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Reducing Operational Cost with SAP®
Bharat Petroleum Corporation Limited (BPCL) – in order to improve responsiveness to market demand while lowering supply chain costs; match available supply to demand at the lowest possible cost; and outperform the competition with faster, more effi cient planning and execution – chose SAP® Supply Chain Management application.

By introducing the SAP® Supply Chain Management application to calibrate planning and execution with customer demand and employing flexible IT solution to meet specific needs of each division BPCL, achieved ability to ensure high product availability, lower inventory costs and lower distribution costs.

Building a Strong Pipeline to Customers For Bharat Petroleum Corporation Limited, ÂPeople Above OilĘ is more than a slogan - itĘs a commitment. Bharat Petroleum is one of IndiaĘs leading and most respected nationally owned companies, refining and marketing a wide variety of petroleum products that have literally fueled the nation's development and growth. "We have fueled our own rapid growth by making sure that we are the customer's first choice when it comes to petroleum products," says Madhukar Bidani, Head of Supply Chain Management at the lubricants division of Bharat Petroleum. „And we are a leader in using enterprise software to support that effort," he adds Bidani should know; he oversees a highly complex supply chain, delivering more than 700 products to Building a strong pipeline to customers 9,000 retail outlets across India. „It is a distribution network that gives us a competitive edge,‰ explains Bidani. But even with this advantage, competitive pressure is fierce. Says Bidani, „In the lubricants business, the stock moves as soon as it is Âon the shelves.Ę So if you arenĘt replenishing the stock fast, youĘre losing sales to the competition.‰ In trying to mitigate lost sales, the lubricants division had to maintain artificially high levels of inventory to ensure product availability. Not only was it losing sales opportunities, it was struggling to rectify a working capital deficit. „We needed to make sure that every customer has the right product at the right time, in the right quantity," says Bidani. „ThatĘs why we turned to SAP."

Leading the Pack as India's First Implementer of the SAP® Supply Chain Management Application In choosing the SAP® Supply Chain Management (SAP SCM) application, Bharat Petroleum was breaking new ground. "At the time, we were the first company in India to deploy SAP SCM,‰ says S Prakash, DGM - ERP Bharat Petroleum. The company had already achieved significant performance benefits as an early adopter of the SAP ERP application. But the SAP SCM applicationĘs scalability and functionality enabled Bharat Petroleum to optimise supply chain performance across its liquefied petroleum gas (LPG) and lubricants divisions. The application was also able to meet each divisionĘs unique supply chain challenges. "For our lubricants division, SAP SCM helped us switch from executing our production based on available supply to executing it based on actual demand," Prakash explains. "For our LPG division, SAP SCM helped us lower our high logistics costs and eliminate manual, spreadsheet-based planning processes."

Bharat Petroleum deployed SAP SCM in phases starting with the lubricants division, which had the software up and running in just nine months. "SAP SCM functionality for demand and supply network planning allows us to continuously incorporate the latest demand signals into our supply chain," says Bidani. "And the application's production planning functionality helps us optimise monthly and daily production schedules; that means we can always make the most of available equipment, material, and transportation resources."

Fueling Sales Growth and Lowering Supply Chain Costs SAP SCM is fulfilling the lubricants divisionĘs goal of high product availability to customers. "With SAP SCM, we don't lose sales to the competition because we do a much better job of meeting demand," says Bidani. „In just the past two years, weĘve grown sales by 38 per cent." By shrinking average days in inventory by 56 per cent, SAP SCM is also helping the division drastically lower supply chain costs. The software also helps BidaniĘs team accommodate high-volume, last minute orders. "For me, the biggest benefit is a good nightĘs sleep," Bidani confesses, "because I donĘt get calls about missing shipments and lost sales opportunities." After the lubricants division, Bharat Petroleum continued its rollout of SAP SCM, launching a pilot project in its LPG unit. The company began to see benefits quickly - including a 2.5 per cent reduction in logistics costs and a 60 per cent to 80 per cent reduction in planning cycle time. The LPG division estimates an additional 5 per cent to 6 per cent reduction in logistics costs going forward.

Fueling Further Transformation The company next plans to deploy the software throughout its three fuels divisions (retail, industrial and commercial, and aviation), making it IndiaĘs first oil and gas company to use SAP SCM for this particular line of business. In doing so, the company will continue to lead the way in using innovative technology to help ensure customer value and satisfaction.