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Bharat Oman Refineries Limited

BORL integrates multiple agencies at multiple locations, addressing business growth with SAP ERP ECC 6.0.

QUICK FACTS

"BORL currently is in the project phase and wants to complete the project ahead of schedule without cost over runs. SAP helped us on both counts by providing a time and cost monitoring tool. It has also enabled us to reduce cycle time in many processes enabling us to pursue and meet the performance challenges. Implementing SAP's best practices early on has given us the competitive edge and we plan to leverage the full potential of SAP's solution portfolio in near future."

R Ramachandran, DGM Projects, BORL

Summary

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Company Name: Bharat Oman Refineries Limited Location: Bina in MP & Vadinar in Gujarat Industry: Oil & Gas Products and Services: Gasoline & Diesel products Revenue: Start up company Employees: 131 and growing www.borl.in

Implementation Highlights

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Deployment of SAP ERP in a record time period of 56 days. n Big Bang approach saw modules such as IM/PS, MM, FI/CO and HCM being implemented.

Why SAP

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Challenges and Opportunities

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Absence of a common database leading to duplication of data or usage of stale data. Manual planning of projects. Managing budget, commitments and expenditures manually. Rising confusion, complexity and cost. Delay in reporting and decision making. Financial loss due to increased inventory cycle time and inaccuracies in data. The basic objective was to have a single, real time view of information across all locations, controlling project progress and capital costs. SAP ERP application ECC 6.0

No other solution is as tried and tested in the Oil Industry as SAP. BPCL has already been working successfully with SAP for the past eight years, building the trust and comfort factors. For synergy in operations with the BPCL Group of Refineries that are already using SAP. Availability of real-time, single image of information across all locations and agencies. Rendering Just-In-Time services. Reduction in payment cycle. Saving in manpower resources. As a start-up company, no proper system in place. Hardware Operating System

Benefits

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Objectives

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Existing Environment

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Third Party Integration

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SAP Solutions and Services

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SAP ERP Success Story Bharat Oman Refineries Limited

BHARAT OMAN REFINERIES LIMITED

BORL integrates multiple agencies at multiple locations, addressing business growth with SAP ERP ECC 6.0.

A mega project worth Rs 10378 crores, the Bharat Oman Oil Refinery consists of a 6MMTPA state-of-art grass roots refinery at Bina, Madhya Pradesh, crude oil storage terminal at Vadinar, Gujarat, and a 935 km pipeline from Vadinar to Bina.

While the project was designed by Engineers India Ltd. located in Noida, the contracts for the projects were awarded in Mumbai, while construction is being managed by Engineers having offices in Bina, Vadinar, Ujjain and Ahmedabad. Clearly, the organization needed a common platform to integrate the multiple agencies at multiple locations. SAP ERP provided a sturdy base to the rapidly growing organization, integrating business processes and providing real time visibility across all locations. Bharat Oman Refineries Ltd. is a private sector project with Bharat Petroleum Corporation Limited as the principal promoter. Almost all of the Refinery production will be sold to BPCL which will have its Marketing Terminal adjacent to the Refinery. Located in the Central Indian state of Madhya Pradesh, the Refinery will enable BPCL to economically market its petroleum products in the North and Central India market. Benefits include lower transportation costs due to proximity to the target markets and market leadership as a result of being the only refinery within a 400 km radius in a high demand market. The project kick-started on 1st January 2006 and is likely to be completed by Dec 2009. The overall progress achieved is 66.3% against the schedule of 59.5%, total commitment is Rs 9215.56 crores

and expenditure is Rs 3310.11 crores as of mid June 2008. Challenges: Coordinated planning and monitoring of each phase of the project, transparency and accuracy. Multiple agencies working from geographically diverse locations lacked real time visibility of rapidly changing data. Working on their own sets of databases and excel sheets, with hardly any synchronization with the other relevant agencies, all offices were susceptible to information slippages and inaccuracies ­ costly mistakes when each transaction is in tune of Rs 100 to Rs 200 crores. Manual planning of projects and cost control made the process extremely tedious. Hours had to be spent to get information on the updated position of commitment and expenditure, and then consolidate, report and monitor the same. Even Purchase Orders were maintained manually in files with a few excel sheets to keep consolidated information by Purchase and Contracts group sitting at multiple locations. This resulted in increased cycle time for checking and making payments with increased paper work being transferred from one location to another. Frequent Duplication and Reconciliation became part of the process since there was no linkage to payments. Moreover, there were no budgetary

