hydroenergy
Different technologies and diversification of
regional production and demands should balance
the fluctuations in energy supply between given
regions Combination of various technologies and
logistic management can assure stability of
energy supply despite of seasonal changes in
energy production
Hydrogen production
Power plants
Storage
Wind
Geothermal
Industry
Solar power
Residential
Biofuels
Commercial
Short term storage
Collector
Cogeneration
Furnaces
Transport
Solar houshold
Medium/long term storage
Electricity
Fuel
Heat
Applied from Droege P. (2009) 100 per cent
renewable energy autonomy in action,
Earthscan, London UK
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10
Module 1
2
Unit 2
Unit 2 Renewable energy technologies
Renewable technologies characteristics
Renewable energy technologies are divided into
two main groups CSCM (Complete Supply Chain
Management group) and PSCM (Partial Supply Chain
Management group)
Group Components of the Supply Chain Energy sources
CSCM 1. Procurement chain (supply of raw materials/resources for energy generation) 2. Production chain (processes for energy generation/production) 3. Distribution chain in terms of distribution of energy (heat or electricity) or post-processing/secondary materials for energy generation Biomass (solid and liquid)
PSCM 1. Production chain (processes for energy generation/production) 2. Distribution chain in terms of distribution of energy (heat or electricity) only Procurement chain is very limited to supply spare parts and MRO materials only Solar Geothermal Hydroelectric Wind Tidal/wave
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Module 1
6
Unit 2
Unit 2 Renewable energy technologies
Geothermal energy
Geothermal resources
Geothermal plants

• Type of geothermal power plants
• Dry steam geothermal power plant
• Single-flashing geothermal plant
• Dual-flashing geothermal plant
• Binary geothermal plant
• Investment costs vary depend on local
• geological conditions. Total cost of geothermal
• power plant with electric capacity of 1 000 kW is
  
• about 1,9 million

Dry steam the water has a temperature ranged
from 200 to 280 degrees Celsius, great amount of
steam is produced that is carried through
geothermal wells Hot water hot liquid water is
produced inside the reservoir wherever
temperature is lower than in case of dry steam
reservoirs. Geopressured reservoirs
temperatures are much lower than temperatures in
dry steam and hot water reservoirs and ranged
from 120 to 160 degrees Celsius. Only hot water
is directed to a power plant
Thermal energy carriers (steam or vaporization of
water) are used for electric power generation by
turbines, thermal energy may be used directly in
the central (or other) heating systems
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Module 1
7
Unit 2
Unit 2 Renewable energy technologies
Solar energy
Conversion potential

• parameters used to determine the
• potential to convert solar energy to
• useful forms of power
• maximum daily average power on a horizontal
  surface (W/m2)
• maximum daily energy received by a horizontal
  surface (J/m2)
• annual average incident power on a horizontal
  surface (W/m2)
• annual energy received by a horizontal surface
  (W/m2)

Technology
1. Solar-thermal systems include heat storage and
indirect production of electricity . 2.
Photovoltaic systems for direct electricity
generation Solar-thermal systems used heat
accumulated from solar radiation for production
of electricity using conventional thermal cycle
and for production of heat water for domestic
use and industrial processes
well insulated collector may heat water to
temperature 40-45 degrees Celsius but good
effective collectors may heat water or other
fluids to even 70-85 degrees Celsius
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Module 2 Logistics Supply Chain
MODULE CONTENT

• Module 2 starts from basic issues on supply chain
  management and planning and then more detailed
  knowledge about supply chain architecture,
  procurement, production and distribution chains
  management and finally logistics and
  transportation.
• Unit 1 Fundamentals of supply chain management,
  covers the following issues
• - Introduction, definitions
• Supply chain architecture
• Fundamentals of the supply chain management
• Supply chain metrics
• Material flow management
• Supply chain integration
• Supply chain planning.
• Unit 2 Procurement chain management, covers
• the following issues
• Inventory turnover
• Supplier sourcing strategy
• Cooperation with suppliers
• Stock management
• Spare parts and MRO.

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14
Module 2 Logistics Supply Chain
MODULE CONTENT cont.

