2. Background note
• 1951- Govt of India entered agreement with
Burmah-Shell for estb. Oil ref at Bombay
• 1952- agreement led to incorporation of Burmah
Shell Oil Refineries Ltd
• 1975- company aquired by Govt Of India and
named it Bharat Refineries.
• 1977- Name changed to BPCL
• 1999- Emerged as 2nd largest oil company in
terms of mkt share. (32% petrol, 27% in diesel)
3. Facts
Bina 9 Numaligar
mtpa h 3mtpa
4,500+ outlets
nation wide
Manali ref
BPCL
6.5 mtpa Cochin
7.5 mtba
Mumbai
6.9 mtpa *MTPA -million metric tonnes per
annum
4. Foresightedness (1996)
• BPCL planned to increase its emphasis on retail
business and increase its non-fuel revenues, by
leveraging on the strength of its retail by
providing value-added services like convenience
stores, automated teller machines (ATMs) and
internet kiosks.
• To enhance its customer focus , the company was
revamped into six Strategic Business Units
(SBUs)- Retail, Aviation, Lubricants, Liquefied
Petroleum Gas (LPG), Industrial & Commercial
(I&C), and Refinery. (Kind of BPR)
5. Restructuring
• These SBUs were integrated with support
entities like Information
Systems, Finance, Human Resources, Strategy
and Brand Management.
• It helped the organization focus on specific
customer segments and address their
individual needs.
• This required streamlining of the processes
and integration of organization as a whole.
It is when the company decided to
implement ERP.
6. IT initiatives at BPCL (1996)
• BPCL divided its IT initiatives into a three-
pronged strategy
– to create a communication network within the
organization; (created intranet)
– to create a basic information network for the
entire corporation
– to process transactions with customers all over
the country
7. Cont:-
• Problem areas included
– high costs of traditional communications,
– No quick access to executives,
– need to communicate with recipients over multiple
locations.
8. First step:- Intranet setup.
• Microsoft Exchange Server and MS Windows
NT Server – platform
• Conducted feasibility test:
– connected three locations on a Very Small
Aperture Terminal (VSAT)-based network
– VSAT network was rated on the criteria of
• ease of deployment,
• speed of mail
Microsoft Consulting
• delivery, Services
• zero message loss
• response times.
10. 'Project CUSEC (Customer
Service and Satisfaction)
• The ERP implementation was part of this project.
• Company selected SAP R/3 ERP.
• Appointed consultants Coopers and Lybrand.
• Existing network was redesigned and restructured
– Central cloud connectivity
– Ensured security through Sun Ultra 5 firewalls , Real
Secure, Internet Scanner , Floodgate, Web Trend and Web
Sense.
• The server architecture - Compaq Proliant NT server.
• Routers and Switches- Cisco
14. After Implementation
• In November 2001, BPCL successfully implemented SAP
• BPCL was one of the very few Indian companies to have
successfully implemented ERP
• Each and every person related to the organization was
exposed to all the relevant and real time information.
• BPCL's revenues grew by 2.28% in 2000-01, even as the
revenues of the petroleum industry declined by 3.4%.
• BPCL's biggest advantage from the ERP implementation
was regarding the management of inventory because it
was now possible for the company to know the details of
receivable of inventories
Editor's Notes
In 1951, the Government of India entered into an agreement with UK-based BurmahOil Company and Shell Petroleum Co. (Burmah-Shell) for establishing an oil refineryin Bombay. In 1952, this agreement led to the incorporation of Burmah Shell OilRefineries Ltd. In January 1955, the refinery at Bombay went on stream, and in 1962,the refinery started processing crude oil from Ankleshwar in Gujarat.In December 1975, following the passing of 'The Burmah-Shell (Acquisition ofUndertaking in India) Bill', the Government of India signed an agreement withBurmah-Shell. Subsequently, the government took over the operations of the companyand changed its name to Bharat Refineries. Initially, the company sold only kerosene,but later it set up service stations to sell petrol as well. Bharat Refineries became the .first Indian company to introduce LPG for domestic cooking purposes. In January1976, the government acquired 100% shares in the company, and in August, 1977, thecompany's name was changed to Bbarat Petroleum Corporation Ltd. (BPCL).The economic reforms of 1991 paved the way for major changes in BPCL. Thecompany entered into marketing contracts with Indo-Burmah Petroleum (IBP),Madras Refineries Ltd. (MRL) and Cochin Refineries Ltd. (CRL). In 1992, thegovernment disinvested 30% of its stake in BPCL in favor of financial institutions and mutual funds. The Rs3 10 share created a record on the bourses when it openedatRs1,275,the highesteveropeningamongpublicsectorcompanies.In 1993,BPCLtiedup with its erstwhile partner Shell, to form Bharat Shell Ltd. (BSL), in whichthelatterhad a 51% stake. In 1994, BSL launched lubricants under the Shell brand. These weremarketed by BPCL as weU as by BSL. By the late 1990s, BPCL had emergedasIndia's second largest oil company in terms of marketshare. In April 1994,3.8%of.apCL'sequitywasdisinvestedinfavorof its employees. \\., .In 1998-99, the government decided to further disinvest 26% :of its stake in BPCL,which was one of the 'Navratnas,.4 This move gave BPCL greater freedomto developemployeepolicies. It also enabled the companyto take decisionsregardingcapitalproject expenditures without government interference. In 1999, BPCL acquired32%stake in Indo British Petroleum (ffiP).
