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Benchmarking supply chain performance – A case study in Indian petroleum sector

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Journal of Supply Chain Management System
7 (2) 2018, 8-25
http://publishingindia.com/jscms/

Benchmarking Supply Chain

Performance: A Case Study in Indian
Petroleum Sector
Saswati Tripathi*, Krishnamachary Rangarajan**, Bijoy Talukder***
*Associate Professor, Indian Institute of Foreign Trade (under Ministry of Commerce), Kolkata Campus.
Email: [email protected]
**Professor, Indian Institute of Foreign Trade, Kolkata Campus. Email: [email protected]
***Student, MBA, Indian Institute of Foreign Trade, Kolkata Campus.
Email: [email protected]

Abstract
The petroleum industry comprises of activities, which are geographically disbursed for exploration, procurement, transformation,
storage, and distribution with transportation network linking facilities through which products flow. The supply chain in the petroleum
industry covers a network of processes including placing order for raw material, in-bound logistics and delivery, conversion of raw
materials to semi-finished and finished products and their storage, delivery to intermediate facilities, and flow to end customer
through distribution channels. The challenge in this supply chain is not only due to the large number of activities, but also due
to their dispersed execution which requires a high degree of coordination among all players, leading to evolve a systematic
technique for measurement, analysis and improvement in the performance. The sample analyzed has clearly demonstrated
that big companies need to rationalize on supply-chain-asset productivity. It demands operational strategies encompassing the
logistics and distribution planning mainly for the demand side, which attracts huge investment in the assets and accounts for high
pipeline stock. The operational strategies of the companies should be able to follow an agile inventory strategy to storage, which
incorporates wireless technology, inventory scenario along with orchestration of demand, and supply data across the supply chain.
Keywords: M110: Supply Chain Management, Supply Chains, Logistics, Inventory Management (Based on JEL Classification)

Introduction professionals. The actual value created at logistics level in

terms of customer satisfaction and cost can be measured
Managing supply chain plays a pivotal role in enhancing through supply chain performance.
productivity and profitability of an organization. This In recent times, supply chains are becoming more complex
integrates several components like sourcing raw materials, as there is a shift in the structure of the chain from a linear
production, storage, transportation, and delivery to to a network form. In turn, it is creating the need to track
customer. In the chain, information and finance flow bi- an increasing quantum of information allowing evaluation
directionally with end customer as the driving force. of functioning of the entire supply chain. Hence, it is
Performance measurement of these flows plays an essential to logically choose the parameters for measuring
imperative part in fixing targets, assessing execution, its performance.
and future decisions in supply chain. Measurement of Most organizations desire a standard model, which
performance of supply chain uncovers the gap between includes metrics of performance to improvise the supply
planning and implementation, aiding organizations to chain proficiency. Supply Chain Operation Reference
take corrective actions. Nevertheless, it is perceived (SCOR) model is a versatile model to analyze the
that creating key performance indicators are extremely performance. SCOR model has built up a set of metrics
complex but a ready arrangement of guidelines is pertaining to reliability, responsiveness, agility, cost, and
not promptly accessible for organizations and SCM assets.
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  9
The petroleum industry comprises of activities, which are Supply Chain in Petroleum Industry:
geographically disbursed for exploration, procurement,
transformation, storage, and distribution with Overview
transportation network linking facilities through which
products flow. The supply chain in the petroleum industry The petroleum industry involves highly specialized
covers a network of processes including placing order for business processes, which mostly work in silos with
raw material, in-bound logistics and delivery, conversion limited information sharing across the units. An
of raw materials to semi-finished and finished products International Report has exhibited that most of the firms
and their storage, delivery to intermediate facilities, in Oil and Gas Industry give top priority to cost-reduction
and flow to end customer through distribution channels. decisions (www.dvngl.com). This is quite obvious because
The challenge in this supply chain is not only due to the net profit margin of renowned and big oil companies are
large number of activities, but also due to their dispersed measured to be around 6.5% (www.forbes.com) which is
execution which requires a high degree of coordination far less than other chemicals (~15% net profit) industry.
among all players, leading to evolve a systematic Management of Supply Chain plays a crucial role in cost
technique for measurement, analysis, and improvement reduction, which can bring competitive edge on cost front.
in the performance.
Supply chain of Petroleum Company involves: (i)
This paper focuses on three different areas – literature crude oil operation/purchase, (ii) crude transportation to
survey to understand the petroleum industry supply chain refineries, (iii) refining operations, (iv) product purchase,
and the challenges; measuring supply chain performance (v) product transportation, and (vi) distribution of product
of Indian petroleum industry using both financial metrics to end user. Demand of end customers derived from real
and select metrics of SCOR model; and evolving time, historical and forecasted sales. Such a demand is
strategies to overcome challenges and improve supply met by either by sourcing the crude oil, or performing all
chain performance. activities including exploration to produce the product.
However, Economics decide whether to buy or produce.

