The e-Business of Oil

What could India’s second-largest oil company, earning over Rs 25,000 crore,
do to get bigger faster? Bharat Petroleum Corp (BPCL) found the answer in
connecting better to its 30 million customers, to become their preferred
supplier. Step one: focus on the large corporates, and speed up their order
processing, online.

The Bharat Petroleum customer self-service system (BPCS) was built on the
company’s countrywide WAN. The 250-plus VSAT wide-area network reaches right
down to its distributors. Among the effects of BPCS: large corporate buyers
found order turnaround time dropping from 12 days to 2 days.

BPCL was among the first Indian public sector units with strong infotech
deployment. The company, of course, far predates infotech. Born 1860 as the
Standard Oil Trust, it subsequently merged with rivals Royal Dutch, Shell and
Rothschilds to form Asiatic Petroleum (India). It then joined up with the Burmah
Oil Company to form the Burmah-Shell Oil Storage and Distribution Company of
India. With nationalization in 1976, the company finally became Bharat
Petroleum. And while it also sold kerosene, it was the first company in India to
introduce LPG (liquified petroleum gas) as a cooking fuel.

Today, BPCL’s products range from petrochem and solvents to aircraft fuel
and specialty lubricants. It markets these through over 4,500 petrol pumps,
1,000 kerosene dealers and 1,400 LPG distributors, and also supplies fuel
directly to industries and to Indian and international airlines. Among the bulk
buyers of its crude oil products are Reliance Industries, Haldia Chemicals,
Asian Paints, Bombay Dyeing and Goodlass Nerolac, each buying more than 3,000
kiloliters of crude every month.

Its distribution channels include retailers, franchisees, direct sellers and
LPG distributors. This distribution is what the BPCS helped streamline, after it
went live in 1999.

Anand Teltumbde, the 48-year-old GM of BPCL’s IS department, says that
until then, all orders were taken on the phone or in person. "We’d just
been using the speed of electronics to compress the process," he says.
"Nothing else had really changed because of infotech or telecom. Our
customers and distributors were always anxious about the supply chain, supply
security and the quality of the products."

Self-service system

BPCL then decided to use the Internet as a key medium to reach out to
customers, speed up order turnaround and cycle times, and to build up loyalty
among a vast customer base.

The spec was clear: a self-service system over the Internet–for corporate
customers. It covered order placing and tracking, and status queries (including
statement of accounts and order delivery). BPCL’s industrial and commercial
(I&C) strategic business unit, for which the project was implemented,
focuses entirely on supplying products to large corporate clients like Reliance
and Haldia Chemicals. Such corporates customers number about 25, and BPCL
interacts directly with these, selling some 60 products and sub-products.

The products–and corresponding specs and grades–offered to specific
customers are pre-defined. To force standardization, customers don’t have a
great deal of flexibility to add or change product specs interactively. Even
non-standard products are pre-defined. However, the specs of the contract,
including payment, are customer-specific and customized. "All this is very
different from typical e-business sites," Teltumbde says, "which would
not mean much for our kind of clients."

And how does the BPCS system work? It recognizes two types of users: BPCL
users and customers. Users are identified based on their unique login id.
Customers access the system over the Internet, through their Web browsers.
Authorized customers can view information about their dispatches, and can place
orders online. Each customer sees a personalized catalog of products that is
decided by a BPCL sales officer and places orders for these products. They can
also use the system to view a history of their orders and dispatches, in various
report formats–including matching deliveries against orders. The customers can
view their monthly statement of accounts online in the same form as the printed
report they currently receive from BPCL.

BPCL’s internal users access the system on the intranet to process customer
orders. They can also add new customers, assign products to customers and be
informed whenever customers place orders. The daily invoice data received from
the various depots across the country is recorded in the system. The frequency
of these updates depends on the ability of the depots to feed data regularly.

The customer self-service application is developed on IBM’s Net.Commerce
storefront. This runs off IBM’s DB2 database server–on a basic 400 MHz
Pentium II with 256 MB RAM, 9 GB of disk storage and a 4 mm tape drive. The
entire project took a team of five (in BPCL’s IS department) a few days and a
mere Rs 25 lakh to complete–compare with BPCL’s WAN project, which cost Rs
10 crore.

Was the decision to e-enable the delivery process taken by the IS department,
or was it a business decision? "The IT department has always been an
enabler," Teltumbde says. "The marketing people saw an opportunity
here and asked us to set up the system." He adds that neither customers nor
BPCL users faced major hiccups during the e-biz transition. That BPCL’s
locations nation-wide were already networked helped.

BPCL’s direct customer base exceeds 7,000, out of which more than 500 use
its e-business system. "That may sound like a small percentage, but those
include big customers," Teltumbde explains. The I&C division grosses Rs
20 crore a day, with 65% happening through its e-business program. Teltumbde is
confident of pushing this up–"to over 90% within a year, if the banks can
streamline e-payment."

What’s beyond B2B? B2C, of course. No, they probably won’t have millions
of car-owners ordering petrol on the Web to have it delivered at home. The
likely consumer product to go online is the humble (and increasingly expensive)
cooking gas cylinder. So next year when you order your LPG cylinder, you could
be doing it on the Web.

While BPCL will have to keep up the pace of change, to stay ahead of the
tough competition likely from private Indian and global players–after India’s
full deregulation of oil by 2002.

A Dataquest report, with inputs from Bijesh Kamath

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