How HPCL Pumped Up Its Ordering Processing System

They wanted it and they wanted it bad. But some dealers of Hindustan Petroleum (HPCL) just couldn’t get their hands on it: as slick as oil, their requests for stock kept slipping away.

What was annoying was that the order processing was standard business practice. For dealers, placing an indent — an order which typically holds the amount of oil that a dealer requires — was just another thing that needed to be done every so often. But the process was painful. To place an order for petrol, diesel or other HPCL products, dealers harangued HPCL’s regional offices with repeated requests. Being in the middle of HPCL and the fuel pump owners, the dealers faced the heat from both sides.

The problem with this manual process was that it bore the seed of all sorts of possible human errors.

For instance, a lack of prompt — or worse, no response — to their phone calls when they placed their requests was beginning to trigger unrest among the dealers. Sometimes, dealers complained that when an HPCL official finally picked up the phone, he or she got their order wrong or recorded it on their systems incorrectly or misplaced their order. The worst was when their indents were not executed at all.

Some transporters and dealers were beginning to feel that they were being subjected to unfair treatment — something that HPCL would have found very hard to justify. There were serious discrepancies between the execution of loads and the amount dealers had ordered. This became a bone of contention between the dealers and the Rs 103,800-crore (US$21.3 million) refinery major. At a time when oil companies were fighting for their share of the market, HPCL which holds 16 percent of retail and marketing share was slowly losing its grip.

There was a broken link in the ordering process and it needed to be fixed.

Oiling the Wheels

Established in 1952, today, HPCL caters to over 460 dealers across India. The company also owns and operates the largest lube refinery in the country and produces lube base oils of international standard. The company accounts for over 40 percent of India’s total lube base oil production. For this Fortune 500 company, (it ranks 290 on the list) business comes not only from the metros but also from the remotest corners of the country, from states as far flung as Sikkim.

The epicenter of dealer unrest, however, was a terminal in southern India. With the increasing number of complaints it was getting, HPCL knew that if it neglected the problem, it could prove costly. So, the company conducted an internal study and the result has saved it a world of trouble.

HPCL’s managers figured that if all indents were recorded correctly the first time a dealer interfaced with the company, then all their grievances would cease to exist. This would mean automating the entire recording of indents and minimizing manual interferences. HPCL needed something that could oil its creaking wheels and it turned to technology for help.

Web and IVR (interactive voice response) systems were popular options and would enable smoother indent filing but considering the remote locations of HPCL’s dealers and poor Internet penetration, the company decided to develop an SMS-based system.

“I knew that the idea of placing an indent using the Internet would face some aversion from the dealers because not all of them are tech-savvy. But with mobiles being not just tech tools today, we thought that the automation of indents using SMS was an ideal and wise option for all of us,” said Nishi Vasudeva, executive director-IS, HPCL.

Banking on the popularity and the user-friendly nature of mobiles, Vasudeva and her team decided to develop an indent management system (IMS) with a mobile interface to place indents. The IMS, which is integrated with an auto indenting software to receive indents, is based on data from retail automation systems (contains data on the location of dealers, retail outlets, etcetera). Once a dealer sends a message requesting for his stock to be replenished, it is checked for authenticity.

If the SMS is valid, an indent is created and the acknowledgment with an indent number — similar to the railway’s PNR — is sent back to the customer.

“Today, when the dealer wants to place an indent for ‘x’ amount of fuel (petrol, diesel or both), all he needs to do is send an SMS to an HPCL installation. He has been provided with multiple templates of various combinations of different products offered by the company,” explains S.T. Sathiavageeshwaran, GM-IS, HPCL.

In the meanwhile, the planning officer views all the indents that need to be executed. He decides on the allocation of various products according to the availability of trucks at that point in time. A record of available trucks at an HPCL installation is maintained by cards swipes by truck drivers at the gate. This data is also available with the planning officer.

Thereafter, the indents are moved forward automatically to the ERP for order processing. As invoicing is completed by ERP, it is again fed to the IMS for reporting purposes. The IMS is integrated with HPCL’s ERP system to minimize the scope of errors when the data is transferred to the ERP.