I (i)
I(ii)
I (iii)
II (i)

Demand Side: Logistics:

What to Store
Demand Distribution &
and Where?
Forecast? Planning?

II III I(iv)

Supply Side: Storage: Refinery:

Crude What and How What and
evaluation & to Feed? Where to
Procurement? Make?

Source: Compiled
Source: Compiled by authors
by authors

The Fig. 1: industry

petroleum Petroleum Industry
can be divided Supply
into two parts Chain
by keeping andinDecision
the refinery the middle. The

The petroleum industry can be divided

upstream supply chaininto two
consists parts the crude
of acquiring
wells and move to the refinery. The downstream supply
and this segment involves forecasting,

by keeping the refinery inexploration,

the middle. The upstream
and logistics management needed to getchain
the crudeoperation is comparable
oil extracted from wells and move to standard manufacturing
supply chain consists of acquiring the crude and this supply chain and focuses
to the refinery. The downstream supply chain operation is comparable to standard manufacturingon distribution of consumable
segment involves forecasting, exploration, and logistics products (like diesel, gasoline, lubricant oil, etc.) to
management needed to get supply chain and focuses on distribution of consumable products (like diesel, gasoline, lubricant
the crude oil extracted from retailers and end consumers.
oil, etc.) to retailers and end consumers.

Figure 1 shows the redesigned ideal supply chain and related decisions. Both supply and demand

sides simultaneously govern the flow in the chain. Hence, the ultimate decisions of what, when

5
 10   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

Figure 1 shows the redesigned ideal supply chain technology has also influenced the demand side through
and related decisions. Both supply and demand sides fuel-efficient transportation. The geopolitical equations
simultaneously govern the flow in the chain. Hence, the among oil-producing countries like OPEC, the US, and
ultimate decisions of what, when and where to deliver the CIS countries resulted in fall in crude prices. Marker
products (POS) is influenced by right decision leading to Crude Oil Brent reached its nadir at 25.985 $/Bbl on
cost minimization and speed of market reach. Jan. 20 while Dubai to 22.80 $/Bbl on Jan. 21 of 2016.
Thereafter, price rise has occurred with Brent at 63.22
Price of crude oil has never been stable and seen many $/Bbl and Dubai at 60.85 $/Bbl on 30 Dec. 2017. Oil
peaks and troughs in recent years. The price of crude oil prices now have started being governed by marginal cost
remained above $100 until August 2014 (Fig. 2). The (additional cost for producing one extra barrel) rather than
benchmarked price of $100 for a long time forced many breakeven or demand/supply or geopolitical opportunistic
firms to increase their investments in technology to lower cost dynamics. Price trend of Marker crude oils Brent
production cost, looking for alternative energy sources and Dubai since Jan. 2013 until Nov. 2017 is depicted in
and reducing scope of business. The increased focus on Fig. 2:

