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IT bunker at Chemoil

Chemoil recently implemented OBIS 6.0 to address issues such as lack of data integrity, slow response time and lack of real-time access to current market information. Priya Jain reports

Chemoil, a marine fuel products supplier, was faced with meeting growing business demands and dealing with issues such as lack of data integrity, slow response time and lack of real-time access to current market information. Hence, the company recently deployed OBIS 6.0.

Earlier in 1994, it had implemented Chemistry, an Oracle-based solution. This was upgraded in 1999. In 1995, the company’s turnover was $1.5 billion. Presently it is around $4.2 billion. So the number of transactions has increased and the business has also grown in terms of the number of offices.

With growing business needs, increased complexities, global spread, statutory regulations and multi-country, multi-currency operations being part and parcel of the business, Chemoil was forced to look for a fresh solution. It chose Calsoft’s Online Bunkering Information System (OBIS) Ver 1.0.

In 2002, it upgraded to OBIS Ver 3.0 and migrated from a two-tier to an n-tier architecture and brought new business processes under the purview of the system. In 2005, Chemoil upgraded its systems to OBIS Ver 6.0 from California Software with the focus to Web-enable critical operations.

Bunker trade

IT implementations are an outcome of business requirements. To understand the specific requirements of a bunker-trading corporation, let’s take a closer look at its operations. A typical bunker trader’s day starts with checking current trade inventory positions and commitments in a spreadsheet. During the day, the trader enters new trades and sends them to the back-office for an update of records. Subsequently an e-mail is sent to the operator for further action and he, in turn, talks to the agents via telephone and confirms the delivery plan in a spreadsheet. The plan is then manually keyed in and sent to the terminal operators. On delivery, the Bunker Delivery Note is sent to the finance department for invoicing.

The terminal operation is a high traffic area where fuel is continuously pumped in and out of storage tanks by trucks, barges and pipelines. Keeping track of these movements, collectively and from individual modes of dispatch, results in an enormous information overload on bunker operators. The entire process is person-dependent and error-prone due to manual data entry. Global operations layer their own complexity on to these processes.

A source of concern at the Chemoil group was the non-uniform representation of data because the associate company had its own style of reporting and data representation. Some major issues encountered were data integrity, response time, validity, and real-time access to current market information and data transfer across locations.

"Earlier pricing used to take two to three days but today it gets done in half-an-hour. Now we can key in real-time information and get access to the current status of inventory and invoices" - Baburaj Parakkal Global IT Director, Chemoil

Baburaj Parakkal, Global IT Director, Chemoil states, “We were using an isolated trading system to track the trading and risk management activities. This meant that data had to be culled from various locations. A forecast based on this data usually was a time-consuming and painstaking effort. Each group company carried out its transactions in isolation and consolidation of trades leading to frequent delays in reporting. At the end of the day, employees were working hard, but the results did not fully justify their efforts.”

Chemoil stipulated that any IT solution implemented by it had to support all of its functions including bunkering trading, cargo operations and finance management and it had to be simple to operate, and scalable. The solution had to be online with suitable Web-based interfaces, multi-location and multi-currency support with workflow automation and alerts.

However, J K Nair, Executive Vice-president and COO, California Software highlighted some of the challenging aspects of the project; process automation by linking modules and connecting different users such that each department can work independently and yet interact with other departments without loss of confidentiality of information. This need was addressed by building in comprehensive data level security that ensures confidentiality.

The fuel oil trading business is a volatile, high-volume, low-margin business. Parakkal explains, “The market scenarios keep changing and hence business processes get dynamic. This places greater emphasis on the setting up of automated workflow engines that send alerts to the management and support users in the field (from departments such as retail sales, cargo operations and claims) with Web-enabled user interfaces that have adequate security to ensure confidentiality and user defined dynamic reporting across locations.”

Automatic for the business

Today, the company’s business processes are automated and integrated including the automation of cargo operations, back-to-back trading, terminal operations, use of third-party equipment to record terminal operations, filling in process gaps and ironing out process inadequacy. This is with respect to information flow in operations and inventory. The other aspects of the project are facilitating updates to inventory as estimates, as well as actual and verified movements in a simple manner. Last but not least, the solution generates alerts, tasks and clarifications to facilitate information flow.

All this automation and integration has reduced the overall time taken from inquiry to invoicing at Chemoil. OBIS Version 6.0 carries out the standardisation of the data collected internally and generates reports in a uniform format while continuing to allow individual users to work with the format that they are comfortable with.

All front-end modules of OBIS Version 6.0 are Web-enabled letting traders and operators access information from anywhere. Further, centralised Web-based modules in OBIS Version 6.0 have eliminated data transfer problems, ensured data integrity and given operators access to real-time inventory positions and value. It automatically re-costs the inventory giving an accurate idea of the cost of various products across tanks and locations at any given point of time.

“The only challenge during the implementation was to get feedback from multiple locations, handle change requests, synchronise testing and have simultaneous communication. Since the accounting functionality was done at the back-office in Chennai, this issue was sorted out,” feels Parakkal.

With the introduction of OBIS Version 6.0, collection and collation of data became automatic and hence real-time data and timely forecasts are readily available.

Parakkal adds, “Earlier pricing used to take two to three days but today it gets done in half-an-hour. Now we can key in real-time information and get access to the current status of inventory and invoices. The system analyses and gives us the provisional profit and loss statement based on the additional cost involved in selling at a particular port. It also provides multiple purchase and sales analysis and helps plan our own strategy. Costing is also done in real-time along with hedging, thus minimising the risk of inventory.”

Other than that, consolidation and standardisation of trading and risk management functionalities across group companies has helped the company leverage capabilities such as real-time reporting and optimal price realisation. It has also aided in the implementation of a company-wide risk management policy and build in ‘natural hedge’ opportunities across companies against market fluctuations.