A group Project on

SAP implementation in BPCL

Section A, Group #9

Submitted ByHardik Badgujar (11DM035) Bhavsheel Kohli (11DM037) Dhaval Gokani (11DM042) Gaurav Mani Diwakar (11DM050) Gaurav Mittal (11DM051) Ajesh Malhotra (11DM191) Maminiaina Rabenja (11DM708)

Under The Guidance ofProf. Eugene Reuben Prof. Kapil Garg

AcknowledgementIts our pleasure to take this opportunity to thank all those who helped us directly or indirectly in preparation of this project report. We are very much thankful to Mr. Sanjay Suri and Mr. Atul Kumar, for their real-time help. Healthy discussions, valuable inputs from them & frequent visits to BPCL, helped us a lot in giving the present shape to this report. Their constant encouragement & co-operation has been a source of inspiration for us throughout. We would also like to thank Prof. Eugene Reuben & Prof. Kapil Garg for their support & advice, wherever required.

INDEXSl. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Topic Introduction Before Implementation of SAP During Implementation After Implementation Needs and Benefits of ERP S.W.O.T. Materials Management module Sales and Distribution module Stock Accounting Sales Accounting HRM module FI module CO module Appendix Leave Application screenshots Travel Application screenshots Appraisal system based-on Balance Score Card Creating a Purchase Order (PO) Page No. 1 1 2 3 4 5 7 8 11 12 14 17 19 23 25 27 28

IntroductionBPCL is a Government-owned second largest Petroleum Refining and Marketing company with its Retail network spread all over the country. The annual turnover of the company is Rs. 46,850 Crores. BPCL has an employee strength of 12,688. It has over 4562 petrol stations and 1421 LPG distributors throughout India including 19 Installations, 164 depots, 19 Aviation Service Stations, 38 LPG Bottling Plants. The companys sales volume is about 25 Million Metric Tonnes. As part of the organizational restructuring exercise, the company was revamped into six Strategic Business Units (SBUs) Retail, Aviation, Lubricants, Liquefied Petroleum Gas (LPG), Industrial & Commercial (I&C), and Refinery. These SBUs were integrated with support entities like Information Systems, Finance, Human Resources, Strategy and Brand Management. This restructuring was designed to help the organization focus on specific customer segments and address their individual needs. The company also realized that it needed to streamline its processes and integrate the organization as a whole. It is when the company decided to implement ERP. All the business processes of all the departments in the organisation are run on SAP R/3. BPCL has rolled out SAP R/3 solution at all its company owned locations numbering around 196 including the Regional offices and Head Office. The company now runs on a single system with 100% of the business volume in SAP.

Before implementation of SAPIn the pre-ERP era, companies were largely confined to the local markets and all managerial functions were managed by a single set of people. Same was the case with BPCL. However, as businesses became global, companys activities grew beyond local boundaries and more people were brought-in to manage the businesses. While the departments within the companies grew, they also set up their own procedures and hierarchy. Within departments, information moved upward. Due to the upward movement of information, it was shared between departments at the top level only. There was no proper employee involvement & information sharing. This resulted in comparatively low productivity of organization. Information in that time was considered to be gold. The person holding information was considered to be the king. In his/her absence the management of the organization was difficult. The processes & the hierarchies were becoming difficult to manage. There was an extreme need to establish a centralized information and controlling system to deal with situation effectively. ERP thus aided in effectively managing the resources of the organization.

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During ImplementationConsidering the size, complexity and the geographical spread, BPCL went for a phased implementation. The project went through 3 phases viz. Conceptual Design and Planning phase, Detailed Design & Implementation phase and Rollout phase. The project team which started with a 6 member core team grew to a size of 160 at the peak of rollout phase. The company chose Microsoft Exchange Server as the platform, because of the level of integration with the desktop environment and MS Windows NT Server. BPCL conducted feasibility testing of the solution with the help of a pilot implementation. With the help of Windows NT Server and Exchange Server, BPCL connected three locations on a Very Small Aperture Terminal (VSAT)-based network with a bandwidth of 64 kilobytes per second (Kbps) to share Time Division Multiplexing/Time Division Multiple Access (TDM/TDMA) connections. The VSAT network was rated on the criteria of ease of deployment, speed of mail delivery, zero message loss and response times. For a comprehensive implementation of the intranet, BPCL took help from Microsoft Consulting Services. BPCL connected its corporate office in Mumbai with the various regional offices. Seven webservers were deployed at the VSAT hub in Bangalore to provide intranet connectivity to users all over the country. Access was provided with the latest local and international developments through the intranet. This not only helped the company offer better services, but also aided in building employee skills and competencies. Internet gateways were made available at the refinery as well as at all the regional offices. All the employees were thus constantly connected to each other and to the outside world. BPCL also implemented various applications to facilitate information retrieval from corporate databases, including intranet applications that allowed employees to access and update personnel records such as contact details and salary information on the intranet itself. It also introduced 'Query by Mail' (QBM) by way of which remote users could extract business transactions from corporate databases. This system helped conserve the WAN bandwidth and schedule database queries at night. Communication costs reduced drastically because of the communication infrastructure. According to reports, in 1999, savings on long-distance landline communications were less by 30% as compared to costs in 1998. The SAP implementation was part of the company's 'Project CUSEC (Customer Service and Satisfaction), which had to meet the challenge of an imbalance between refining and marketing. The company selected SAP R/3 as it was already being successfully used by major oil companies in the world. It was also the only package which had an oil industry specific package and an India specific package. BPCL appointed consultants Coopers and Lybrand for the planning process of SAP R/3'simplementation. The consultants worked in close co-ordination with functional experts within the company. The first phase of the implementation began in April 2000. The company's existing network was redesigned and restructured and all its branches were linked to a central connectivity cloud.2