NB:
NB:Majority oftraded
Majority of tradedcrude
crudeoils
oils
areare listed
listed at premium
at premium or discount
or discount to marker
to marker crudes(low
crudes Brent Brent (low
sulphur)
and Dubai (high sulphur)
sulphur) and Dubai (high sulphur)
Source:http://markets.businessinsider.com/
Source:http://markets.businessinsider.com/
Fig. 2: Crude Oil Price Trend (S/Bbl)
The petroleum-industry supply chain supply
The petroleum-industry is unique compared
chain is unique compared through ships to
to conventional reach shoreindustry
manufacturing of the importers coun-
to conventional manufacturing industry supply chain due try followed by additional weeks for unloading, pro-
supply chain due to following factors:
to following factors: cessing, and finished product production and there-
∑∑ Volatility and variability towards
Volatility upward trend
and variability towardsinupward trendafter
in distribution
prices of crude of oil,
products
which through
is the various means
prices of crude oil, which is the primary raw mate- like oil tankers, rail & road transportation, pipelines
primary raw material for refinery,
rial for refinery, often puts supply chain under pres- often puts supply
leadingchainto aunder
verypressure to partially
long supply chain.
sure to partially offset
offsetthe
thecost.
cost. Usual
Usual economic fac- issues
economic factors, ∑∑ like
Inventory
political in petroleum
instability, industry
terrorism, war,is non-discrete in
tors, issues like political instability, terrorism, war, nature – typical SKUs are not available. End prod-
OPEC domination, OPEC domination,
traders’ belief traders’ belief
of future of future marketucts
market govern
likethepetrol,
pricing.diesel,
Crude oil
andsuppliers
kerosene are measured
govern the pricing. Crude oil suppliers often form
often form cartels making the crude market a sellers’ market leaving little option to oil Fuel Oil, and
in kiloliters while LPG, Naphtha,
cartels making the crude market a sellers’ market Bitumen are sold in metric tons.
leaving little option to oil
refiners and refiners
marketers.and marketers.
Petroleum-industry supply chain often experiences uncertainty in
∑∑ From single raw material (Crude) many end prod-
Petroleum-industry supply chain often experiences
supply of crude. ucts are produced like diesel, gasoline, kerosene,
uncertainty in supply of crude.
naphtha, etc. It is contrary to standard manufactur-
∑∑ Acquisition of crudeAcquisition
oil is based on forecast
of crude and on forecast
oil is based ing and
chainsusually
where faces
manylongitems
lead-time.
are put together to ar-
usually faces long lead-time. Transport is largely rive at a single finished product.
Transport is largely through ships to reach shore of the importers country followed by

additional weeks for unloading, processing, and finished product production and

7
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  11
∑∑ The manufacturing process in petroleum industry try, therefore, plays a major role in profitability of
is continuous and the refineries must run in 24 × 7 this sector.
basis with high-capacity utilization. There is hardly ∑∑ Extreme diversity is experienced in petroleum sup-
any scope for short-term capacity change and the ply chain. Varietal disciplines need to be covered in
production cannot be stopped at will. each link like crude procurement, which includes
∑∑ End products resulting from refining of crude oil are international pricing, contracts, forecasting, char-
highly standardized and there is hardly any scope tering, crude operations, relationship management,
to make any change in product slate-basis demand. and risk management; refining, which consists of
This makes it extremely difficult to effect manufac- processing, chemistry, engineering, and optimiza-
turing or geographic postponement or advancement tion; primary and secondary distribution such as
or increase/decrease manufacturing of one product domestic/export/import pricing, market knowledge,
over other basis demand, which are often used as contracts, credit control, logistics, and customer
effective strategy for customization, profitability, relationships.
demand materialization, and inventory manage-
Above-mentioned variance and complexity compel
ment. Therefore, petroleum supply chain is required
petroleum supply chain to strive towards continual
to focus more on efficiency than on responsiveness.
reorientation for adjusting itself to dynamic environments
∑∑ Collaboration or integration across the chain is a and thereby adopt ‘Adaptive Supply Chain (ASC)’.
major challenge in this sector as crude oil produc- ASC uses detailed information on demand and supply
ers, refiners, and marketers primarily work in silos. requirement and contributes to the improvement by
Most companies had pieces of supply chain tools focusing on four different aspects of the Process.
in place, but not fully integrated due to technology Designing process to run the supply chain management;
limitations. High level of fluctuations in oil prices People process for proper communication and knowledge
comes in the way of collaboration, be it for short sharing of best practices with people in the organization;
Technology process for best in class IT platforms for real-
term or long term.
time connectivity; and Performance management process
∑∑ The end consumable products like petrol, diesel, which is driven by data (mainly financial data) and data-
kerosene, etc., are having very high risk of con- driven decision making (Tomkins, 2003).
tamination, which may affect image of the firm and
consequential loss in market share. Stringent quality Indian Petroleum Industry: Supply
checks must be in place in each stage of the chain Chain Practices
from journey of crude oil to refinery to storage and
dispatch of products until it reaches end consumer. Supply chain cost in Indian petroleum industry accounts
∑∑ The long supply chain results in very high invento- for 20% or more of total refining and distribution cost. In
ry-holding cost for the petroleum industry. Majority India, around 13% of GDP is spent on logistics as against
of the products, whether crude oil or finished/in- 10% in developed countries. (Annual report 2016-17,
termediate products, move in bulk mainly through Ministry of Petroleum and Natural Gas, Government
ships, pipelines, rail wagons, or road oil tankers. of India).
A large chunk of oil inventory thereby remains on The upstream supply chain deals with exploration,
transportation in addition to stationary storages. As forecasting, acquisition of raw material (crude oil) along
petroleum oil plays a crucial role in any country’s with the logistics necessary to deliver raw material
economic activity, sufficient amount of inventory from distantly located sources to refineries. Forecasting,
should always be available as back up. As per the production, and logistics of the end products to consumers
norm of International Energy Agency storage of 90 across the market including refining are covered by the
days of net oil import (in the form of crude, finished downstream supply chain.
product, or combinations) is required to be main-
The unique characteristics of Indian petroleum-industry
tained. Inventory-carrying cost in petroleum indus- supply chain are high transportation cost and very complex
 12   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