• Unit 3 Production chain management, covers the
  following issues
• - Introduction to production process
• Production chain management
• Production planning
• Operating planning
• Maintenance management
• Unit 4 Distribution chain management, covers the
  following issues
• Introduction to distribution chain management
• Matching demand and supply
• Smart grids
• Distribution systems
• Unit 5 Logistics and transportation, covers the
  following issues
• - Introduction to logistics
• New role of logistics, convergence with
  marketing
• Logistics processes

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15
Module 2
Unit 1
2
Unit 1 Fundamentals of supply chain management
Supply chain definition
i
modern definition of supply chain management
covers all aspects of supply chain integration
(procurement, production, distribution) and
supplier-buyer relationships
i
supply chain is a group of inter-connected
participating companies or departments within one
organization, that add value to a stream of
transformed inputs from their source of origin to
the end products or services that are demanded by
the designated end consumers
supply chain management is a natural development
of the studies on logistics management
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Module 2
Unit 1
3
Unit 1 Fundamentals of supply chain management
Supply chain definition
synergy and entropy are two main aspects of
supply chains
i
synergy means that the whole is greater that the
sum of the parts that constitute it. Companies
or elements of supply chain working together can
achieve more than the sum of achievements
obtained by each of the company/element
separately
i
entropy means that system with poor feedback but
sufficient inputs has the tendency to continuous
debilitation (bullwhip effect is a good example
of debilitation)
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Module 2
Unit 1
5
Unit 1 Fundamentals of supply chain management
Supply chain architecture
supply chain is only formed by more than one
independent companies or departments (internal
supply chain) that they are interconnected to add
value to the stream of material flow running
through the supply chain
Supply chain network zones
Upstream zone
Midstream zone
Downstream zone
connects raw materials and MRO items with supply
chain. Includes transformation and preparing raw
materials to more suitable form (drying, cutting,
heating)
includes all manufacturing processes that
transform raw materials or components into final
products (energy or biofuels)
includes fulfillment of orders and connects
supply chain with all customers. This zone is
simpler in power plants and it is more complex in
case of biofuels producers
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Module 2
Unit 1
8
Unit 1 Fundamentals of supply chain management
Supply chain complexity
the supply chain complexity has significant
influence on supply chain functionality and
managing flows of all processes and their
outcomes (operational level) as well as
co-operation between all chain nodes at all
structural level
Complexity of the internal supplier-customer
relationships material and information flows
between departments
Internal organizational complexity product,
processes, structures, management, human
interactions
Complexity related to dynamic fluctuations varia
ble market condition, demand fluctuation,
location within supply chain
1
3
2
in energy sector the complexity of supply chain
structure ranged from very simple (as in solar or
wind energy plants) through middle degree (as in
biofuels producers) to very complex (as in large
co-generation plants using various kind of
renewable sources or renewables and fossil fuels)
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Module 2
Unit 1
13
Unit 1 Fundamentals of supply chain management
Supply chain management
Supply chain metrics
supply chain metrics are used for monitoring and
control its all operations material,
information, finance, demands flows within supply
chain to get best performance level, production
capacity and its adjustment to fluctuations in
time
tradeoff must exists between stock of raw
materials and volume of energy generation or
between inventory of final products and customer
service (in case of biofuels producers)
Data for performance measure
Strategic data
Tactical data
Operational data
What must be done?
How to do it?
What actually must be done?
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Module 2
Unit 1
14
Unit 1 Fundamentals of supply chain management
Supply chain management
Supply chain performance measures
Total supply chain management costs
Supply chain production flexibility
Supply chain cash flow cycle time
the costs includes process orders, purchase
materials, energy cost, comply with environmental
regulations, inventory management, information
systems, supply chain finance management.
Companies usually spend from 5 to 6 of average