controls and the budget available, commitments made, and expenditure incurred had to be tracked manually. As long as the project was in the design stage, the standalone systems served the purpose. But once the execution activities began, complexity, confusion and cost increased exponentially. All these factors convinced BORL Management to implement ERP during the project phase itself ­ not only to aid the project's execution, but also to avoid the complicacies involved in software migration at a later date. As Gita Ramachandran, VP ERP, BORL, explains, "There was a very critical need for having the same image across all sites. Multiple agencies operating at multiple locations maintain multiple images of the same data in the style they want with no integration and with lot of manual interfaces going on". Record Implementation Period sees Critical Operations Getting Consolidated across locations "We found that no other solution is as comprehensive or as tried and tested in the Oil Industry as SAP. BPCL itself has been operating SAP for the past eight years. This experience of working successfully with SAP for so long reassured us that we would be getting a trusted and reliable system with adequate back up of Oil Industry as value additions. The final decision was based on the demand of

"There was a very critical need for having the same image across all sites. Multiple agencies operating at multiple locations maintain multiple images of the same data in the style they want with no integration and with lot of manual interfaces going on." Gita Ramachandran, VP ERP, BORL,

Project Engineers and people who have hands-on experience of working with SAP", says R P Singh, MD, BORL. "Other refineries under the BPCL Group have also been operating extensively on SAP platform successfully. In order to leverage the benefits of synergy in operation with other refineries, SAP naturally became the preferred choice of ERP for BORL". adds A G Limaye, Manager ERP, BORL. The SAP ERP deployment began on 3rd September 2007 and was completed on 1st November 2007 ­ a record time period of 56 days. This rapid pace of implementation was propelled by a critical need to account for all transactions which were piling up at an accelerated pace. At the time when SAP deployment began, BORL had already made commitments for Rs 7,000 crore and had expenditure of Rs 1,000 crore. By the time the deployment got over, the commitments had risen to Rs 7,650 crore. The SAP deployment phase had to be made as short as possible to account for all the POs in process, minimize inaccuracies and make the transition flawless. "The Project Management team was empowered to take 90 to 95% of the decisions. Timely decisions significantly contributed to the success of the project. The management directed changes to be made to company policies and procedures instead of going for modifications or developments in SAP - recognizing the best in class practices built in SAP solution. It was

tough getting appropriate resources for the project at a time when refinery construction work was peaking up. It was the determination of Top Management that came in support of making the best resources available for the SAP Project. One cannot underestimate the importance of quality of masters and the painstaking efforts required for the upload of open transactions in SAP. The project team took up the responsibility for both and left no scope for errors at any stage. Considering the dynamic nature of business environment, getting the whole process right first time was a big challenge". says G Kalaiselvan, DGM ­ ERP Competency Center. Benefits: Availability of real-time information across locations, data accuracy, streamlining of operations, cutting financial losses The SAP ERP deployment has not only given BORL a solid foundation to build the business, but has also brought immense benefits in terms of capital cost control, accuracy and industry best practices. V N Herwadkar, AVP - Planning, BORL says, "BORL has sourced its debt funding from a consortium of banks, and financial commitments to various vendors run into crores. Systematic monitoring of cash flow has enabled the concept of `just in time', saving on interest to be paid on the same along with optimization of loan withdrawals. It is estimated that a consistent reduction in current account balance by about Rs 50 crores would potentially deliver savings of around Rs 4 Crores per annum".

In sharp contrast to the older practice of sending hard copies to multiple agencies, the availability of data across the company as a single image has enabled faster payment cycles. In legacy, each calculation, dealing with values in crores, had to be manually checked and verified physically at each step resulting in delays of up to 10 days. The SAP deployment has automated the entire process, negating any possibility of errors or delays and even saving manpower costs to the tune of Rs 20 lakhs per annum. "BORL is a grass root Refinery and everything is new. With the implementation of SAP early enough, BORL is now confident of completing the project ahead of schedule at lower total cost of ownership, giving it an edge over its competitors", R Ramachandran comments. Moving Forward Looking forward, Gita says, "As yet we have implemented only the bare minimum essential modules of SAP to take us through the Project phase. Once the Refinery becomes operational, we will be leveraging the full potential of SAP including IS OIL / SD, Plant Maintenance and Business Warehousing".

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