and lengthy supply chain. This supply chain is also very performance of the public sector oil firms. In this industry,
inflexible in terms of product customization and volumes there are many series of transactions between distributors
of production handled. Oil companies continually strive and wholesalers, retailers, end customers. These vary in
to integrate the value chain to extract maximum benefit. volumes. It is empirically proved that a single transaction
or product lifting at the rack, at least five to seven
To carry out supply chain integration and optimization, parties are involved which increases overhead costs of
the three oil majors in India, Indian Oil Corporation Ltd. documentation and communication across all the parties
(IOCL), Hindustan Petroleum Corporation Ltd. (HPCL), (Bevers, 2002; Coia, 1999; Tierney, 2004). Hence, a fully
and Bharat Petroleum Corporation Ltd. (BPCL) adopted integrated ERP system has become a basic requirement to
customized SCM solutions towards improvement in improve efficacy of the chain.
demand planning, integrated planning, distribution
planning, and refinery production planning. In addition to Inefficiency of the chain often results from various
non-value adding factors. Extended waiting time of oil
that, Iternet-of-Things (IoT) is also being brought in for
cargo in the Indian ports due to congestion and less-
real-time data assimilation, validation, and dissemination
efficient port operations and multiple rounds of checks
in the form of reports, dashboards, and alerts so that the
to avoid adulteration result in longer supply chain time.
responsiveness of the whole system improves across the Similarly, continuous and less-flexible refining process
chain. Faster and more efficient planning and execution produces several downstream products, which may not
helps the firms to get competitive edge over other players have immediate market demand, and in turn, increases
in the market. inventory-holding cost (Verma, , Wadhwa, & Deshmukh,
2007). These bottlenecks in the industry have led to
Objectives evolution of performance measurement of supply chain
across the links in the chain.
This paper examines the processes and practices of Indian
There is no unique reference model that each firm in the
petroleum-industry supply chain with a special focus on petroleum industry can follow to make their supply chain
performance measurement. It has studied the petroleum- more efficient. Firms need to customize standard models
industry supply chain from the year 2000 to understand to suite formulating strategy towards improvement in
issues, the industry was facing during different time performance, reducing wastage, and optimization of
periods. An attempt is made to bring forth the unique the chain. Effective ERP system should be in place to
characteristics of the oil industry supply chain, specifically integrate all linkages to overcome the gaps originated
in India context. This paper has developed and analyzed due to inadequate data infrastructure, which is impacting
performance measures of the Indian petroleum-industry communication between marketing, manufacturing,
supply chain through different models and suggested and distribution units (Foti, 2006; Verma, Wadhwa, &
strategic initiatives, which can help the industry to Deshmukh, 2006).
improve performance.
Accenture’s benchmarking study, which involved 14
global major and regional midsized companies, shows
Literature Review that the downstream supply chain of petroleum industry
lags in many areas such as analytical sophistication,
Petroleum industry is pivotal for the growth and technology upgradation, information symmetry within the
development of any country and more so for oil-deficient firm, alignment towards common organizational goals,
countries like India. Capital and distribution intensive match between supply, demand and margin maximization
features of this industry significantly influence overall because of crude price volatility, state-of-art process,
performance of firms. and innovation. Accenture and INSEAD research show
a mutual relationship between supply chain excellence
Supply chain of this industry faces series of challenges and increased market capitalization. Improvement in
because of limited crude resources and fluctuating crude downstream process can raise internal rate of return of
oil prices. Distribution, storage, and logistics always act petroleum firms by 35-50% (D’Avanzo, Hans von, Van,
as inhabiting factors in this industry and have undergone & Luk, 2003).
changes over the years on various occasions. In India,
major supply chain restructuring and consolidation in The petroleum industry continues to face several risks in
the industry was initiated in the year 2000 in order to the area of crude oil procurement, operations, marketing,
streamline the supply-chain process and improve business government and political actions, collaboration and
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  13
pricing, which affect their supply chain. Crude price petroleum industry. The lack of performance measure
volatility and logistics transfer continues to be the focus following standard practices is one of the major gaps
in this industry. Hence, a well-devised operations risk identified in the supply chain of the industry (Verma, &
management system for supply chain is emphasized to Deshmukh, 2007 & 2009).
be integral part of the oil firm’s overall risk management
system (Enyinda, 2011). Focus should be on shared SCOR model, whilst using detailed financial data of the
goal setting across the firm along with the suppliers and firm, is being introduced with a focus in manufacturing
distributors, collaborative planning, risk sharing and industries albeit very little absorption in petroleum sector
reward, and reorganization sharing (Talavera, 2015; both in contexts of India and abroad. SCOR is composed
Urciuoli, Mohanty, & Else, 2014). of three levels of processes in which levels one and two
are called ‘SCOR process’ and ‘SCOR process type’,
Supply Chain Performance Management (SCPM) is respectively. Level-3 process is sub-processes of level-2
gaining importance as it helps firms to identify areas (Chithambaranathan, Subramanian, & Palaniappan
that need improvement and compare themselves with 2015; Kocao˘glu, Gülsün, & Tanyas, 2011; Ma. Gloria
competitors and market leaders. The insights about V. Talavera 2015; Ling, Qin, & Xu 2011; Salazar, 2012;
functioning of supply chain is tracked using key indicators Seifbarghy, 2010).
like inventory level, supply chain management cost,
etc. Proper selection of set of KPIs helps in identifying This paper attempts to bridge the gap as found in the
deviation between planning and implementation, which literature reviewed, introducing both financial metrics
offers opportunity for identification and correction of and SCOR performance attributes to measure supply
impending problems (Chae, 2009; Leończuk, 2016). chain performance of downstream oil PSUs in India.

