Global Supply Chain
Supply Chain Leadership
About
CASTROL
Castrol, one of the world’s leading lubricant brands, has a proud heritage of innovation and fuelling the dreams of
pioneers. Our passion for performance, combined with a philosophy of working in partnership, has enabled Castrol
to develop lubricants and greases that have been at the heart of numerous technological feats on land, air, sea,
and space for over 125 years. Our branded products are recognised globally for innovation and high performance
through our commitment to premium quality and cutting-edge technology.
Castrol India's journey is driven by innovation, fueled by passion, and defined by commitment to creating value.
With our stakeholders at the centre of it all, we forge ahead, facilitating resolute trust and igniting growth with
bold, visionary strategies that redefine the future. For more information, please visit: www.castrol.com or read our
Annual report of 2024 . You can also follow us on LinkedIn to be up to date with what is happening in our world
7 litres
Of Castrol sold
every second
5500+ 400+ 630+
3 Castrol bike Distributors Employees
including workmen
Manufacturing points
plants
22 36,000
Villages
4 CMS sites
reached
Offices in
Mumbai, Delhi, 600+
Kolkata, Chennai CAS outlets
Our strategy and
what keeps us moving
We have defined our strategy as ‘Onward, Upward, Forward’ strategy
Onward: Advancing mobility solutions that help people and goods move with greater efficiency through innovative
technologies and a commitment to the principles of circularity.
Upward: Help our industrial customers and the machines they rely on, to perform better, improving the efficiency of
their operations.
Forward: Explore exciting opportunities and a path of progressive diversification. Our initiatives include end-to-end
digital and service solutions, data centre immersion cooling, and battery thermal management. This forward-thinking
approach underscores Castrol’s commitment to staying at the forefront of innovation
PROBLEM STATEMENT
Castrol is a global leader in lubricant technology, a brand owned by BP.
They offer a wide range of lubricants for various sectors, including
automotive, marine, and industrial, serving customers and consumers in
over 150 countries. Castrol's history in lubrication spans over 70 years,
and it mainly deals with 3 different business segments viz. Automotive,
Industrial and Marine.
Following are the scenarios for Case study purposes. It shall not be
construed as real, and it is provided merely for educational purposes.
Castrol produces 3 different product categories to cater to the demand of
the 3 business segments in BP owned plants namely
Prod_Industrial
Prod_Automotive
Prod_Marine
Product Type Unit Value in USD Unit Price in USD UOM
Prod_Industrial 35 50 L
Prod_ 27 45 L
Automotive
Prod_Marine 55 65 L
It distributes the finished lubricants through its network of central and
regional DCs spanned over various geographies. To produce the finished
lubricant, it uses 2 main ingredients – base oils (derived from crude oil
refining) and additives (chemical compounds added to base oils to
enhance their performance and provide specific properties).
Castrol is expecting significant growth in its business for the next 10 years
and thereby want to review their supply chain footprint in terms of
capacity and reach. It has reached out to many industry supply chain
consultants to review their supply chain and foresee any gaps that could
be addressed as part of their strategic supply chain review. You are
identified as one of the consultants to look deeper into their supply chain
and recommend long term strategy and design a full proof and resilient
supply chain design.
PROBLEM STATEMENT
Overview of the current Supply Chain Network
The biggest customers of Castrol are spread across the geography in
various countries in mainly 6 regions namely ASIA, CHINA, META
(Middle East, Türkiye and Africa), LATAM (Latin America), Europe and
the United States.
It has 5 BP owned plants to cater for regional demands
1. Houston, Texas, United States
2. Neuhof, Germany
3. Silvassa, India
4. Taicang, China
5. Jeddah, Saudi Arabia
It also has 12 large and midsize DCs facing the largest 80 customers
and are strategically located at below locations.
1. Hamburg, Germany
2. Jurong, Singapore
3. Gemlik, Türkiye
4. Tianjin, China
5. Bhiwandi, India
6. Warsaw, Poland
7. Rotterdam, Netherlands
8. Riverside, USA West Coast
9. Chicago, USA Northeast
10. Abu Dhabi, UAE
11. Dalton, Geogia, USA
12. Sao Paolo, Brazil
PROBLEM STATEMENT
USA and LATAM plant. DC, customer locations and customer flows
Europe and META plants, DCs, customer locations and customer flows
PROBLEM STATEMENT
ASIA and CHINA plants, DCs, customer locations and customer flows
The customers in various regions can be served by the respective
regional DCs and other central DCs which were identified during last
network study conducted 4 years ago. The current flow matrix is
below.