BPCL realized that security would determine success of online business. BPCL ensured security through Sun Ultra 5 firewalls, Real Secure, Internet Scanner, Floodgate, Web Trend and WebSense. Web servers were installed at Bangalore and other metros with Compaq Proliant 1600 servers. Tests to modify and customize the SAP modules were carried on the quality assurance server (QAS). New developments and customization were made on the Development Server and then moved to the QAS for quality tests. The server architecture included a Compaq Proliant NT server, an SCO box, a Sun Firewall and other servers. The Cisco 2610 routers at each location led to a Cisco 1900 family switch for distribution. BPCL had also setup a data warehouse with business objects and query-by-mail. The company also implemented a Tivoli ESM (Enterprise System Management) solution. By November 2001, BPCL became the first Indian company in the oil industry to have implemented SAP. According to analysts, BPCL managed to complete the SAP implementation much ahead of its arch rivals IOC and HPCL, mainly because of its efforts to streamline its IT initiatives.

Problems during ImplementationThe problems faced by BPCL during the implementation were due to the Human Factor. It was a bit difficult to change the mind-set of the employees. Training the employees, to adapt to the new systems was also difficult but by various motivational, involvement & training programs, the company was able to deal with these problems very easily.

After ImplementationIn November 2001, BPCL successfully implemented SAP. Implementation began in April 2000. The company hoped to speed up its decision-making and respond faster to customer needs through ERP. The intention was to show the differentiation in services, retain customers and help increase the business of its Industrial & Commercial (I&C) customers. Also, each and every person related to the organization was exposed to all the relevant information, which increased their productivity & in turn benefited BPCL. There was no information blockage. The system was transparent enough. BPCL also wanted to increase its retail thrust by exploiting IT initiatives to the maximum. The noteworthy aspect was that the company was one of the very few Indian companies to have successfully implemented ERP. With the successful implementation, BPCL customers could access information and do business online, which enabled BPCL to increase its share of I&C customers from 14.9% in 2000 to 15.8% in 2001. After the ERP implementation, BPCL's revenues grew by 2.28% in 2000-01, even as the revenues of the petroleum industry declined by 3.4%.3

SAP R/3 helped BPCL to successfully launch its e-biz initiatives, the first of which was to allow I&C customers to track the status of their orders online. This not only allowed the company to retain existing customers, but also helped in attracting new customers. According to company sources, BPCL's biggest advantage from the ERP implementation was regarding the management of inventory. Before ERP implementation, the company's practice of monthly inventory reviews frequently led to time lag in processing orders. However, after ERP, this problem was eradicated. It was now possible for the company to know the details of receivable of inventories, which in turn made cash management also easier. The company expected the ERP to achieve a payback by 2003. The introduction of the Petro-card in 1999-00 tested the coordination between the various departments to the fullest. The Petro-card was a 4K-microprocessor smart card, which was used at retail outlets across the country. By March 2001, around 2.5 lakh customers were using Petro-card with over 20,000 daily transactions taking place at BPCL's retail outlets throughout the country. Petro-card's success put all doubts about BPCL's ERP implementation to rest. After this, BPCL also introduced a Fleet card for transport companies, which made it easier for them to track the position of their inventory. The company also integrated the manufacturing execution system of its refinery with the system.

Needs of ERP In BPCL, there were old system operations in practice which were non-integrated and everything was done manually, i.e. in isolation. There was no proper exposure & centralization. Batch processing of the produced goods was done but it was not online. In these transactions, there was a delay of around 40-45 days to get the complete financial status, and again there was a problem of report tallying. There was no central accounting system established which integrated all the departments together. Man power was wasted in dealing with such accounting issues and the errors were more while the productivity was less. Wherever there was a technology being used, it was out-dated (Foxpro, COBOL, etc.)

Benefits of ERP The clerical staff was minimized to a great extent and this led to the manpower rationalization and hence resulting in cost saving. System integration was done and now there was no more isolation in the organization. Free flow of information started taking place. All the production & batch processing was

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done online & universal reports were generated at various places at a particular point of time. Business to Business transactions started taking place easily and this helped BPCL to a great extent in integrating & competing with other oil companies. The processes now became comparatively simple, flexible & integrated. The accounting done was more accurate and tallying the balances was no more problematic.