sales revenues
this is average time for achieving 20 increase
in production when demand unexpectedly raised. It
may be treated as production flexibility. The
maintain stock of raw materials to quickly
respond to demand increases is common practice.
The production flexibility is measured in units
of time
this is an average number of days between the
execution of payment for raw materials and
received money for products sold CFCT (IDS
DSO) APPm Where CFCT cash flow cycle time,
IDS inventory days of supply, DSO days of
sales outstanding, APPm average payment period
for material
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Module 2
Unit 1
17
Unit 1 Fundamentals of supply chain management
Supply chain planning
Planning process
planning process includes configuration,
integration, strategic outsourcing capacity
planning
Supply side
Supply chain configuration determines how
partners are connected within supply chain, from
supply side, through production chain to
distribution/delivery side and depends on
technology used and market structure In most
power plants supply chain structure takes the
form called stable network In any other supply
chain configuration the structure is referred to
as dynamic network where energy producer does
not have stable suppliers and distributors
The Nature
Supplier
Supplier
Power plant
Final consumer
Electricity distributor
Heat distributor
Distribution side
Supply chain structure in the form of stable
network
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22
Module 2 - QUIZ
Unit 1 Fundamentals of supply chain management
Question Two main aspects of the supply chain
are
Select only one answer
logistics - management
synergy - entropy
A
B
transportation business processes
C
Question 1
23
Module 2 - QUIZ
Unit 1 Fundamentals of supply chain management
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Your answer is incorrect!
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Module 2 - QUIZ
Unit 1 Fundamentals of supply chain management
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25
Module 2
Unit 2
1
Unit 2 Procurement chain management
Procurement management
Definitions
the main task of procurement management is
keeping stocks of raw materials, MRO
(Maintenance, Repair, Operation) items and
finished products at a cost-effective safe level
by process called inventory management
inventory - materials in stock and often it is
called the idle resource of an enterprise items
stocked for sale (in case of biofuels), materials
in the process and raw materials that are not
utilized yet which will be used, spare parts and
MRO items
Raw materials
Finished goods
MRO supplies
Work-in-process
unprocessed materials (also solar radiation or
wind in case of pure energy plants) used for
energy generation or manufacturing of biofuels
final products ready to deliver to customers or
directly to consumer (heat, electricity, solid or
fluid biofuels)
necessary for production processes but they are
not a part of final products (lubricants,
solvents, spare parts and so on)
partially processed materials used in production
processes such as pellets, briquettes, partially
refined oils, prepared wastes, and so on. They
are often used for energy generation or biofuels
production
Inventory categories
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26
Module 2
Unit 2
2
Unit 2 Procurement chain management
Procurement management
Puchasing department
Purchasing department
Purchasing must become supply management
Centralized
Decentralized
Purchasing department is responsible for all the
purchasing decisions such as order quantity,
negotiations, contracting, supplier selection and
evaluation and overall pricing policy
All activities are delegated to each individual
department that takes all responsibilities for
purchasing process and often procurement
management Hybrid type of purchasing
organization, centralized-decentralized structure
may be useful (centralized purchasing of raw
materials and decentralized purchasing of MRO
materials)
Centralized structure is much better for power
plants because of one or very few final products
offered (heat, electricity, biofuels) and raw
materials used (biomasses, biofuels, fossils)
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Module 2
Unit 2
3
Unit 2 Procurement chain management
Procurement management
Procurement chain
procurement chain starts from supplier/vendor of
raw materials and ends at the point of starting
production process or storage facilities and
management of procurement processes is important
for energy plants that buy raw materials (biomass
or fossil fuels) for power generation or biofuels
production (both solid and fluid)
when the Nature is the only one supplier of raw
materials for power generation as in case of
wind farms or solar power plants, the procurement
process is limited to purchasing of spare parts
and services related to MRO activity (Maintenance