Customers Products DC
LATAM Customers All Sao Paolo, Dalton, Riverside, Chicago, Gemlik,
Singapore
USA Customers All Dalton, Chicago and Riverside
ASIA Customers All Singapore
META Customers All Abu Dhabi and Gemlik
CHINA Customers All Tianjin
INDIA Customers All Bhiwandi
EUROPE Customers All Hamburg, Rotterdam and Warsaw
PROBLEM STATEMENT
The saleable products discussed above require additives and base oils, which
are currently procured from various international suppliers spread all over
the world for which the location and cost data is given in the excel sheet of
the Appendix section. The components (Base oil and additives) are stored in
separate tanks at the production sites and are mixed in predetermined
proportions (along with water at times) at a known temperature and are
filled into drums (packaged and labelled) and are moved to Central and
regional DCs for further distribution to these 80 strategic customers.
The component proportion of Base oil (RawMat_BO) and Additive
(RawMat_Additive) in these 3 types of finished products are as below which
make up for the plant formulation. (For e.g., in Taicang plant, 1L of finished
industrial lubricant
Plant Finishedrequired
Product 1L Raw
of Base
Materialoil and 0.5L of
Quantity UOMadditive.
Taicang Prod_Industrial RawMat_BO 1 L
Taicang Prod_Industrial RawMat_Additive 0.5 L
Taicang Prod_Marine RawMat_BO 1 L
Taicang Prod_Marine RawMat_Additive 1.2 L
Taicang Prod_ Automotive RawMat_BO 0.8 L
Taicang Prod_ Automotive RawMat_Additive 1 L
Silvassa Prod_Industrial RawMat_BO 0.8 L
Silvassa Prod_Industrial RawMat_Additive 1 L
Silvassa Prod_Marine RawMat_BO 0.9 L
Silvassa Prod_Marine RawMat_Additive 1 L
Silvassa Prod_ Automotive RawMat_BO 1 L
Silvassa Prod_ Automotive RawMat_Additive 0.9 L
Houston Prod_Industrial RawMat_BO 0.8 L
Houston Prod_Industrial RawMat_Additive 0.5 L
Houston Prod_Marine RawMat_BO 1 L
Houston Prod_Marine RawMat_Additive 1 L
Houston Prod_ Automotive RawMat_BO 0.8 L
Houston Prod_ Automotive RawMat_Additive 0.9 L
Jeddah Prod_Industrial RawMat_BO 0.8 L
Jeddah Prod_Industrial RawMat_Additive 0.7 L
Jeddah Prod_Marine RawMat_BO 0.9 L
Jeddah Prod_Marine RawMat_Additive 0.8 L
Jeddah Prod_ Automotive RawMat_BO 0.9 L
Jeddah Prod_ Automotive RawMat_Additive 0.83 L
Neuhof Prod_Industrial RawMat_BO 0.7 L
Neuhof Prod_Industrial RawMat_Additive 1 L
Neuhof Prod_Marine RawMat_BO 0.65 L
Neuhof Prod_Marine RawMat_Additive 0.9 L
Neuhof Prod_ Automotive RawMat_BO 1.2 L
Neuhof Prod_ Automotive RawMat_Additive 0.85 L
PROBLEM STATEMENT
Once the finished lubricant is produced, it is moved from plants to
central DCs and regional DCs in FTL/LTL containers through sea/road.
The ordering cost per liter (CPL) of finished lubricants is given below
in the matrix.
Destination Source Ordering Cost CPL (is USD)
Dalton DC Houston Plant 1
Sao Paolo DC Houston Plant 1.5
Singapore DC Taicang Plant 0.65
Singapore DC Silvassa Plant 0.6
Gemlik DC Jeddah Plant 0.7
Dalton DC Silvassa Plant 1.35
Hamburg DC Neuhof Plant 0.9
Riverside DC Dalton DC 0.9
Chicago DC Dalton DC 1.2
Tianjin DC Taicang Plant 0.25
Bhiwandi DC Silvassa Plant 0.4
Abu Dhabi DC Gemlik DC 0.2
Warsaw DC Hamburg DC 0.3
Rotterdam DC Hamburg DC 0.37
Sao Paolo DC Taicang Plant 1.1
Riverside DC Houston Plant 1.2
Chicago DC Houston Plant 1.1
Singapore DC Jeddah Plant 0.75
Rotterdam DC Neuhof Plant 0.95
Warsaw DC Neuhof Plant 0.97
The storage, inbound handling and outbound handling at various
DCs mentioned also incur cost which is given below.
