Fuelling Efficiency

Serving hotdogs and doughnuts around the clock is one way to guarantee that customers keep on coming back, but for Emarat it’s just one of the many services that form a cornerstone of its business strategy.

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By  Greg Wilson Published  May 29, 2001

Emarat|~||~||~|Serving hotdogs and doughnuts around the clock is one way to guarantee that customers keep on coming back, but for Emarat it’s just one of the many services that form a cornerstone of its business strategy. The petroleum retailer is determined that the 1000 or so people that pull up at its petrol stations on a daily basis are going to do more than buy just fuel for their car. During the past few years Emarat has revamped its service stations —renamed C-Stores — to offer customers a wide range of services and products. Visitors to a C-Store can shop from around 3000 product lines; drop off camera film for processing, hand over dry cleaning, ask to send a fax or even post a letter.

Emarat’s expansion into retailing services is supported by more traditional ‘automotive’ services. Since 1999, motorists have been able to have their car cleaned and minor repairs conducted while they wait.

Emarat’s emphasis on building services around its core competency has its roots in the company’s founding back at the start of the 1980s. When the price of oil rocketed during 1979, the UAE federal government stepped in and took over the running of petrol stations, to stabilise and maintain the price of petroleum products. Twenty years later and the cost of petrol has remained unchanged.

Although federal price fixing protects UAE-motorists from price fluctuations on the international petroleum market, it presents Emarat with a unique situation — if international prices are high, it can’t raise its prices to compensate. Faced with a fixed price structure, and a changing purchase price, Emarat has diversified its business model in an attempt to generate further revenue sources.

Going hand-in-hand with Emarat’s investments to expand its business model, the petroleum distributor is slashing its operating costs and fuelling its efficiency with a comprehensive overhaul of its IT infrastructure. “We are restricted in our selling prices [of] the petroleum products we sell in our filling stations, we can’t change the prices, that is set by the government… [and] we buy at market prices,” explains Suhail Al Banna, information technology manager, Emarat.

“So in order to be profitable we have to manage our organisation and streamline [our operation.] By improving the business we are trying to reduce our cost of operation by at least 25%.”

At the start of May, Emarat’s target of a 25% reduction in its operating costs leapt one step closer, when the organisation went live with its 11-month long implementation of Oracle 11i. As part of the project, the petroleum distributor revisited and redesigned its business processes, as it rolled out 14 modules of 11i, including core applications such as, Financials, Inventory & Distribution, Human Resources and Payroll.

“We wanted to take advantage of industry best practices, revisit business processes and also take advantage of the application features as much as possible,” comments Al Banna.

“One of the major shifts that we have [completed] is that our whole purchasing system is now automated… All Emarat’s purchasing is done through Oracle purchasing and inventory.”
Key in automating the distributor’s purchasing system has been the integration of the business critical order management application. Previously, Emarat’s order management had been run by a bespoke application, however, the 11i project aimed to create an integrated solution, reducing the dependence on in-house developed or standalone vertical applications. “We have eclipsed the whole functionality of the vertical application into Oracle Order Management, and integrated that into the vertical application for oil stock accounting,” says Al Banna.

“We now have an advantage in terms of reconciling all our products into one system and getting the product profitability on a daily basis. We know exactly what the profit was out of each product, and at each filling station,” he adds.

Further application consolidation is in the pipeline, as the organisation brings its other vertical applications under the Oracle ERP. Emarat is planning to replace its maintenance management application in the forthcoming months. Although the vendor hasn’t finalised which package will be deployed, it’s clear it will integrate closely with 11i.

“We have terminals, storage units and pipelines, filling stations, vehicles, buildings, we do all of our maintenance in-house… and we want to manage all of these,” says Al Banna.

Critical in delivering data transparency, particularly in the business’ daily operations has been the close integration of the point of sale system (POS) in each of Emarat’s C-Stores. Each store has a networked PC, which uploads information from the POS with the rotation of each shift.

All the petrol stations run PDI, a system specifically designed for fuelling stations. PDI integrates with the POS solution Verifone Ruby. The server-side edition of Ruby, which is integrated with Oracle General Ledger, can pull up-to-date sales information from the client in the station. “The PC is connected to the head office, where all the information on the transaction, plus pricing and new items are updated, through our wide area network,” says Al Banna.

