Industry Company

BPCL In 1951, the Government of India entered into an agreement with UK-based Burmah Oil Company and Shell Petroleum Co. (Burmah-Shell) for establishing an oil refinery in Bombay. In 1952, this agreement led to the incorporation of Burmah Shell Oil Refineries 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 of Undertaking in India) Bill,' the Government of India signed an agreement with Burmah-Shell. Subsequently, the government took over the operations of the company and 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 January 1976, the government acquired 100% shares in the company, and in August, 1977, the company's name was changed to Bharat Petroleum Corporation Ltd. (BPCL).

Objective
The company hoped to speed up its decision-making and respond faster to customer needs through ERP. The intention was to show the differentiation in service, retain customers and help increase the business of its Industrial & Commercial (I&C) customers. BPCL also wanted to increase its retail thrust by exploiting IT initiatives to the maximum. BPCL also wanted to aim at helping the management for setting better business practices and equipping them with correct information for taking timely decisions.

Processes

ERP
ERP is software driven business management system that helps to integrate all functions of a business including planning, manufacturing, sales, and marketing. The history of ERP has its roots in the inventory control systems developed in the 1960s to manage inventory according to traditional inventory concepts. Over the next few decades, as businesses became increasingly complex and global, companies came under pressure to improve their competitiveness by lowering operating costs and improving logistics. ERP aimed at helping the management for setting better business practices and equipping them with correct information for taking timely decisions.

Architecture for erp system

Need of erp
BPCL planned to increased its emphasis on retail business and increase its non-fuel revenues, by leveraging on the strength of its retail network by providing value-added services like convenience stores, automated teller machines (ATMs) and internet kiosks. The company realized the importance of IT initiatives to retain its market position in the post-APM era.5 BPCL began to implement its IT initiatives. . The noteworthy aspect was that the company was one of the very few Indian companies to have successfully implemented ERP. As part of the organizational restructuring exercise, the company was revamped into six Strategic Business Units (SBUs) Retail, Aviation, Lubricants, Liquefied Petroleum Gas (LPG), Industrial & Commercial (I&C), and Refinery. These SBUs were integrated with support entities like Information Systems, Finance, Human Resources, Strategy and Brand Management. This restructuring was designed to help the organization focus on specific customer segments and address their individual needs. The company also realized that it needed to streamline its processes and integrate the organization as a whole. It is when the company decided to implement ERP. BPCL's successfull implementation of ERP thus came as a major relief to ERP vendors and industry watchers. However, analysts commented that BPCL had not implemented ERP as a stand-alone system, but had integrated with the overall IT initiatives, which it had initiated in 1996 after the restructuring.

BPCL divided its IT initiatives into a three-pronged strategy, wherein it planned to create a communication network within the organization; to create a basic information network for the entire corporation and to process transactions with customers all over the country. The strategy was devised after the company divided the organization into six SBUs and conducted a detailed evaluation of the company as a whole. The organization was restructured to help focus on specific customer segments and address their individual needs. For this, BPCL needed a system for speedy and effective communication. The company's senior management realized that unless the procedures were streamlined and communication improved, faster decision-making would be very difficult. The communication structure was seen as hampering the integration of its activities. The problem areas included high costs of traditional communications, quick access to executives, and the need to communicate with recipients over multiple locations. To improve communication systems within the organization, BPCL decided to establish an intranet8.

Role of erp
ERP initially targeted the manufacturing industry and dealt with functions such as planning and managing businesses like sales management, production management, accounting and finance. Later, these packages diversified into many different types of industries. The main modules in a typical ERP application were finance and accounting, customer order management, MRP, materials management and decision support/data warehousing.

Gap analysis
Gap analysis is the phase in ERP implementation where the organization tries to find out the gap between existing business practices and those supported by ERP package.This is the process where the company creates a model as where they are now and where they will head in future.
Human Resource Strategy SAP R/3 HR Competitive Human Resources by Oracle Human capital mgmt by PeopleSoft Functional 1. Organizational Management 2. Personnel Administration 3. Recruitment Time Management GAP Career and Succession Planning and Competency modelling is customized for

Workforce management by JD Edwards

Personnel Cost Planning Budget Payroll Benefits Compensation Management 7. Personnel Development 8. Training & Event Management 9. Travel Management
4. 5. 6.

the industry Organizational Management, Budget Planning and Travel Management systems are not implemented in BPCL

Marketing

Sales and Distribution

Marketing, Sales by Oracle Supply chain by PeopleSoft Order management by JD Edwards

1.

2. 3. 4. 5. 6. 7.

Sales Order Processing and Monitoring Shipping Bill / Invoice Generation Credit Management Bill of Material Pricing and Discounts Statutory Requirements

Is oil enhancement Systems are customized Specialized processes are non-IS based.

Production

Materials Management Production Planning Quality Management

Procurement , Manufacturin g , Service , Projects , Order Management by Oracle Supplier relationship , Enterprise perform, Enterprise service by PeopleSoft Inventory, procurement , Manufacturin g mgmt , Technical foundation , Project

1. 2. 3. 4.

5. 6.

7. 8. 9. 10. 11. 12. 13.