Repair Operation) that allows continuous plant
operation and capacity maintenance at desired
levels
the procurement function is divided into five
activity categories purchasing, consumption
management, vendor/supplier selection, contract
negotiation and contract management
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Module 2
Unit 2
7
Unit 2 Procurement chain management
Procurement management
Sourcing strategy matrix
sourcing matrix helps to set different strategies
to manage risk
High
Bottleneck
Critical
Sourcing risk
Routine
Leverage
Low
High
Spend
Applied from Kraljic, P. (1983). Purchasing
must become supply management. Harvard Business
Review, 61(5)
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Module 2
Unit 2
10
Unit 2 Procurement chain management
Procurement management
Inventory management
cycle stock One of the important measures is an
average stock size based on the order quantity.
The average stockholding is expressed by the
simple equation
A Q/2 A average stockholding Q order
quantity
safety stock protect against uncertainty,
unexpected events from the side of supplier or
unexpected demand fluctuations. Safety stock may
be calculated using a simple formula
SS DD x SD SS Safety Stock (in tons) DD
Daily Demand (in tons) SD Supplier Delay (in
days)
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Module 2
Unit 2
11
Unit 2 Procurement chain management
Procurement management
Inventory management
economic order quantity (EOQ) method for
calculating order quantities that enable to hold
stock volume of raw material as well as finished
goods at most cost-effective level and it is used
most commonly by many companies. This method can
be useful for power plants using biomass or
fossil fuels for energy generation and in case of
biofuels producers for inventory of finished
products
EOQ
C cost per order R annual demand in
units (quantity of raw materials necessary for
generation of one unit of energy) P
purchase cost of one unit F annual holding cost
(fraction of unit cost) PF holding cost per
unit per year
the economic order quantity is useful when demand
rate is known, constant and continuous, supplier
lead time is known and constant, there are no
stock out, replenishment is instantaneous, cost
structure is fixed, there is sufficient space,
capacity and capital to procure the desired
quantity
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31
Module 2 - QUIZ
Unit 2 Procurement chain management
Question Procurement chain starts from
Select only one answer
supplier of raw materials and ends at the point
of starting production
supplier of raw materials and ends at customer
side
A
B
supplier of raw materials and ends at the
storehouse
C
Question 1
32
Module 2 - QUIZ
Unit 2 Procurement chain management
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Your answer is incorrect!
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33
Module 2 - QUIZ
Unit 2 Procurement chain management
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34
Module 2
Unit 3
1
Unit 3 Production chain management
Energy producers
renewable energy manufacture sector may be
divided into three main groups of producers
depends on raw materials and technology used
(regardless of the type of energy generated, heat
and/or electricity)
Pure energy producers
Energy producers
Biofuels producers
energy producers energy is generated by the
combustion process using biofuels (solid or
liquid), fossil fuels or mixed combustion of
fossils and biofuels (usually solid biomasses)
biofuels producers production of secondary
energy carriers in the form of solid (palettes,
for example) or liquid (biodiesel, bioethanol,
for example) fuels, utilizing various solid
biomasses or wastes
pure energy producers energy is generated from
renewable clean sources such as solar, wind or
hydro-energy
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35
Module 2
Unit 3
2
Unit 3 Production chain management
Production process
production process - all activities that
transform raw materials into finished goods. The
character of production system has a significant
effect on the whole supply chain organizational
and functional structures and management
Inputs
Transformation process
Outputs
Product design Process planning Production
control Maintenance
Men Materials Machines
Information Capital
Products Services
Continuous
Inventory Quality Costs
Environment
Feedback information
Applied from Kumar S.A., Suresh N. (2008)
Production and Operations Management, NewAge
International New Delhi, India
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Module 2
Unit 3
3
Unit 3 Production chain management
Continuous production system
Production process
production lines - sequence of production
operations from raw materials to finished product
(heat, electricity or biofuels) and often use
conveyors and other transfer devices for
facilitation of the flow of materials
Advantages
Conditions