S.W.O.TSTRENGTHS Checks and controls are provided at various points of segregation. Thus the chances of error were very less. Flow of info is seamless, universal and in real-time. As earlier there was no delay in report generation. The accountability was more proper. Paper work is reduced, thus saving costs and increasing efficiency. Planning and directing is much easier to execute. Various reports can be generated based on the past data, which helps in decisionmaking. Brings-in better relationships with suppliers and vendors as bill processing and payments are faster.

WEAKNESS The cost of implementation and running of SAP is very expensive and hence smaller organizations cant afford to implement it. The corporation has to spend money on regular upgradation. The user can become a slave of the system and hence when the system is down, he finds himself incapable to do any work. No manual backup maintained. The organization has to manage a cell which would have to sort out the day-2-day problems because the user isnt able to sort it out himself. In a country like ours, it reduces job opportunities. SAP fixes the number of users and only that many number of licences can be issued. They charge royalty on the number of users and any increase in the no. of users will lead to increase in the royalty to be paid.

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OPPORTUNITIES Better business opportunities are available, if stocks are available readily and hence, the customer can be served better and hence, most economic destination can be chosen after getting stocks from various places. Provides the opportunity to the company for acquisitions. Ability to leverage market position. Provides an opportunity to move into the web-based SaaS model.

THREATS Systems crash and hence one needs to create Data Recovery Centres. In BPCL, youve a data recovery centre and an alternate recovery centre (in Mumbai) in case the data recovery centre crashes. Malicious attacks on the software, cases of hacking, etc. which can affect the system. Very high level frauds can be carried out within the system. Requires highly specialized personnel to troubleshoot in case of bottlenecks and system failures. Increasing competition has brought to many other ERP vendors in the market forefront and thus there is a price competition. Economic slowdown has caused many companies to defer or drop ERP implementation.

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Materials Management (MM):The MM module is associated with procurement of materials required for maintaining or developing the infrastructure for conducting the business activities of BPCL i.e. procurement of non-hydrocarbon materials, for example pumps, motors, vehicles, furniture, valves, gas cylinders, tank sheets, laptops, etc. The procurement is to be carried out from the registered vendors else the vendors need to be pre-qualified before seeking an offer from them. Let us say, 5 lac gas cylinders have to be procured. Once the company has finalized the material specifications & the sufficient no. of vendors are already registered with BPCL, the company seeks an RFQ (request for quotation) from the vendors. In case the material to be purchased requires new parties to be identified/qualified, BPCL seeks Request for Proposal (RFP) from the interested parties & then qualifies the vendors against pre-determined criteria. RFP & RFQ are created in the SAP system. Once the proposer (BPC employee), say a person x creates a note i.e. (RFP) in the system & forwards it to the next level, say y. Y receives a message through the system that the file has been received for his/her action. He can either approve or review it, in which, it goes either goes to the next person or back to the sender for necessary correction & resending to Y. After selecting the vendors, a Request for Quotation (RFQ) is sent to the vendors in a limited tender system. This process is also called Tendering. The tenders are sought in two bid system i.e. technical & commercial. Upon receiving the quotations, a comparison is done manually as well as in SAP too. Technical comparison is carried out to ensure that all the bidders are brought on the same platform & would be supplying the material which meets the companys requirement & there are no gaps between the vendors & companys understanding of the specifications. If required, the company can also alter the specifications at this stage giving all the vendors an opportunity to submit a revised commercial quote. Finally the vendors are qualified on technical grounds. Next, the commercial bids of only those vendors are opened, who have been qualified technically & a comparison is done on basis of the price at which the product is offered by the vendor. Once all these comparisons are made and the vendor on L1 basis is selected, a Purchase Order (PO) is raised in the SAP & issued to the vendor. Upon receiving the product from the vendor, a Delivery Confirmation (DC) is carried out in the SAP. Finally, the payment is made in the vendors bank account via NEFT automatically without any human interface only after the receiver of goods carries out a Goods receipt (GR) in the system. In case services are also a part of the goods ordered, the deduction in respect of service tax, income tax, etc. are carried out by the system automatically, thus avoiding the human mistakes. The transaction through SAP ensures that payments made could easily be traced & a duplicate payment is prevented.

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Flow diagram of the process in Materials Management

Sales and Distribution (SD):Before SAP was implemented, the data entry was manual and the availability of data and other important information was localized. Due to this, the information flow was manual & slow and there was a significant chance of committing error. Moreover, data transfer was carried between various locations via a floppy and hence the risk of floppy corruption/missing caused many bottlenecks. All these factors would affect the decision making process of the company. In order to understand the Sales and Distribution (S&D) module, it is imperative to understand how supply chain works at BPCL. BPCL procures crude or finished products from ONGC or countries like Dubai, Iraq, Libya, Iran, Saudi Arabia, etc. and receives it at its refineries. BPC has 4 refineries in India located at Mumbai, Cochin, Numaligarh and Bina. Here the crude oil is refined and subsequently stored in the refinerys tanks. From the refinery, it goes to the regional major hubs (also called Installations), i.e. Bijwasan in the North, Tundiyarpet in the South, Budge-Budge in the East and Manmad in the West through the tank lorries. Some of the products of BPCL are Petrol (motor spirit), High Speed Diesel (HSD), Kerosene (SKO), Aviation Turbine Fuel (ATF), LPG, etc. The installations have huge storage locations capable of storing multiple products in big volumes. The capacity might be 50,000 KL 250,000 KL and more. From the installation, the product is dispatched to particular depots depending on the specific market requirements of the volume and the type of the product. Some of the BPC depots are in8