The supply chain performance measure can be focussed Methodology

on strategic, tactical, and operational dimensions. In
SCPM, agile and resilient approaches are followed. These
approaches consider economic (like quality, delivery, The review of literature has already identified a lack of
time, inventory level, etc.) and operational (cost, return integrated approach towards supply chain performance
on asset, C2C cycle, efficiency, etc.) performance of the measurement. Moreover, in the capital and distribution-
chain (Leończuk, 2016). intensive oil sector, supply chain efficiency is subject
to various geopolitical and qualitative factors. In spite
There exist three types of processes in supply chain: of that, this paper has tried an integrated methodology,
primary process which defines the main value-added which encompasses financial metrics and the inclusive
activities of an organization; secondary process that SCOR model.
performs necessary actions like developing a Sales &
Operational plan; and development process that improves This paper has used primary and secondary data for
both primary and secondary processes (Syed, 2013). analysis wherein, secondary data include published
reports & industry forecast as available from different
The complications of processes and stages where they databases like Bloomberg, Prowess, Indiastats, etc., apart
are performed make performance measurement of supply from the Annual Reports and other published reports of
chain of oil firms more difficult. There are initiatives to the firms. In order to understand the finer details of Supply
use Analytical Hierarchy Process and Balanced Scorecard Chain performance of oil sector, unstructured interviews
to evaluate the performance of the industry supply chain. with the executives and suppliers were conducted.
In these tools, the measurements are focussed on both
internal and external parameters. The internal perspectives Aggregated and disaggregated data as reported by
revolve around financial and business processes of the Bloomberg and Prowess, related to the sectors and the
firm. The external perspectives are focussed on end firms were studied. The accumulated data from these
users, innovative techniques, and learning. Among the databases were analyzed broadly into two stages.
perspective factors, quality of the product, regular supply
of raw material (crude oil), market share, and utilization Stage I: Financial Analysis
of information technology are vital. It can be seen that
petroleum firms seem to be lacking in developing In this stage, the Industry reports, Annual Reports, and
performance measures using the firm’s financial data. their relevant schedules were used to understand both
The implementation of standard supply chain framework operational & financial performance using different ratios.
for performance measurement like SCOR is not seen in
 14   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