Production Planning Production Order Processing Demand Management (DM) Materials Requirements Planning (MRP) Shop Floor Control Capacity Requirements Planning (CRP) Information System Purchasing Inventory Management Inventory Valuation Vendor Evaluation and Rating Invoice Verification Statutory Requirements

Project Systems, Quality Management, integration with manufacturing execution systems is customized.

management by JD Edwards

14. Incoming Inspection 15. Process Inspection 16. Final/Delivery

Inspections 17. Quality Reports / Certificates 18. Quality Notifications

Finance

SAP Module F1(Financial Accounting) SAP Module CO(Controlling)

Financials, Asset Management by Oracle Financial mgmt sol by PeopleSoft Financial mgmt sol , Enterprise asset mgmt , Time & Expense mgmt by JD Edwards

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

General Ledger Accounts Payable Accounts Receivable Bank and Cash Management Budgeting and monitoring Withholding Tax Asset Accounting Funds Management Treasury Management Product Costing Periodic Allocations Profitability Analysis Cost Centre Accounting Profit Centre Accounting

Budgeting and monitoring , Withholding Tax, Periodic Allocations , Profit Centre Accounting is not implemented

Service

------------------------

Contracts by Oracle Subcontract, real estate by JD Edwards

Plant maintenance and service at refinery/marketin g plants

-feasiblity analysis
BPCL conducted feasibility testing of the solution with the help of a pilot implementation. With the help of Windows NT Server and Exchange Server, BPCL connected three locations on a Very Small Aperture Terminal (VSAT)-based network9 with a bandwidth of 64 kilobytes per second (Kbps) to share Time Division Multiplexing/Time Division Multiple Access (TDM/TDMA) connections. The VSAT network was rated on the criteria of ease of deployment,

speed of mail delivery, zero message loss and response times. For a comprehensive implementation of the intranet, BPCL took help from Microsoft Consulting Services.

Even the functional part of the erp is working.

Erp project life cycle

ERP Selection
The first task was to finalize the selection of a particular ERP system. The task force had the following options to evaluate: i)Single ERP (System Application Product - SAP or Oracle) or ii)Best of breed (selecting the best module for each of its functional area) Option (ii) was discarded quickly as it required more cost, time and skills to implement. In addition, it required building a comprehensive skill set for a variety of applications, which was extremely difficult at the time. Therefore, the option to go for a single ERP was selected. The next question was to choose between SAP and Oracle as these two ERP packages were amongst the most popular choices in that region and industry sector (i.e. Oil & Gas). Again the taskforce had the following options to consider: i)Conducting a self-study and choose between SAP and Oracle or ii)Hiring a consultant to study the companys requirements and propose a particular ERP system. After evaluating both options, the taskforce dismissed the second option as it required extra time (the tendering process itself could take many weeks) and cost. Therefore, it was decided to arrange meetings with other sister companies who had already implemented an ERP to obtain their view point and lessons learned. It was also decided to arrange volunteers from each functional area to study the high-level features of a particular module of both ERPs. After conducting the self-study and meetings with other operating companies, the task force agreed to proceed with SAP. The recommendation was presented to management and it was accepted. The task force then conducted market research to find out the range of costs and timeframe. The initial data ollected was not very encouraging as the minimum cost identified was USD 8 million (software license, hardware and implementation cost). The average implementation time ranged from 18 months to 3 years; which was beyond the initial estimations, as the company was aiming to complete the transition in 12 months

Cost elements

Benefits
Improved visibility: Due to the centralized nature of ERP systems, organizations can track inventory levels on a daily basis, including inventory in transit and future consignments to be received. This visibility can enable organizations to control their working capital requirements to a great degree. This visibility also enables organizations to run their enterprise in accordance with their strategy, while empowering them to make quick decisions to pursue opportunities. Reduced operating costs: One of the most immediate benefits from implementing an ERP is reduced operating costs: such as lower inventory control costs, lower production costs and lower marketing costs. By avoiding duplication of information but not reinventing the wheel for common business processes, an ERP provides opportunities for cost reduction and value-added tasks, leading to increased margins. Standardized business processes: Most ERP vendors design their products around standard best-business processes, which are based on industry best practices. Organizations can use these business processes to standardize their own processes. This process consistency allows a consolidated view of the business across the distributed enterprise, enabling organizations to drive continuous improvements, as operations are streamlined and there is healthy synergy between departments and functions. The improvement also comes from transparency and reduction in human errors due to automation of inter-company transactions. Disadvantages of in-house When you opt for on-premise ERP software, you may get additional help with training, setting up the system, and choosing modules from the consultant. Once you are up and running, however, your business is on its own. In-house IT staff become responsible for maintenance on the server. Running an ERP system may consume their time and put other IT projects on the back burner. Ask yourself if your IT staff has the time, skills and abilities to take this on.

Additionally, up front costs with on-site systems are high, because you pay for all of the servers and infrastructure you might need, even if your current need is lower. You might pay for capacity that never gets used, whereas a cloud ERP system allows a more granular approach. If something goes wrong, you have to pay diagnostic, maintenance, and repair costs.

CLOUD ERP
SaaS (Software as a Service) ERP systems including Plex Manufacturing ERP software reside in the cloud. The cloud provides the computing power to run the ERP solution which is available to users on demand via subscription pricing.
Since cloud systems are hosted elsewhere, they relieve some of the pressures that come with choosing an on-premises system. You won't have to perform maintenance on the server. The cloud provider performs this task, and backs up your data in the system. When equipment needs to be replaced, the provider replaces it. Cloud systems may be less expensive, because you can purchase only the licensing, service space and infrastructure that you need. When your business needs change, it's easy to purchase more space

Conclusion
An ERP implementation done right, can build the foundation for future growth, and translate into improved productivity, cost savings, and a much better bottom line. Even the higher end version of ERP might be helpfully in the domain wise implementation.Even the concept of Cloud ERP might be a cost effective alternative.Since the instructure requirements are eliminated.