Much of the stock ordering issues in the stations have been decentralised to the managers of each particular store. Supplier agreements are negotiated at head office, and products are delivered directly to the filling stations, bypassing the need for any warehousing facilities. Each station has been equipped with barcode scanners to ensure consistency in pricing across Emarat’s stations, and accurate stock management. Changes to pricing, products or barcode information are downloaded on a daily basis through the station’s PC.

||**||Page 2|~||~||~|With the purchase, ordering and inventory processes automated, Emarat has eliminated the human element, reducing errors and lowering the cost per transaction. More significantly, the distribution business has access to up to the minute financial information. “We’ve tried to integrate with the ERP implementation as much as possible to eliminate the cost of transactions and human errors,” says Al Banna. “The increase in efficiency is also a major issue — certain tasks took a long time. There were processes which used to take 21 days, but now can be done in just a few hours,” he adds.

Emarat is already looking to the next phase in its ERP project and to take advantage of the clean data it is now collecting from its retail and distribution business. By the end of this month, it plans to have gone live with its OLAP system, which will form the basis of its data warehouse.

With the data warehouse in place, Emarat executives will be in a strong position to start analysing customer data it generates on a daily basis. The construction of a data warehouse will form the core of Emarat’s forthcoming customer relationship management strategy (CRM). The petroleum distributor is currently “brainstorming,” about the possible CRM opportunities, says Al Banna. However, says the IT manager, any CRM strategy will deployed in close conjunction with Emarat’s business strategy. “By the end of this year we will have a formal strategy in place and one of next year’s projects is to implement a CRM solution,” predicts Al Banna. “We’re looking at how to attract more drivers to the filling stations… [so] CRM is going to be increasingly important,” he adds.

Emarat intends to reduce its operation costs further through the widespread introduction of ‘self-service’ applications, initially within its own organisation and then extending similar services to its partners and suppliers. Current plans include deployment of employee self-service, receivable self-service and supplier self-service.

No firm timetable exists for the delivery of these services, says Al Banna, but the company needs to address network security issues before opening up its processes and information to external third party organisations. “There were two reasons for going with 11i; one was to prepare ourselves for e-business and secondly, [to give] our customers and employees self-service access,” adds Al Banna. “At the beginning we will use Oracle ERP self-service packages. There isn’t an application for ordering self service, but eventually [that is an aim.] We’re planning to give multiple channels to do ordering, based on the Internet,” he adds.

During the course of the implementation, the 10-man deployment team has worked closely with business ‘power users and external consultants’ to ensure the project was welcomed by the business users. Several training sessions have been held over the course of the 11-month project to educate users about the features of 11i. “With any new system you will get resistance with the users, but it depends how and when you pass information to the users,” says Al Banna. “There were people that had never used Internet or Windows-based technology because we used to be character-based, so certain users had to be given training on things like using the mouse.”

Running in parallel to the rollout of 11i, Emarat’s team also conducted a hardware upgrade of its servers and storage. After an extensive research, the business decided to deploy six IBM RS/6000s to run the Oracle Applications. A number of Netfinity servers were also deployed to power the company’s Lotus Notes environment. With the IT overhaul the number of Oracle users has risen to 170, and is expected to rise to 300 in the near future and consequently the company had to beef up its processing power.

“We are growing very sharply, we used to have 80 users on our old ERP system, with this change in the business processes, we’re now running all our business through the system, which means that every user, in every section has to do his business through the system. We will reach about 300 users,” comments Al Banna.

The server consolidation was also accompanied by the rollout of a storage area network to manage and backup the data generated by the business. The SAN is based around IBM’s Shark disc arrays and LTO tape libraries. “We wanted to consolidate our whole system,” says Al Banna.

“Previously, we had eight servers all looking after different areas of the business… by consolidating our storage infrastructure and linking it directly to tape backup we managed to eliminate any attended backup occasions.”

With the work to revamp its IT infrastructure still continuing Al Banna pledges that there will be further changes to Emarat’s filling stations in the future.
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