Moreover, Du-Pont model linking investment and firm Hence, when the financial ratios calculated are put on a
performance has also been used. The Du-Pont model will time scale, their impact or otherwise can be traced in the
help to understand not only business performance, but also Du-Pont model. Thus, the data so used for ratios were
the effect of improvement in Supply Chain on business. focusing mainly on Supply Chain issues involving the
firms as these ratios indicate supply chain performance.
Financial Metrics

Sl Metrics Measurement Terminology

1 SCL DRM + DWIP + DFG SCL= Length of supply chain in days
(lower the better) SCI= Supply chain Inefficiency ratio
SWCP = Supply chain working capital productivity
2 SCI SCC / NS
ITR= Inventory turnover ratio
(lower the better) where SCC=DC +(INV X ICC)
DCER = Distribution cost efficiency ratio
3 SWCP NS / SWC AP = Account Payable
(higher the better) where SWC = INV + AR – AP AR = Account Receivable
DRM = Days of raw material
DWIP = Days of work in progress
DFG = Days of finished goods
4 ITR NS / INV ICC = Inventory Carrying Cost
(higher the better) INV = Total Inventory
SWC = Supply Chain Working Capital
5 DCER DC / NS SCC = Supply Chain Management Cost
(lower the better) NS = Net Sales
DC = Distribution Cost
Source: Compiled from J. Shah & N. Singh, 2001, “Benchmarking Internal Supply Chain performance: Development of a Framework”,
& authors’ compilation

SCOR Metrics

Sl Metrics Measurement Terminology

1 DSO(AM.2.1) (AR / GS) X 365 DSO = Days Sales Outstanding
(lower the better) IDOS = Inventory days of supply
DPO = Days Payable Outstanding
2 IDOS(AM.2.2) (INV/COGS)*365
C2C = Cash to Cash Cycle time
(lower the better)
AP = 5 point rolling average of gross account payable
3 DPO(AM.2.3) (AP/TGAMP)*365 AR = 5 point rolling average of gross account receivable
(higher the better) COGS = Cost of Goods Sold
GS = Gross Sales
4 C2C(AM.1.1) DSO+IDOS – DPO INV= 5 point rolling average of gross value of Inventory at standard
(lower the better) cost
TGAMP = Total Gross Annual Material Purchase
5 RSCFA(AM.1.2) (SCR-TCS) /SCFA RSCFA = Return on Supply Chain Fixed Assets
(higher the better) SCR = Supply Chain Revenue
TCS = Total Cost to Serve [This is approximated as Cost of sales +
6 RWC(AM.1.3) (SCR- TCS)/(INV + AR – Inventory Holding Cost + Purchase of Stock in trade]
(higher the better) AP)
SCFA=Supply Chain Fixed Assets [Approximated as 40% of total
fixed Assets]
RWC = Return on Working Capital
7 TCS(CO.1.001) (lower the better) Planning Cost + Sourcing Cost + Material Landed Cost + Production Cost + Order Management
Cost + Fulfillment Cost + Returns Cost
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  15