Hisar, Jaipur, Trivandrum, Jalandhar, Surat, Madurai, etc. The depots have their own inventory and storage capability of 10,000 KL 50,000 KL. In addition, the product is also dispatched to nearby customers & industries from the installation. From the depot premises, petrol and diesel are sent to the retail outlets (or the petrol pumps) whereas the SKO or kerosene is sent to industrial users or to the kerosene dealer to be distributed to the home users via the public distribution system (PDS), while ATF is sent to the Aviation Fuelling Stations (AFS). 1) Indent or Purchase Requisition The station manager will identify the requirement at his station based on stocks available, ullage, expected sales and lead time. Say he needs x quantity of ATF. He will put forward his requirement to the dispatching location or the transit location where the product is maintained at a higher inventory. 2) Stock Transfer Based on the indent received, the dispatching location will plan the supply of the product based on the distance to be covered, availability of tank lorries and prioritize the delivery based on demand. The time taken by the lorry to go to the station, deliver the product and return back to the dispatching location is termed as turn-around time. Based on this, the volume of the product that can be sent to the stations is planned.

Flow diagram of the Supply chain in BPCL

Process flow with SAPEarlier, this requirement was posted manually, whereas now in SAP, indent is made by the user who will put his requirement through an indent or a contract in the system, based on which he will get regular supplies. Relevant codes for dispatching and receiving locations are entered9

along with the quantity to be sent, the relevant period and the grade of the desired product. This is automatically passed through the SAP and can be accessed by the dispatching location. The supply location will give this indent to the installation, which in-turn sends it to the refinery. It may be noted that all of them maintain their own inventory and some additional stock for crisis time because these products are sensitive to the customer demand and are under government regulation (monitored by the Deptt. Of Civil Supplies) on the level of production and distribution. In this way, the scheduling of the product to be sent is made by the dispatching location, based on the distance between the cities (i.e. the turn-around time of the lorry) and the number of lorries available. In case, the requirement of the location increases, the idle time has to be reduced or more number of lorries have to be employed. Both the sides can monitor the stock levels and arrange for additional requirements from alternate sources, in case of any shortages. The information flow is seemless, automatic which brings in efficiency in the system, influencing the decision making. Not only this, monitoring is done at various stages and hence, any shortage at any of the stage can be spotted through the system and corrective action can be immediately applied. Moreover, as indenting is online (unlike the manual process earlier), the requirement can be known immediately and thus process disruption and delays can be eliminated. Even the retail outlets are provided with a program through which they can raise their requirements, though they cant directly access the SAP. The sales officer can vet the data as per the monthly/weekly requirements. Now let us examine the process flow of goods between the dispatching location and the receiving location. Goods will be issued by the dispatching location through the SAP and will be called Goods Issued (GI). A Transaction Code (T-code) will be fed by the Planning Officer into the SAP for authorizing the issue of goods so that the product can be filled in the lorry from the inventory. The filling officer will fill the lorry and prepare a Product Dispatch Note (PDN). Since the products are very sensitive to density, temperature, etc. these details along with the quantity is entered in the SAP system to generate the PDN. So the PDN contains the lorry number, quantity to be carried, temperature, density, time of leaving, etc. The PDN also acts as the gate pass for the lorry. Next, the lorry enters the receiving location with the PDN. The quantity is physically checked for variations in temperature, density and other parameters to ascertain any losses during the transit. The losses can be of 2 types Transit loss (due to variations in temperature, density, etc.) or Other Causes (OC) like leakages, theft, etc. Once, the quantity is physically checked, the quantity received along with the temperature and the density is put in the SAP. This is called Goods Received (GR). The stock is updated in the SAP while the inventory is physically checked and also updated in the system.10

The retail outlets will have to pay in advance to the company through a DD to the tank lorry driver. This DD will be the product requirement for the next day. Once the Planning Officer receives the DD and enters it into the system, he can issue a GI to prepare a PDN. Stock Accounting is finally done at the end of the day.

Flow diagram of the process in Sales and Distribution

In some regions, IOC takes products from BPC while in some BPC takes from IOC, as per requirement and hence, no cash transactions are immediately carried out. This is called Hospitality and the product exchange is done to save on the transportation cost through crisscross movement. These types of transactions are called Other Marketing Company (OMC) transactions and accounted separately in Stock Accounting. Another advantage of SAP is that the user can see the in-transit process. Once the leaving time of the lorry is entered into the system, based on the turn-around time, the system is able to predict the receiving location the time at which the lorry will reach the receiving location. Similarly, from the information of Goods Received (GR), the dispatching location will come to know when the empty lorry will return to the installation/depot.

