Case: Shell Canada Fuels Productivity with ERP
Shell Canada is one of the nation's largest integrated petroleum companies and is a leading manufacturer, distributor, and marketer of refined petroleum products. The company, head-quartered in Calgary, produces natural gas, natural gas liquids, and bitumen. Shell Canada is also the country's largest producer of sulphur. There is a Canada-wide network of 1,809 Shell-branded retail gasoline stations and convenience food stores from coast-to-coast.
To run such a complex and vast business operation successfully, the company relies heav¬ily on the use of a mission-critical enterprise resource planning lERP1 system. The use of such a system is a necessity in helping the company integrate and manage its daily operations-operations that span from wells and mines, to processing plants, to oil trucks and gas pumps.
For example, the ERP system has helped the company immensely in terms of reducing and streamlining the highly manual process of third-party contractors submitting repair informa¬tion and invoices. On average, there are between 2,500 and 4,000 service orders handled by these contractors per month on a nationwide basis.
Before implementation of the ERP system, contractors had to send Shell Canada monthly summarized invoices that listed maintenance calls the contractors made at various Shell gas¬oline stations. Each one of these invoices would take a contractor between 8 and 20 hours to prepare. Collectively, the contractors would submit somewhere between 50 and 100 invoices every month to Shell Canada. This involved each invoice being reviewed by the appropriate territory manager and then forwarded to the head office for payment processing. This alone consumed another 16 to 30 hours of labor per month. At the head office, another 200 hours of work was performed by data entry clerks who had to manually enter batch invoice data into the payment system.
And this would be the amount of time needed if things went smoothly! More hours of labor were required to decipher and correct errors if any mistakes were introduced from all the manual invoice generation and data reentry involved. Often errors concerning one line item on an invoice would deter payment of the whole invoice. This irritated the contractors and did not help foster healthy contractor relationships.
To make matters worse, despite the hours involved and the amount of human data-handling required, detailed information about the service repairs that contractors did was often not entered into the payment system. And if it was entered, the information was not timely-it was often weeks or even months old by the time it made it into the payment processing system. As a result, Shell was not collecting sufficient information about what repairs were being done, what had caused the problem, and how it had been resolved.
Fortunately, the ERP solution solved these inadequacies by providing an integrated web-based service order, invoicing, and payment submission system. With this tool, third-party contractors can enter service orders directly into Shell's ERP system via the web. When this is done, the contractors can also enter detailed information about the work that was performed-sometimes even attaching photos and drawings to help describe the work that was done. With the ERP system, it takes only a few minutes for a contractor to enter details about a service order. Further, this information can be transmitted through a wireless PM to the appropriate Shell manager for immediate approval-shaving off more time in unnecessary delays.
Mother bonus of the ERP system is that the contractor's monthly summarized invoices can now be generated automatically and fed directly into the ERP system's account payables application for processing. No rekeying of data required! Even better, if there is an issue or concern with one invoice item, the other items on the invoice can still be processed for payment
Shell Canada's ERP system also handles other operational tasks. For example, the system can help speed up maintenance and repair operations at the company's refineries. With the ERP system in place, rather than trying to utilize a variety of disparate internal systems to access blueprints, schematics, spare parts lists, and other tools and information, workers at the refineries can now use the ERP system to access these things directly from a centralized database.
An added benefit of the ERP system is its ease of use. Past systems used by refinery work¬ers were complex and difficult to search for information. The ERP system in place now has a portal-like interface that allows refinery workers to access the functions and information they need to keep operations running. The web interface allows workers access to this information with one or two clicks of a mouse.
An important part of any successful ERP implementation is training end users to learn how to utilize the system and teaching them about the functions and abilities of the ERP system. Recognizing this, Shell Canada offered its personnel both formal and informal ERP training. These proved to be invaluable in teaching end users the mechanics of the system and raising awareness of the benefits of the system and the efficiencies that the ERP system could offer Shell Canada. This not only helped promote end-user acceptance of the ERP system, but also greatly increased employees' intentions to use the system in their daily work.
Shell Canada executives are pleased and optimistic about the advantages of the ERP sys¬tem. With this new system, employees across the company have gained fast and easy access to the tools and information they need to conduct their daily operations.'
Questions
1. How did ERP help improve business operations at Shell?
2. How important was training in helping roll out the system to Shell personnel?
3. How could extended ERP components help improve business operations at Shell?
4. What advice would you give Shell if it decided to choose a thfferent ERP software solution?
5. How can integrating SCM,CRM, and ERP help improve business operations at Shell?