Stage - II spite of decline in income, IOCL has shown 73% increase

in profits over the three years due to 10% reduction in its
During this stage, SCOR model has been used to total expenses. BPCL has recorded the lowest growth of
understand supply chain performance of the firms in 37% in profits among the three firms over the three years.
petroleum sector in India. In the SCOR model, five It is also observed that all the three firms have gained from
attributes in two categories are considered for supply inventory in 2016-17 using price arbitrage. In income
chain performance evaluation. The three attributes related per unit of sale, BPCL has recorded the highest income.
to Reliability, Responsiveness, and Agility are customer However, in terms of growth, it has actually declined by
focused for which data will be required at the firm micro 20% in 2016-17 compared to 2014-15. Highest employee
level. Hence, this article has considered internal-facing cost was incurred by IOCL for per unit of sale, but BPCL
attributes consisting of ‘Cost’ and ‘Assets Management has incurred highest increase of 38% in the growth of
Efficiency’. The ‘Assets Management Efficiency’ attribute employee cost in the three years. The increase may be
will be more critical for the oil companies due to their attributed to its acquisition of refineries operations. IOCL
capital intensity and huge investment in distribution and incurred highest finance cost, which is in fact more than
storage. These features equally contribute towards ‘Cost’ three times of the other competing PSUs, which may be
attributes for the oil firms. Briefly, the following table due to the huge asset base of the firm. Among the three
indicates the final matrices that are used in this article for firms, BPCL has leveraged its finance cost per unit of
analysis. sale better financially. Total expense per unit of sale of
IOCL remained low compared to the other two firms as
In order to draw conclusion, a benchmarking approach is it has its own sources of raw material. In spite of such
used in this article, which derives a scenario to guide the an advantageous position, the expenses of IOCL other
firms to improve their supply chain performance. than raw material and product purchase were very high
compared to the other two firms. The firm spends more
The methodology narrated previously has been applied on
on the employees also for the given scale of operations.
select firms in the downstream activities of the industries.
Thus, IOCL shows huge scope for improvements based
As has already been indicated, the upstream activities
on the financial metrics analyzed.
in the industry is dominated by a single state-owned
Source: Compiled from “Supply Chain Operations Reference Model:
enterprise and through imports. The firms selected for the
Overview of SCOR Version 11” APICS, 2014
analysis account for more than 75% of the supply chain
activity in the industry.
Analysis of Supply Chain Performance Metrics
Performance Analytics - Indian
Downstream Petroleum Supply Chain The simple financial indicators used have shown volatility
in performance across the firms on different elements
of supply chain. Hence, further analysis is done using
The petroleum supply chain of downstream players is
specific Supply Chain ratios / metrics.
analyzed with the help of financial metrics such as SCL,
SCI, SWCP, DCER, and ITR. IOCL, BPCL, and HPCL As a first measure, the Inventory Turnover Ratio (Table
are selected here for the analysis. 2 in Appendix-1) is found to be better for BPCL with
higher turnover ratios in all the years compared to the
Financial Ratio Analysis other firms. Similarly, the Distribution Cost of BPCL
(Table 3 in Appendix-1) is found to be lowest among the
other two companies in all the years. The relationship is
As the first part of analysis, the relevant financial
further extended to measure the Length of Supply Chain
parameters are tabulated (Table 1 in Appendix-1) for
(Table 4 in Appendix-1). In this measure, also, it is found
inter-firm comparison during the three years ending
that BPCL had the lowest number of days of inventory
2016-17. Among the three firms studied, IOCL remained
in Supply Chain. Higher level of inconsistency is found
a dominant revenue firm in the period of the analysis.
in HPCL, where the number of days was highest in five
However, it has also recorded a decline of 5% in its total
out of seven years of comparison. Further, fine-tuning
income during the three year ending 2016-17. BPCL was
of this measure has been undertaken through SCIR and
the only firm, which has recorded an income growth of
SWCP. Supply chain efficiency was found to be higher
1.6% over the three years among the three firms studied. In
 16   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