• standarized final product or by-products
• standarized production process sequence
• higher rate of production with reduced cycle
  time
• material handling is automatic or semi-automatic
• unit cost is lower because of high volume of
  production

• dedicated plant design and equipment with zero
  or near zero flexibility
• material handling is often fully automated
• predetermined sequence of process operations
• planning and scheduling is often treated as a
  routine action

Limitations
- often very high investment in plant
facilities - product differentiation is
extremely limited
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Module 2
Unit 3
11
Unit 3 Production chain management
Management
Maintenance management
maintenance means the activities of keeping
something in good condition, actions that should
be taken to prevent devices/equipment from
failing and keeping them at the best operating
condition
Reactive maintenance
Preventive maintenance
Predictive maintenance
activities that detect the onset of a degradation
mechanism what allow to take preventive action
that eliminates harmful stressors. Predictive
maintenance is based on actual condition of the
machine. Reduction in maintenance costs (by 25 -
30), elimination of breakdowns (by 70 - 75),
reduction in downtime (by 35 - 45), production
increase (by 20 - 25)
actions performed on time or run-based schedule
that detect, preclude or mitigate degradation of
machine or its parts for maintaining its proper
operating and useful life time. Cost effective,
increasing machine life cycle, energy savings,
reduced process failure incidents
do not do anything until it breaks. Worst type
of maintenance strategy. This approach leads to
shorter life time of equipment and is associated
with the risk of temporarily disrupt or even stop
a production process
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Module 2
Unit 3
12
Unit 3 Production chain management
Management
Maintenance management
it is important to rank the plant units by
failure consequence using four levels of their
impact on production and safety
Level Production consequences Safety consequences
Level 1 Failure causes an immediate and significant production loss Failure causes an immediate and high risk safety hazard
Level 2 Failure causes an immediate but low production loss Failure causes an environmental pollution hazard
Level 3 Failure causes a potential production loss Failure causes a potential safety hazard
Level 4 Failure causes no immediate or potential production loss Failure causes no safety hazard
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39
Module 2 - QUIZ
Unit 3 Production chain management
Question From the production chain management
point of view, renewable energy manufacture
sector is divided into
Select only one answer
pure energy producers, energy producers and
biofuels producers
energy producers, biomass producers, solar energy
plants
A
B
biomass and fossils combustion plants, renewable
energy producers
C
Question 1
40
Module 2 - QUIZ
Unit 3 Production chain management
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Your answer is incorrect!
Please try again
41
Module 2 - QUIZ
Unit 3 Production chain management
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Your answer is correct!
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42
Module 2
Unit 4
1
Unit 4 Distribution chain management
Distribution management
Distribution and demand
distribution management is an integrated part of
supply chain and in energy sector two different
approaches are used depend on the type of
business (1) energy producers and (2)
manufacturers of energetic products such as a
secondary energy carriers such as solid and
liquid biofuels
Total energy demand
External demand
volume of energy that is sold to customer or
final consumer via the electric grids or
pipelines, in case of hot water or steam
Internal demand
biofuels producers distribution networks are more
complex and may include warehouses, distributors,
retailers so distribution chain management is
more complex
the volume of energy used by power plant for
maintain its operation
5 to 7 of electric energy produced in steam
power plants (fossils, biomass, biogas) is used
on-site to maintain plants in operation state
(enable electricity generation). Hydro power,
solar and wind as well as combustion turbine
power plants use relatively less electricity to
maintain their operation
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43
Module 2
Unit 4
7
Unit 4 Distribution chain management
Distribution management
Matching supply demand
forecast demand is important for supply chain
integration. Accurate forecast demand allows to
produce and deliver the right quantities in a
cost-effective manner, what means achieving of
optimal levels of cost and customer service
quality. Lower inventory, reduced stockouts,
better production plan, reduced costs and
improved customer service are the benefits of
better forecast
Large stock
Flexible pricing
Biofuels producers. Holding large stock available
at any time regardless of fluctuations in demand
level. This strategy allows to maximize sales but
it is expensive the cost of holding inventory
is high.There is a risk of inventory
obsolescence. Power plants - fixed price and
constant volume of energy generation resembles
that approach in some extent
Price is higher during peak demand periods (for
reduction of high demand) and then price is
lowered (certain discount rate is used) beyond
that period when demand decreases. This approach
can still lead to lower sales volume (stockouts).
Some companies move their production capacity