Stock AccountingStocks are available in the refinery, depots, installations, aviation stations, import points, stockin-transit, etc. The locations where stock is kept are called Plants. Generation of the product happens in the refinery. BPCL has 4 refinery units Mumbai refinery, Numaligarh refinery (Assam), Bina and KRL (Kochi). Once the crude is refined and various products produced, stock numbers are updated. When the sales are carried out through the depots, aviation stations, etc. stock level is reduced. Also, stock accounting is carried out at natural temperature and 15C since temperature impacts the stock volumes.

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Oil companies as PSUs indulge in B-2-B exchanges of products, i.e. BPC doesnt have a refinery in North and IOC doesnt have a refinery in and around Mumbai. In that case, products can be exchanged between the 2 companies to meet the requirements of the customers of both companies around these places through product exchange. The documentation of Stock Transfer (exchanges) is done through SAP by creating certain documents called B-2-B exchanges and data is transferred through the internet. The exchange of petroleum products is carried out at ex-refinery prices, i.e. the price is calculated after the product leaves the premises. So, whatever marketing profit is made by the company taking hospitality is enjoyed by it. Stock Accounting is considered as a part of the Sales & Distribution and is done on a daily basis. At each plant, day-end activities are carried out in the SAP and closing stock is calculated, which becomes the opening stock for the next day. Losses/gains can happen which can affect the stocks. They can be natural i.e. due to temperature variations, evaporation, leakages or they can be abnormal losses. Whenever the losses exceed certain pre-decided limit, investigations on the same are carried out. Before the SAP was implemented, Stock accounting was done manually where-in the opening and closing stocks of the tanks were verified by taking physical dips of the tanks, converting the dips to the quantity through the charts, entering the details of the sales invoices and closing the day-end stock. After SAP was implemented, it has become possible to view the stock at any point of time. Refineries are connected to the SAP and generate the Stock Transfer document, wagon-wise while sending the products down the chain. The document has some details like sending location, receiving location, product grade and product quantity (at natural temperature and at 15C). From the refinery, the product is transferred through pipelines (in case of bigger installations like Manmad) and railway wagons to the various depots (like Meerut). Once the product is received, say at Meerut, receipt documentation is carried out for each tank wagon. The product is discharged in the tanks and the tanks stocks are accounted in the system. After sales are carried out, the cheques and DDs received are sent to the finance department and handled through the FICO module.

Sales AccountingBefore SAP was implemented, FoxPro packages were running in all the 300+ locations of BPCL which did the billing after the cheques received were entered into the software. This would generate the sales invoice, which would be sent to a centralized location (say the H.O.) in floppies. This way, data was collected for the entire month for all of the 300+ locations. Next, batch processing was carried to do sales accounting at the central location. Since any sales done will affect the stock in the inventory, once the sales are done, stock accounting is carried out. Consequently, the stock is subtracted in the master file.12

Next, Accounts Receivable accounting is done. ARC is run and a statement of account is generated for customers eg. Retail outlets. Accounts Payable is run to generate the payment to transporters, vendors, etc. The actual payment is made via cheques/DD. With the implementation of SAP, since all the locations are integrated in the package, once the sales are made, the stock are immediately affected through the system. This avoids many hassles like data unavailability due to floppy corruption, floppy missing, etc. and other human errors. The customers account is adjusted in the system and money received is credited to his account. The system also matches the customer payments received against sales and any delay/shortage in payment is indicated through credit blocks which prevents the PDN to be generated in favor of the customer. Similarly, the payment to the vendor goes to the vendor account and if the vendor has an NEFT account, it can go directly to the bank without any human intervention.

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HRM:In BPCL, the payroll is generated in 3 staff category - management, non- management (clerical and labor) and Mumbai refinery. The processing of payroll for the non management staff is carried out monthly on a region wise basis that is North, South, East and West. Before the implementation of SAP, this processing used to happen in COBOL in batch mode. Voucher payments are given for variable components like care mileage, TA, DA, medical, furniture loan, cable TV. The information was entered in fox-based package and payment was made in cash. The record used to go to finance department. The individual bank account was credited with the salary. The HR module is a part of separate landscape and not part of main ERP software and is on different server. As opposed to the earlier system where the processing was done for each individual employee, in the new system (SAP), a single processing is done for management, clerical, labor staff and refinery. Cash vouchers are given for all the cash payment and Transaction-code (T-code) are entered into the system. These codes are developed by the ABAP developers written to suit the BPCL requirement. Up till 2005, People used to be paid in cash, after which the company put up its own portal (Self service portal) ESS/MSS i.e. Employee Self Service/Management Self Service. The HR module also handles leave, transit-flat booking, travel booking, travel claims, employee benefits, loans, etc. Under leave, the leave balance is indicated by the system for all type of leaves, i.e. casual, medical & earned leave. The leave application is also through the system, whereby the applicant applies for leave providing the details like no. of days (to/from) and the reason and he sends it to his superior for approval. The approver has the option of either approving it or review. In that case, it goes back to the applicant for discussion with the superior. The leave are also credited in the individual employees account on quarterly basis and once can apply for leave encashment also through the system, in which case, the encashment amount is credited to the individuals account through NEFT.