Running Out of Fuel

“Earlier, dealers used to constantly call and follow-up asking when their truck would reach them and inevitably lots of things were put on hold as the arrival of the truck was awaited. For instance, dealers had to simply keep their porters on stand by until the truck arrived. But with IMS in place, a dealer now gets an intimation via SMS about when their truck will leave the terminal and he can calculate the time of arrival,” says Vasudeva.

The IMS has not only automated the process but has also enabled HPCL to track indents, create sales orders and invoices automatically in the ERP system on execution of indents.

But getting to this point was not an easy task. The system was not devoid of technical glitches.

An all-new customized application using Visual Basic had to be developed to read and transfer messages from a modem to a PC format. The GSM modem also had a ceiling on the amount of outgoing messages it could send per minute. The scary part? The system had no alert in place to warn officials of messages that didn’t get sent.

“We had to advise all our dealers to use an alternate number. It took a lot of effort to stabilize the software and make it adequately fault-tolerant. We made a provision in the software to simultaneously handle inputs from several GSM modems and also send outgoing messages with load balancing. The integration with the ERP system was also a challenge as this was the first ERP application to use EDI (electronic data interchange),” says Vasudeva.

Tank Full

Apart from the tech bit, getting user buy-in was another roadblock, though not a monumental one. Many dealers were not comfortable with mobiles and found it difficult to communicate via SMS. They followed up constantly with phone calls. But, Vasudeva found a way around it.

“We conducted one-day training workshops with the dealers to familiarize them with the new system. We did not encounter much opposition [after that] from the dealers as mobiles are no more a technology but an everyday utility,” says Vasudeva. After tackling those speed-breakers, HPCL and its dealers found themselves on the right end of the ordering process. The IMS has not only satisfied dealer queries but has made it easier for internal planning officers and other officials to review reports from time-to-time. The system has done what it set out to do: pumped up efficiency.

This is extremely important in addressing issues related to delayed indent execution which was earlier straining the company’s relationship with its consumers. With IMS, the planning officer is fully equipped to handle dealer queries and explain delays in execution to the concerned party.

“The system also has an additional feature in which dealers can inquire about the status of their last indent which is again an SMS and no manual interface is required. Also, a dealer is intimated (via SMS) as a truck leaves the installation for the execution of his indent,” says Vasudeva.

The system has reduced the huge amount of paperwork HPCL churns out and merged indents electronically with the ERP, which helps in tracking invoices and respective payments.

For internal users like Y.K. Gawali, GM- O&D, IMS is like a magic wand.

“The issues in the old system were dealer dissatisfaction regarding handling and execution of their indents. Complaints regarding phones being not reachable or not getting picked up, handling of large amounts of physical paper, indents not getting executed or getting wrongly recorded, executed or lost were hampering our growth. Claims by dealers regarding discrimination were severely affecting our business. All these issues were addressed once the system was put in place,” he says.

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There were obvious benefits that helped Vasudeva. “The biggest benefit is customer delight, since the whole indenting process has become very easy and transparent for dealers. They get automated confirmation via SMS acknowledging the receipt of their indent and another SMS when a truck leaves the installation after getting loaded. Further, dealers can also indent their requirement up to one week in advance.”

Adds Gawali, “Another big gain is the elimination of non-productive activities among our planning officers and sales officers in terms of reducing the number of phone calls they had to answer from the dealers. This gives them ample time to do their job effectively. IMS has also eliminated the time required for entering sales orders into the ERP system and this translates into a huge saving.”

Sathiavageeshwaran says, “It has now become much easier for a planning officer to screen a request for the indents and execute them accordingly. It has definitely smoothened the operational process. More importantly, our service to the dealer has improved a lot.”

With 8,329 retail outlets and 2,232 LPG distributors across the country, HPCL today boasts of a healthy network of happy and satisfied dealers.

“Timely availability of reports to plan further product allocation in today’s competitive time definitely gives an edge. Besides saving productive man hours can be translated into quantitative benefits. And above all a sound customer relationship,” says Vasudeva.

Snigdha Karjatkar is correspondent.

This story, "How HPCL Pumped Up Its Ordering Processing System" was originally published by CIO.

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