outside the period of daily peak demand for
energy when they have such possibility
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Module 2
Unit 4
9
Unit 4 Distribution chain management
Distribution management
Distributed energy generation
Definition
distributed energy - convergence of energy
consumption with energy production, combined heat
and electricity, energy storage, power quality
and demand response and demand side management
distributed energy technologies include solar
photovoltaic modules, combustion turbines,
microturbines, fuel cells and batteries, wind
turbines, reciprocating and stirling engines and
others. Dynamic energy management system is a
demand side energy resource that integrates
energy efficiency and load management. The key
challenges include balancing customer demand for
electricity with cost, environment protection and
stakeholder requirements
new energy services became more demand responsive
which enable load and distributed energy
resources to provide capacity into the bulk power
system in response to grid contingencies and
market pricing signals
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Module 2
Unit 4
10
Unit 4 Distribution chain management
Distribution management
Distributed energy generation
Central power plant
Commercial buildings
Industry
Grid National / Regional
Household
Household
Household
Household
Household
Household
Renewable source plant
Renewable source plant
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46
Module 2 - QUIZ
Unit 4 Distribution chain management
Question Accurate demand forecast is important
for
Select only one answer
deliver the right quantities in a cost effective
manner
holding a large stock available
A
B
set a much higher prices for energy
C
Question 1
47
Module 2 - QUIZ
Unit 4 Distribution chain management
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Module 2 - QUIZ
Unit 4 Distribution chain management
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49
Module 2
Unit 5
1
Unit 5 Logistics and transportation
Logistics
Definitions
logistics - part of supply chain management
that plans, implements and controls the
efficient, effective forward and reverse flow and
storage of goods, services and related
information between the point of origin and the
point of consumption in order to meet customers
requirements
Council of Supply Chain Management Professionals
supply chain management covers all logistics
functions procurement, distribution,
maintenance, inventory management, marketing,
finance and customer service management
today logistics is seen as relationships between
three main elements
Logistics Supply Materials Management
Distribution logistics is concerned with
physical and information flows and storage from
raw materials, production process to distribution
of finished product
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50
Module 2
Unit 5
3
Unit 5 Logistics and transportation
Logistics
Logistics marketing
Marketing and logistics convergence
Consumer franchise Brand values
Innovation Benefit focused
logistics has an ability to influence on the
benefit to costs ratio, both in terms of positive
or negative impacts
Marketing advantage
Customer value Cost of ownership Value adding
relationships Service quality
Supply chain effectiveness Low cost
supplier Reduced asset base Network management
Applied from New S., Westbrook R. (2004)
Understanding Supply Chain, OUP Oxford, UK
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51
Module 2
Unit 5
7
Unit 5 Logistics and transportation
Logistics
Functional structure
Managing director
Distribution manager
Planning control
Operations
Inventory management
Depot network Customer service Budgetary
control Information systems
Warehouse management Transport management Depot
management Delivery operations Order processing
Demand forecasting Stock control Materials
management Unit loads Packing (biofuels)
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52
Module 2
Unit 5
10
Unit 5 Logistics and transportation
Transportation
Transportation costs
transportation cost depends mainly on the
distance between power plant and energy resource
as well as power plants (or biofuel manufacturer)
and final customer/consumer. Primary energy
sources and large power plants usually are placed
relatively far away from the population centers
and require bulk transmission lines or
transportation of raw materials used for energy
generation over a long distance (often over 100
km)
Operating costs of energy transportation
Fixed costs
Variable costs
depend on the amount of transported energy and
include cost that covers energy losses in
transmission lines, lost of primary energy
resources during loading and unloading,
maintenance of rolling-stock as well as
maintenance cost of the fixed transport
infrastructure and cost of land occupied by
transmission line corridors
as function of the energy transport distance and
include cost of generating additional energy
required to cover the losses in transmission
lines, production of additional primary energy
resources to cover the losses during
transportation and maintenance costs of the
variable transport infrastructure
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53
Module 2 - QUIZ
Unit 5 Logistics and transportation
Question Supply chain management covers
Select only one answer
procurement and distribution
all logistics functions
A
B
marketing and customer service
C
Question 1
54
Module 2 - QUIZ
Unit 5 Logistics and transportation
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Unit 5 Logistics and transportation
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Module 3 - Business
MODULE CONTENT