Review

Approval

Employee

Leave Application

Superior

Dig. 1: Leave Application

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Similarly, travel bookings are applied through the system, giving the relevant details of travel the place, the mode (to/from), the duration and the timings. Once the request is sent through the system, a copy of the same is parallely sent to the superior for approval and another copy goes for travel booking to the booking department. On completion of tour, the employee can claim his tour expenditure only after the tour has been approved by the superior. Approval

Employee

Travel Application

Superior Booking Department

Dig.2: Travel Application

The eligibility limits have been defined in the SAP system. The individuals put their claims in the system at the end of the period and send it to the approving authority. Automatic messages are delivered to the sender and the receiver. The approving authority approves the claims in the system, which then passes on to finance department. The finance department carries out a run on weekly basis and the payment is credited into the individuals bank account through NEFT. The system controls to ensure that no duplicate payments or excess payments are claimed or passed through the system.

Leave Encashment Claims Travel Encashment Car Voucher EncashmentApproved Authority

NEFT

Employee Bank A/c

Finance Department

Dig. 3: Claim Disbursement

Now let us understand how a Work Flow Application in the SAP system goes. Say, an employee wishes to create a monthly car voucher. He creates a voucher with the help of application. The mail goes to his superior for approval, who can approve it through the portal or can discuss in case of any discrepancy. This further goes to the system to the finance team for their weekly run and after all approvals are done, the money would finally go to the employees bank account. With the help of the ERP, no cash payment are made and no paper is needed, thus saving time and money and increase efficiency. An important part of the HR module is the Performance Management System or the PMS. It is linked to the reward scheme.15

The corporation sets the overall objective for itself. The objectives are to be achieved through the various businesses of the company, which are run by the business heads. Therefore, the objectives are given to business heads which cascade it down to the next level and further down below. Therefore, KRAs or Key Result Areas are set for each employee by his superior for his relevant area of work. They are certain objectives/targets which the employee is supposed to achieve in the year. The marks for the KRAs are based on the objectives, description and measurement. Depending on the number of targets achieved in the various areas viz. financial, customer perspective, internal business process and learning & growth, the performance evaluation is done and progression is decided. Once the KRAs are met and approved by the superior through the system, a final report containing the appraisal document is prepared through the system. The PMS is also moderated and the PMS of all the employees in a business unit follows a bell-shaped curve, which essentially means that not more than 15% of the employees can be in the topperformer category and the 10% of the employees essentially have to be in the low performance category and may not receive the incentives.

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SAP FICO FI Module:The SAP FI Module has the capability of meeting all the accounting and financial needs of an organization. It is within this module that Financial Managers as well as other Managers within BPCL business can review the financial position of the company in real time as compared to legacy systems which often times require overnight updates before financial statements can be generated and run for management review. The real-time functionality of the SAP modules allows for better decision making and strategic planning. The FI (Financial Accounting) Module integrates with other SAP Modules such as MM (Materials Management), PP (Production Planning), SD (Sales and Distribution), PM (Plant Maintenance) and PS (Project Systems). The FI Module also integrates with HR (Human Resources) which includes PM (Personnel Management), Time Management, Travel Management, Payroll. Document transactions occurring within the specific modules generate account postings via account determination tables.

The FI (Financial Accounting) Module components.The FI Module comprises several sub-modules as follows:1. 2. 3. 4. 5. 6. 7. 8. 9.

Accounts Receivables Accounts Payable Asset Accounting Bank Accounting Consolidation Funds Management General Ledger Special Purpose Ledger Travel Management

Accounts Receivables:AR records all account postings generated as a result of Customer sales activity. These postings are automatically updated in the General Ledger (GL). It is within the Accounts Receivables Module that you can monitor the receivables and generate customer analysis. The Accounts Receivable Module also integrates with the General ledger, Sales and Distribution, and Cash Management Modules. Before implementation of SAP, all the entries in general ledger related to sales were done manually in BPCL. There were a chain of processes involved for maintaining of these records.17

Particular entries were done in the respective zones and then it was consolidated as a master record. Long pending payments were difficult to find out. Through SAP, tracking of customer payments has become very easy. Any person related to sales activity of BPCL can see the payment history of a particular customer.

Accounts Payable:AP records account postings generated as a result of Vendor purchasing activity. Automatic postings are generated in the General Ledger as well. Payment programs within SAP enable the payment of payable documents by cheques, EDI or transfers. Before SAP, the vendor payment system was in a complete chaos. All records were being maintained in a register. It was tough to keep a track on the payment history. There were checkpoints but these were not very effective. Payments to statutory bodies (like IT, ST, etc.) were done based on last month/year data, which led to possible errors in calculations. However, through SAP, all data is available in the system and it is easy to track which bills are paid, which ones are pending.

