Comparison of Bpcl and Other Indian Companies on Supply Chain

EXISTENCE OF A SUPPLY CHAIN STRATEGY:

The results of the conference "Supply chain management for global competitiveness", organized by MDI, Gurgaon (1998) exposed the fact that 1/3rd of the Indian companies surveyed had no supply chain strategy in place.

BPCL, a Navaratna public sector undertaking oil company formed a Supply Chain Optimisation department in November 2006, with a strategic intent of maximising overall benefits for the organization.

CUTTING ACROSS FUNCTIONAL BOUNDARIES:

Existing organisations were only using tools such as TQM and Benchmarking which were traditional, time-tested tools. But the business environment had now changed and required for the use of more sophisticated tool deployment across all functional areas.

The SCO at BPCL reports directly to the chairman, unlike other business units which report to a functional head. Thus, it manages to cut across functions, integrate them, increase horizontal interaction and increase the overall corporate focus.

PULL BASED STRATEGY:

The majority of the Indian companies were using a Push based strategy, based on long-term forecast, making the system less responsive.

With the four processes - Demand Planning and Review, Crude Selection, Evaluation and Nomination, Refinery Planning and Review, Product Exchange Plan, Distribution Plan and Inventory Management, all integrated via the SCO, the BPCL became a more dynamic and responsive organization. It has resulted in:

* Increased sales of products

* Discontinuation of products with lower margin

* Reduction of variance between planned and actuals

USE OF INTEGRATED IT PACKAGES:

The various Indian companies focussed more on the use of standalone software packages. The main usage is of Intranet, Internet and ERP but there is no investment in complex, integrated solutions relating to supply chain, e-commerce and data warehousing.

BPCL invested in sophisticated, industry-proven tools utilised extensively in the petroleum sector, aligning itself with global leaders like BP, Shell, Exxon Mobil etc. The system included a comprehensive library of plant operation and process sub models resulting in better utilisation of resources.

SUPPLY CHAIN ALIGNED WITH CORPORATE VISION:

The various Indian companies still considered individual business goals like customer service, information systems, export/import management, transportation etc. over an overall corporate goal.

SCO at BPCL operates in a global context. It realises the fact that it operates in a 'matrix' organisation and has accountability for the overall Net Corporate Realisation. It aims to drive value