Storage cost per Inbound handling cost Outbound handling
Site Products liter (in USD) per liter (in USD) cost per liter (in USD)
Hamburg DC All FG 0.2 0.02 0.02
Warsaw DC All FG 0.25 0.02 0.02
Singapore DC All FG 0.23 0.02 0.09
Riverside DC All FG 0.21 0.02 0.03
Rotterdam DC All FG 0.19 0.02 0.02
Chicago DC All FG 0.2 0.02 0.03
Sao Paolo DC All FG 0.19 0.02 0.12
Dalton DC All FG 0.24 0.02 0.03
Gemlik DC All FG 0.23 0.02 0.15
Tianjin DC All FG 0.21 0.01 0.01
Bhiwandi DC All FG 0.2 0.01 0.01
Abu Dhabi DC All FG 0.22 0.02 0.15
PROBLEM STATEMENT
The transportation costs between two supply chain nodes are
present in the attached in appendix for perusal.
There are certain rules and constraints on the various supply chain
nodes in the whole network to abide by the strict service
requirements set by few of the customers in the regions of LATAM,
USA and Europe. The DCs of Riverside, Chicago, Sao Paolo, Abu
Dhabi and Hamburg should minimum serve 1mn liters of volume for
the respective regional customers every year from 2025 till 2036.
Site Products Minimum outflow in liters
Riverside DC All FG 1 Mn
Chicago DC All FG 1 Mn
Sao Paolo DC All FG 1 Mn
Abu Dhabi DC All FG 1 Mn
Hamburg DC All FG 1 Mn
The plants of Neuhof, Jeddah and Houston have capacity constraints
of producing below liters of finished lubricants and cannot be
expanded further due to space constraints.
Site Products Maximum production in liters
Houston Plant All FG 25 Mn
Jeddah Plant All FG 20 Mn
Neuhof Plant All FG 25 Mn
Castrol has just finished its strategic sales planning ceremony
completed last month and have come out with indicative customer
demand of finished lubricants starting from year 2025 to year 2036.
The demand numbers are present in the excel spreadsheet in
Appendix.
DELIVERABLES
With all these data points, Castrol wants the Supply Chain
Consultant to look at all these data points and answer some
strategic questions and make recommendations to bring in savings
and preparedness of the Supply Chain network. The questions are
as below.
1.
a) Create a baseline network with all the inputs mentioned above
and given in the Appendix and list out the various production
capacities in liters required at all the plants starting from year
2025 till year 2036 (preferably in the tabular format below).
Plant Year 2025 Year 2026 Year 2027 Year 2028 Year 2029 …
Houston X Mn liters XX Mn liters …
Neuhof Y Mn liters …
Jeddah
Taicang
Silvassa
b) Also, list out the various flows and flow volume in liters
between various supply chain nodes of the Castrol’s Supply
Chain network. Show the same in below tabular format
starting from Year 2025 till 2036.
Plant Distribu Year 2025 Year 2026 Year 2027 Year 2028 Year …
tion 2029
Center
Houston Riversid X Mn XX Mn …
e liters liters
Neuhof Warsaw Y Mn …
liters
Jeddah
Taicang
Silvassa
DELIVERABLES
Any kind of flow maps or other visualization maps can also be prepared
along with above tabular format.
c) Castrol would like to see the cost benefit by doing away with the flow
constraints on the customer facing DCs of Riverside, Chicago, Sao Paolo,
Hamburg and Abu Dhabi DCs. The cost benefit should be summarized in
table format as below.
Total Total Fixed Total Total prebuild Total Total Total Total
Production Operating Transportati inventory inventory Sourcing inbound Supply
Cost of mfg. costs of on costs in holding cost storage + supply and Chain
sites in CPL sites in CPL CPL USD in CPL USD costs in costs in outbound Cost of
USD USD CPL USD CPL USD handling Network
costs of in CPL
DCs in CPL USD
USD
Baseline
Without
Flow
Constraints
Also, please provide any additional recommendations on the overall
network if this can be further optimized with current constraints (flows
and production constraints included) and cost heads. The
recommendations must be clearly stated along with cost benefit
analysis.