Asset Accounting:AA is utilized for managing BPCLS Fixed Assets. SAP allows to categorize assets and to set values for depreciation calculations in each asset class. BPCL follows straight line method of depreciation. All assets values were being recorded manually in a register. Considering its huge assets and wide spreads business, it was a tedious job for the accounts department to have a uniform valuation of its assets. BPCLs top management were not having the complete information regarding its assets. Now after SAP, there is a centralised asset management system which maintains all the relevant information regarding its assets. Valuation has become easy, and hence, the depreciation accounting.

Bank Accounting:BA allows for management of bank transactions in the system including cash management. Earlier BPCL was having a separate team to look after the entire bank related transactions. It had a system in which they used to issue a letter signed by an authorised signatory before any transaction, which made it a time consuming and a lengthier process. Now, they have a system where they maintain all the transaction through system communication.

Consolidation:It enables the combining of financial statements for multiple entities within an organization. These statements provide an overview of the financial position of the company as a whole.

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Earlier in BPCL, its annual Income statement and balance sheet were made zone-wise then a consolidated statement was released. After the annual report was ready, it was difficult to find out their specific report regarding each and every SBU. Now after implementation of SAP, it has very easy to find out the P/L and balance sheet of its each division and even location-wise.

Funds Management:FM allows management to set budgets for revenues and expenses within the company as well as track these to the area of responsibility.

General Ledger:GL is fully integrated with the other SAP Modules of BPCL. It is within the General Ledger that all accounting postings are recorded. These postings are displayed in real-time, providing up-todate visibility of the financial accounts. Earlier, ledger entries were done manually. Each division was having its own ledger entries, whereas now all entries are done through SAP general ledger.

Special Purpose Ledger:It is used to define ledgers for reporting purposes. Data can be gathered from internal and external applications.

Travel Management :TM provides management of all travel activities including booking trips and handling of expenses associated with travel. Earlier it was done manually by the assistants. Keeping a record of all the travelling expenses, booking, etc. was a tedious job and was done by particular plant and unit wise. Now its a centralised process. One has to sent a request through system and which will be approved by his/her superior and then only it will be processed further.

CO Module:SAP Controlling manual is mainly related to managerial accounting. It represents the company's flow of cost and revenue. It is a management instrument for organizational decisions. It too is automatically updated as events occur. The SAP CO (Controlling) Module provides supporting information to management for the purpose of planning, reporting as well as monitoring the operations of their business. Management decision-making can be achieved with the level of information provided by this module.

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The CO(Controlling )Module components.The CO Module comprises several sub-modules as follows 1. 2. 3. 4. 5. 6. Cost element accounting Cost centre accounting Internal orders Profit centre accounting Product costing Profitability analysis.

Cost Element Accounting:Cost and Revenue Element Accounting provides an overview of the costs and revenues that occur in an organization. Most of the values are moved automatically from Financial Accounting to Controlling. Cost and Revenue Element Accounting only calculates costs which either do not have another expense or only one expense in Financial Accounting. If needed, reconciliation of the values in Financial Accounting and Controlling takes place in Cost and Revenue Element Accounting. Basically, cost elements are carriers of costs. Primary cost elements are like material costs, personnel costs, energy costs, where a corresponding GL account exists in FI to allow costs to flow. Secondary cost elements are like production costs, material overheads, production overheads. They can be created and administered only in CO. These are used in internal cost allocation, overhead calculation, settlement transactions, etc.

Cost Centre Accounting:BPCL uses Cost Centre Accounting for controlling purposes within the organization. It is useful for a source-related assignment of overhead cost to the location in which they have occurred. Cost centres are divisions that add to the cost of the organization, but only indirectly add to the profit of the company. Typical examples include Research and Development, Marketing and Customer service. Earlier BPCL was having separate cost centres for its each unit and SBU, which made the system more vulnerable since it was difficult to have a track of expenses occurring in each and every business unit. Now its easy to keep a tab on the expenses of each individual unit of BPCL. Budgets are made for each unit in the beginning of the year and accordingly funds are allocated, which reduces any chance of mismanagement of funds.

Activity-Based-Accounting:Activity-Based Costing analyzes cross-departmental business processes. The goals of the whole organization and the optimization of business flows are prioritized.

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Earlier in BPCL, overhead allocation was done on the basis of Job Order costing, which led to a faulty costing process because sometimes it resulted in overrated and underrated costing for some of the products. Activity-based costing, which was done for some of the BPCL product was a time consuming and tedious process. To overcome from this, SAP has provided an excellent platform for activity based costing which calculates the rate based on the activity carried out on a product. It requires some data entries regarding the overhead and automatically returns the final value.

Internal Orders:BPCL uses internal orders to collect and control according to the job that incurred them. You can assign budgets for these jobs, which the system monitors to ensure that they are not exceeded. Earlier it was decided by the plant head. Budget was made and if actual spending exceeded the budgeted expense, then a request was sent to the higher authority for increment. Now its entirely done through the system. Once the budget is fixed, there is no way anybody can increase it in normal circumstances. Through this BPCL keeps a track of its internal spending.