• Module 3 provides knowledge on risk analysis and
  management and business process management in two
  consecutive learning Units.
• Unit 1 Risk analysis and management, covers the
  following issues
• - Introduction, definitions
• Risk management, SOAR method
• Risk management in the supply chain
• Relationships between risk and performance
• Regaining stability.
• Unit 2 Business process management, covers
• the following issues
• Business process definition and process
  complexity
• Categories of business processes
• Process management cycle
• Performance management
• Business process lifecycle.

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57
Module 3
Unit 1
Unit 1 Risk analysis and management
Definitions
risk - someone or something that creates or
suggests a hazard and manifests itself in events
that have consequences, usually dangerous or
hazardous for business
risk is the potential for loss caused by an event
(or series of events) that can adversely affect
the achievement of a companys objectives
SOAR (Strategic Objectives At Risk and from the
process point of view Set Observe Analyze React)
methodology is often used for analysis and risk
treatment and defines a process that allows to
identify and determine whether to take a risk and
prepares organization for the consequence of an
event and taking appropriate countermeasures for
elimination of risk and eliminate or mitigation
of its effects
risk management is dealing with uncertainty for
the enterprise and methodology for managing
risks that have impact on strategic objectives of
a company
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58
Module 3
Unit 1
Unit 1 Risk analysis and management
SOAR process
Monitoring right metrics?
Right objectives risks?
NO
NO
YES
YES
Cause-effect Analysis
Set metrics drivers, controls
Observe Metric values
Analyze Metric values
Objectives Plan
React
YES
NO
Need to reset strategy?
Applied from Monahan G. (2008) Enterprise Risk
Management, John Wiley Sons Hoboken, USA
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59
Module 3
Unit 1
Unit 1 Risk analysis and management
Risk management in supply chain
supply chain system may be vulnerable with
respect to as diverse harmful or dangerous events
such as technical failures, human errors,
environmental impacts, loss of key staff,
variation in raw materials prices, interruptions
in supply of raw materials and so on. The adverse
environmental conditions could have tremendous
impact on the short or long term vulnerability of
supply chain systems (pure energy plants, for
example)
Supply chain vulnerability analysis
Determine and understand how the probability and
consequences of such risky events and threats
could be reduced and managed in cost-effective
manner to achieve an acceptable vulnerability
levels
Understand the nature and types of factors that
have an impact on the achievement of the supply
chain short and long term objectives
Identify and understand core processes and
mechanisms through which risks and
vulnerabilities may evolve
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60
Module 3
Unit 1
Unit 1 Risk analysis and management
Types of risk
Delays in material flows
Normal risk
is usually managed as a part of supply chain
management fluctuations of process yields,
materials costs, demands
often occur, can be predictable are usually
managed as a part of supply chain management
Abnormal risk
system failure, is hard to assess and risk
management in such cases is part of business
continuity efforts but some experts believe that
such risks should be treated as a tasks belong to
supply chain risk management process
Disruption to material flows
rare and unpredictable, more harmful in their
consequences, caused by serious events such as
disasters, fires, labor strike and can
temporarily stop the flow of material
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61
Module 3 - QUIZ
Unit 1 Risk analysis and management
Question Risk management is
Select only one answer
dealing with something wrong
dealing with uncertainty
A
B
dealing with natural disasters only
C
Question 1
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Module 3 - QUIZ
Unit 1 Risk analysis and management
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Module 3 - QUIZ
Unit 1 Risk analysis and management
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Module 3
Unit 2
Unit 2 Business process management
Definitions
Business process
business process is a structured, measured set
of activities to produce a specific output for a
particular customer market. It implies a strong
emphasis on how work is done within an
organization, in contrast to a product focuss
emphasis on what. A process is thus a specific
ordering of work activities across time and
space, with a beginning and an end, and clearly
defined inputs and outputs a structure for
action
business process can be simple or very complex
depend on nature of business, production and
services. Production processes are relatively
easy to analyze because they refer to what people
do while service processes are more complex
almost all supply chain and logistics processes
are directly or indirectly integrated with one or
more business processes and should use principles
and rules for their own process design
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65
Module 3
Unit 2
Unit 2 Business process management
Business process classification
Operational
Organizational
operational business processes contribute to one
organizational business process and they are
basis for developing implemented business
processes that contain information on execution
of the process activities and technical and
organizational conditions. Each operational
business process includes detailed specifications
for all activities and their relationships
organizational business processes are
characterized by their inputs, outputs, expected
results and their dependencies on other
organizational business processes existed within
company structure, for example, business process
used to manage incoming raw materials
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66
Module 3
Unit 2
Unit 2 Business process management
Levels of business processes
Business strategy
Goals
Operational processes
Organizational processes
Implemented business processes
determine
realize
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67
Module 3
Unit 2
Unit 2 Business process management
Business process management
Definition
business process management is a comprehensive
system for managing and transforming
organizational operations. It means the
achievement of on companys objectives through
the improvement, management and control of
crucial business processes
modern business process management is an
integrated system used for managing business
performance by managing end-to-end business
processes (business process means all activities
that add value to the final product)
business process management can be treated as an
organizational capability and it is not the
simple execution of the tasks along a process
lifecycle (i.e. identify, model, analyze,
improve, implement, execute, monitor and change)
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68
Module 3
Unit 2
Unit 2 Business process management
Business process management
Business process lifecycle
Evaluation process mining and activity monitoring
Design analysis process identification,
modeling, validation
Enactment operation, monitoring, maintenance
Administration and stakeholders
Configuration system selection implementation
Business process lifecycle consists of phases
that are related to each other and are organized
in a cyclical structure with logical dependencies
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