2. The current CAGR% of demand of all FGs is 19.25% over the period of
11 years from 2025 to 2036. If the demand of product group industrial
increases by extra 5% in META and LATAM regions for every year starting
from 2026 till 2036 and the demand of product group Automotive
increases by extra 7% in ASIA and CHINA regions for every year starting
from 2026, what will be the CAGR% of demand of all FGs over the same
11-year period. Assume demand of Year 2025 remain the same as
baseline and there are no space constraints on any plant eligible for
expansion.
DELIVERABLES
Will Castrol be able to support the increase in demand. If not, what
changes must be made in the network to serve the demand in the most
cost optimal way given all production and flow constraints remain the
same as today. The recommendations must be clearly stated along with
cost benefit analysis. Assume capex investments in expanding
production capacities of all plants to be $0.05 CPL and closing any
plant/DC incur a fixed closing cost of $5 Mn.
3. From 2027 onwards, United States, Brazil and Colombia are planning
to impose a flat duty rate on sourcing FGs from other countries based on
unit value of the finished product. The details are as below. Assume
baseline demand.
Country Duty rate
United States 10%
Brazil 15%
Colombia 12.5%
What would be the implications of these rates on Castrol’s supply chain
costs and what changes in the network must be made to offset the tariff
impact.
Total Total Total Total Total Total Total Total Total
Productio Fixed Transportation duties prebuild inventory Sourcing inbound Supply
n Cost of Operating costs in CPL costs inventory storage + supply and Chain
mfg. sites costs of USD in CPL holding costs in costs in outbound Cost of
in CPL USD sites in cost in CPL USD CPL USD handling Network
CPL USD CPL USD costs of in CPL
DCs in USD
CPL USD
Baseline
with
duties
With
Duties
DELIVERABLES
4. The ongoing trade war in the world is going to get intense soon and
China is planning to impose export duties on its base oils and additives,
thereby increasing it 10% YOY from 2026 onwards till 2036.
Supplier Year 2025 Year 2026 Year 2027 Year 2028 Year 2029
BO_Sup4 X 1.1X 1.21X 1.331X …
AD_Sup4 Y 1.1Y 1.21Y 1.331Y …
What will be the impact of such a move by the Chinese Govt. and what
changes in the network are recommended to minimize the impact?
Clearly show cost benefit analysis in the tabular format shared above in
Question 3.
5. Castrol wants to add the dimension of sustainability into supply chain
design decisions. You are requested to identify and review the
dimensions, paradigms, and concepts of sustainable supply chain
network design used in the industry by the academicians and
practitioners to understand the impact of incorporating sustainability in
SC design and optimization and how is it addressed. Propose a
framework to address sustainable supply chain network design
strategies and concepts.
GENERAL GUIDELINES
1. Please make valid assumptions if required and state them clearly in
your solutions.
2. We are looking for cost optimal solutions – hence for any
recommendations for the above questions, please consider them as
separate scenarios and back your solution with facts and figures
preferably in below format showing the cost savings.
Total Fixed Total Total Total Total Total Total
Operating Transportatio Production prebuild inventory Sourcing + inbound and
costs in CPL n costs in CPL costs in CPL inventory storage supply costs outbound
USD USD USD holding cost costs in CPL in CPL USD handling
in CPL USD USD costs of DCs
in CPL USD
Scenario
1
Scenario
2
3. All Cost figures are in $ USD unless stated otherwise.
4. Use of any supply chain design tools or MS excel is permitted.
5. Demand in a particular period/year could be served by the
Inventory held at any stocking site in previous years.
6. Producing sites can’t hold inventory and ignore raw material
holding costs at production sites.
DELIVERABLE
FORMAT
What should your submission look like?
• Include 1 slide to briefly talk about the team, team members, where
you come from, education etc.
(In short, 1 slide including a resume snapshot of the two members )
• Include as much research as you want but give us sources. Feel free to
do primary research as you would like.
• All presentations are for 15 mins so keep that in mind while you put
your slides to max it at 6-7 slides in all.