Product Cost Controlling:Product Cost Controlling calculates the costs that occur during the manufacture of a product or provision of a service. It enables the calculation of the minimum price at which a product can be profitably marketed. Earlier in BPCL all the costing was done through costing department, which took the input from the marketing and plant head and decided the costing of a particular product. In this system, human error couldnt be prevented. Now the entire costing of the product is done by the system with the help of the input from the concerned department.

Profitability Analysis:Profitability Analysis analyzes the profit or loss of an organization by individual market segments. The system allocates the corresponding costs to the revenues for each market segment. Profitability Analysis provides a basis for decision-making, for example, for price determination, customer selection, conditioning, and for choosing the distribution channel. Earlier in BPCL, profit analysis was done by the costing department only. It was done based on the costing fixed for that particular product and its selling price. It was a difficult job to have a profit analysis of all SBU and even small marketing channels due to its wide spread business and network partner. Now after the implementation of SAP, profit analysis is done centrally and now even it is possible to have a profit analysis of any year, month, week and even a day, which was not possible earlier.

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Profit Centre Accounting:Profit Centre Accounting evaluates the profit or loss of an individual, independent areas within an organization. These areas are responsible for their costs and revenues. Profit Centre Accounting is a statistical accounting component in the SAP system. This means that it takes place on a statistical basis at the same time as true accounting. In addition to costs and revenues, you can display key figures, such as, Return on investment, working capital or cash flow on a profit centre. Earlier, there were integrated cost and profit centres which kept track of both costing and profit of a particular product of BPCL

Benefits of SAP FI Module:1. Eliminated the need for 20,000 printed pay slips a month 2. Reduced overtime at refineries by 42% 3. Enabled employees to receive compensation for personal leave and travel expenses via payroll. 4. Reduced monthly payroll processing time from 8 days to 3 days 5. Gained ability to audit reports, process information and make retroactive changes 6. Implemented process workflow based on HR organizational structure 7. Reduced cycle times for key business tasks 8. Reduced time for processing payment arrears from 6 months to 10 days 9. Online Data Flow decreases the process time 10. Fast & Online Confirmation 11. Less Paperwork 12. No need for folder storage 13. Database Security 14. Less Employee needed 15. Easy Financial Management

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Leave Application (Fig 1)

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Leave Application (Fig 2)

Leave Application (Fig 3)

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Travel Application (Fig 1)

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Travel Application (Fig 2)

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Travel Application (Fig 3)

Appraisal System based on Balance Score card

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Creating a Purchase Order (PO)

As required, complete/review the following fields:

Field Name G/L Account No.

R/O/C R

Description Accounting ledger created to support the creation of statutory reports. Example: 600060 An area of responsibility for capturing costs. Example: 520041

Cost Center

R

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During creation of purchase order ensure that all the relevant fields are entered in the relevant tabs as given in the information below

Field Name Tax code (in Invoice Tab)

R/O/C R

Description Enter the relevant tax code to pick up correct sales tax percentage. Do not use old tax codes with text" Do not use"" Always click on tax details and ensure that excise duty and sales tax elements appear as desired.

Jurisdiction code (in Invoice Tab) GR based IV (In Invoice tab) Header texts (in Texts tab at header level) Item texts (in texts tab at item level) Payment term (in Delivery /Invoice tab at header leve) Over delivery/under delivery tolerance (in Delivery tab at item level) Reminder (in Delivery tab at item level)

R O O

Always use Jurisdiction code ZZ00. Do not use jurisdiction code IN00 Please ensure that this is ticked except for import Pos where PO based IV may be required. Ensure to enter all relevant texts as applicable for PO under relevant headings as pricing type, penalty etc. Header texts will be applicable for all items in PO. Item texts may be used if the texts are specific to a particular item. These will be printed as item level. This will default from vendor master or from RFQ/Quotation if changed at Quotation stage. Check the payment terms in PO header level. The default tolerance would be NIL and the field to be used only if tolerances are allowed on quantities ordered as per PO agreement for which necessary approvals are obtained in TEC etc.

O R

O

O

The field would be blank. The values can be entered for sending reminders to the vendors reminding them of their due delivery dates. The values can be entered as for example -5,0,5 for Reminder 1,2 & 3. This will enable sending reminders before 5 days of delivery due date and on the due date and after 5 days of delivery due date. The latest GR date is the date if specified the system will not allow goods to be received after this date.

Latest GR date (in Delivery tab at item level)

O

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Field Name Delivery date (in item overview) Pricing conditions (in conditions tab at item level)

R/O/C R R

Description The delivery date when goods are expected to be delivered The pricing conditions get copied from quotation if the quotation is maintained. Please check and ensure all conditions appear at item level with proper values as per quotation of vendor. Conditions common to all the items can be entered at the header level conditions. Please ensure that all the conditions given at header level appear at item level before saving.

Delivery address (in Delivery address tab at item level)

O

The delivery address will be picked up from plant address and can be changed if the delivery of material is to be done at any other location.

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As required, complete/review the following fields: Field Name Mode of transp. R/O/C R Description The mode of transport is the way in which an oil product is shipped. There are four standard modes of transport: road, rail, marine and barge. Example: 1 (by road)

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