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