April 2008 | Case Studies | Reader Profile

Barry Schap: Pumping It Up

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The United States is expected to produce 13 billion gallons of ethanol in 2008, according to the Renewable Fuels Association. Barry Schaps, senior vice president of logistics at VeraSun Energy in Brookings, S.D., moves most of that supply.

By the end of this year, when it completes a merger with U.S. BioEnergy and opens some new plants, VeraSun expects to be the nation's largest ethanol manufacturer. It already plays a major role in helping oil companies meet federal and state mandates to blend alternative fuels into their gasoline.

Schaps leads VeraSun activities outside the walls of its manufacturing plants - from procuring corn, selling ethanol and distillers grain (an ethanol by-product) and managing risk, to handling inbound and outbound logistics.

Schaps started his career as a planning analyst with Royal Dutch Shell in New York. Working in that and other financial positions, he soon realized that paying attention to logistics could reap major benefits.

Back in the days of cheap oil, Schaps says, no one worried about moving and storage costs. "I began to realize how inefficient the systems were," he recalls. "I am a puzzle solver and the challenge attracted me." So he started digging for opportunities to save.

Later, while working in a marketing position at Shell, Schaps tackled another puzzle - how to optimize the delivery of fuel to service stations. "By cutting just fractions of cents on billions of gallons of gasoline delivered," he says, "very small savings suddenly turn into very large dollars."

Route optimization programs were practically non-existent, so Schaps worked with software engineers to develop a proprietary solution. A variety of factors came into play, including highway weight limitations that change with the seasons, federal restrictions on drivers' hours, and traffic patterns.

"It was fascinating to address the individual constraints and develop a model that would optimize the cost of delivery," he says.

In 2005, when Hurricanes Katrina and Rita damaged several Shell facilities on the Gulf coast, Schaps and his colleagues wrestled with how to supply gasoline and diesel to rescue workers and consumers, including thousands of drivers who jammed evacuation routes.

Short on tanker trucks in the region, Shell called in vehicles and drivers from other parts of the country to help move fuel from terminals to gas stations.

"We had either police or military escorts, using the shoulder of the road or contraflow lanes, if necessary, to get the supply where it was needed," Schaps says.

At VeraSun, Schaps and his team still labor to ensure that their product reaches customers when they need it. That's tough when customers - the nation's major oil companies - require just-in-time delivery, and shipments depend on railroads for transportation.

Foul weather and rail congestion pose obstacles, but they don't stop VeraSun. "If a blockage or delay occurs, we have to secure product some other way," Schaps says. That often means buying ethanol from a competitor.

"Cost at that point is not the major objective - it's customer satisfaction that matters," he adds.

The Big Questions

What do you do when you're not at work?

You will find me on a beach in the Caribbean or Mexico, sipping a pina colada.

Ideal dinner companion?

Ernest Shackleton, the arctic explorer. When his ship was wrecked on the ice, he and his crew were stranded for more than two years under ungodly conditions—yet not one crew member was lost.

What's in your briefcase?

My laptop, airline schedules, plane tickets, noise-canceling headphones, and a good book.

Technology you couldn't live without?

Optimization and linear programming tools for complicated transportation models.

If you didn't work in supply chain management, what would be your dream job?

Water sports director at a Caribbean beach resort. You can walk to work, you need a minimal wardrobe, and you don't have to work when it rains.

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