BPCL'sMumbairefinery consistently operatedat over 120%of its 6.9 millionmetrictonnesper annum(mtpa )installedcapacity.It had the abilitytoprocessa wide varietyof crude,and its proximityto the BombayHigh oil field enabledit to meetmostofitscrude demand domestically (only 15% was imported). To make up for its limitedrefining capacity, BPCL formed a strategic alliance with Chennai PetroleumCorp(which was later taken over by IOC) to sell the products produced in the latter's 6.5illmtpaManali refinery. The government also transferred its entire shareholdinginKochi Refineries (KRL) (capacity 7.5 mtpa) to BPCL. BPCL also acquired IBP's 19%stake in Numaligarh Refineries (NRL) (capacity 3 mtpa) in West Bengal. Theseacquisitions, and the 9 mtpa refinery being set up at Bina in Madhya Pradesh,wereexpected to address f!1elimited refining capacity problem in the future.By mid-2001,BPCL's nationwideretail network comprised4,500 outlets,60%ofwhich were company-owned or leased - the highest percentage among oil PSUs.Retail salesaccountedfor around60% of the company's sales volume,withaveragesales per outlet being 223 kl per month. In 1999-00, BPCL's marketshare was 32%inpetrol and 27% in diesel. The company was particularly strong in the west and south.However, its share in lubricants, the most profitable product, was relatively low,partly because of its dependenceon other oil companiesfor the base oil neededtomake lubricants.
BPCL planned to increased its emphasis on retail business and increase its non-fuelrevenues, by'leveraging on the strength of its retail network by providing value-addedservices like convenience stores, automated teller machines (ATMs) and internetkiosks. The company realized the importance of IT initiatives to retain its marketposition in the post-APM era.s BPCL began to implement its IT initiatives in 1996.Aspart of the organizational restructuring exercise, the company was revamped into sixStrategicBusinessUnits (SBUs)- Retail, Aviation, Lubricants, Liquefied PetroleumGas (LPG), Industrial & Commercial (I&C), and Refinery. These SBUs wereintegrated with support entities like Information Systems, Finance, Human Resources,Strategy and Brand Management. This restructuring was designed to help theorganization focus on specific customer segments and address their individual needs.The company also realized that it needed to streamline its processes and integrate theorganization as a whole. It is when the company decided to implement ERP.
BPCL divided its IT initiatives into a three-pronged strategy, wherein it planned10create a communication network within the organization; to create a basic infonnationnetwork for the entire corporation and to process transactions with customers all overthe country. The strategy was devised after the company divided the organizatioinnlosix SBUs and conducted a detailed evaluation of the company as a whole. Theorganization was restructured to help focus on specific customer segmentsandaddresstheir individual needs. For this, BPCL needed a system for speedy and effectivecommunication. The company's senior management realized that unlesstheprocedures were streamlined and communication improved, faster decision-makingwould be very difficult. The communicationstructurewas seen as hampering theintegration of its activities. The problem areas included high costs of traditionalcommunications,quick access to executives, and the need to communicate withrecipients over multiple locations.To improve communication systems within the organization, BPCL decided 10establish an intranet8.The company chose Microsoft Exchange Server as the platforl1
To improve communication systems within the organization, BPCL decided toestablish an intranet8.The company chose Microsoft Exchange Server as the platform because of the level of integration with the desktop environment and MS Windows NT Server.BPCL conducted feasibility testing of the solution with the help of a pilotimplementation. With the help of Windows NT Server and Exchange Server, BPCLconnected three locations on a Very Small Aperture Terminal (VSAT)-based networI(lwith a bandwidth of 64 kilobytes per second (Kbps) to share Time DivisionMultiplexinglTime Division Multiple Access (TDMffDMA)lO connections. TheVSAT network was rated on the criteria of ease of deployment, speed of maildelivery, zero message loss and response times. For a .comprehensive implementationof the intranet, BPCL took help from Microsoft Consulting Services.
BPCL connected its corporate office in Mumbai with the various regional offices.Seven web serversll were deployed at the VSAT hub in Bangalore to providedintranet connectivity to users allover the country. Access was provided with the latestlocal and international developments through the intranet. This not only helped thecompany offer better services, but also aided in building employee skills andcompetencies. Internet gateways12were made available at the refinery as well as at allthe regional offices. All the employees were thus constantly connected to each otherand to the outside world.
The ERP implementation was part of the company's 'Project CUSEC (CustomerService and Satisfaction), which had to meet the challenge of an imbalance betweenrefining and marketing. The company selected SAP R/3 as it was already beingsuccessfully used by major oil companies in the world. It was also the only packagewhich had an oil industry specific package and an India specific package.BPCL appointed consultants Coopers and Lybrand13for the planning process of SAPR/3's implementation. The consultants worked in close co-ordination with functionalexperts within the company. The first phase of the implementation began in April2000. The company's existing network was redesigned and restructured and all its branches were linked to a central connectivity cloud.14 This was done throughroutersl5 and switches,16which were in turn connected to servers and workstations
APOThe areas of demand/supply planningand forecasting, as well as supply chain balancingandoptimizationare key functional areas addressed by APO. TSWThe Trader’s & Scheduler’s Workbench(TSW) covers the whole range of business requirements for Inventory Planning , Supply / Demand Balancing, Movement and Capacity Scheduling (including the Distribution Schedule), NominationProcessing,andIntegrationinto Execution Processing, including Ticketing.IS-OIL 4.6cThe processes of order entry, contract management, exchangesandterminalling handling, inventory management, transportand movement executionwill remain within the ERP(R/3 with IS-Oil Downstream) area.Location Balancing PurposeThe Location Balancing process involves comparing demand and supply quantities for a specific period and maintaining a balance between these quantities.Freight Contract DefinitionIn Trader’s and Scheduler’s Workbench, freight contracts represent agreements with a vessel carrier and contain the agreed upon terms, conditions and rates for bulk shipments. You can create freight contracts to represent agreements, such as time charters, voyage charters, or contracts of affreightment.