in BPCL in all the years of comparison with the other 2010-11. The reasons for better performance of BPCL
firms (Table 5 in Appendix-1). IOCL has turned out to be may be tracked to better current assets and fixed assets
more inefficient in Supply Chain performance. In terms management for the given turnover they achieved.
of SWCP (Table 6 in Appendix-1), BPCL was found to Though IOCL has huge turnover, the asset productivity
be more productive until 2015-16. However, in 2016-17 could not convert that turnover into return on assets.
HPCL has outperformed. Hence, irrespective of lower turnover by BPCL, they
have efficiently used both current and fixed assets. In
A summary of all measures of latest two years ending this industry, inventory management and better control
2017 is compared for understanding the performance of of inventory could improve the asset productivity as
the firms (Table 7 & 8 in Appendix-1). In the comparison, demonstrated by BPCL. The analysis through Du-Pont
it is found that BPCL has emerged as a better performer model suggests that the supply chain performance in this
among the three in all the parameters in 2015-16. industry is more influenced by inventory management
However, in 2016-17, BPCL could not perform better in than the distribution aspect. Moreover, the analysis of the
SWCP. In both the years, in spite of being a larger firm, firms studied reiterates the fact that overall performance
IOCL could not perform better. On closer analysis, it can of the firms is more influenced by the current assets in
be seen that BPCL’s better performance may be attributed general and all forms of inventory in particular.
to distribution cost efficiency, financial productivity, and
better inventory management. However, its raw material
and product-purchase cost were higher compared to SCOR Metrics
net sales, which may be due to its lower share of own
production in sales. The SWCP of BPCL is poor compared The supply chain performance evaluation of the three
to HPCL due to high dependence on working capital for companies is assessed using the Asset Management
given turnover in 2016-17. Efficiency and Cost attributes of SCOR model.
Accordingly, C2C, RSCFA, RWC, and TCS are
calculated. Calculations of these KPIs (level-1 metrics)
Du-Pont Strategic Analysis are done based on level-2 metrics such as DSO, DPO,
IDOS, and SCFA.
The overall financial performance can be further measured
with Du-Pont model, which systematically relates all C2C time was calculated as lowest for BPCL at 50 days
investments across the firms and measures the return on in 2016-17 and the highest of 76 days was recorded by
assets. IOCL. It is noticed that all companies have recorded the
lowest C2C in the year 2014-15. Though BPCL is found
Net Sales to have a better C2C in 2016-17, it is the highest (poor)
Gross
Cost-of margin
margi for the firm across the years. Moreover, it is also seen
goods sold
n that none of the firms have shown any consistency in the
Netprofit
Net
Variable - profit C2C measure over the years. One of the stabilized factors
expenses  Netprofit
Net
is their Daily Sales Outstanding, which is calculated at
Total NetSales
Sales profit
margin
Net
+
Fixed expenses margin around 7 days for all the firms in 2016-17. Hence, it is
expenses Return
Returnon evident that all the firms use the delay in DPO for the
Inventor
Inventory x on
assets Returnon
Return on
given size of IDOS to keep a better C2C. They may be
y Net
Netsales
sales assets NetWorth
Worth
x = Net
+ Asset
Asset Financial
Financial
able to sustain such a bad practice being a PSU; however,
Accounts Total
Totalcurrent  turnover
turnover Leverage
Leverage the C2C glaringly reveals the poor inventory management
receivable assets
current Total
Total
+ current
assets
+ assets
assets (Table 10 in Appendix 1).
Other
Other current Fixed
Fixed
assets
assets assets
assets
RSCFA was calculated for the sample firms studied,
Source: Management & Accounting Web (http://maaw.info)
Source: Management & Accounting Web (http://maaw.info) revealing the net supply chain revenue productivity out of
The analysis giving return on assets for the firms in the past seven years ending 2016–17 is
supply chain assets. All firms scored a negative value of
Fig. 3: Du-Pont analysis
tabulated (Table 7.3.1 in Appendix-1) which is showing that BPCL has steadily outperformed
RSCFA from 2012-13 to 2014-15, which indicates poor
the other two firms in all the years except 2010–11. The reasons for better performance of BPCL
The analysis giving return on assets for the firms in the supply chain asset utilization. However, the trend has
may be tracked to better current assets and fixed assets management for the given turnover they
past seven years ending 2016-17 is tabulated (Table 9 in changed since 2015-16 and BPCL generated almost three
achieved. Though IOCL has huge turnover, the asset productivity could not convert that turnover
Appendix-1) which is showing that BPCL has steadily times net supply chain revenue for the deployed supply
into return on assets. Hence, irrespective of lower turnover by BPCL, they have efficiently used
outperformed the other two firms in all the years except chain assets and remained the best performer in the last
both current and fixed assets. In this industry, inventory management and better control of

inventory could improve the asset productivity as demonstrated by BPCL. The analysis through

Du-Pont model suggests that the supply chain performance in this industry is more influenced by

inventory management than the distribution aspect. Moreover, the analysis of the firms studied

22
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  17
two years. The inconsistent performance of the all the the strategy of oil firm than their internal performances
firms in RSCFA is a real concern, which may be eroding alone.
the profitability of the firms (Table 11 in Appendix-1).
Whilst progressing from 2014-15 to 2016-17, SCI ratio
RWC is the best measure, which can clearly indicate and deteriorated year-on-year for both BPCL and HPCL
supplement the reasons for RSCFA performance of firms. primarily due to increase in supply chain management
The calculated values of RWC for the oil PSUs show cost, more particularly higher inventory holding. For
negative returns for all the firms from 2012-13 to 2014-15 IOCL, there was deterioration in first year and then
as it is seen in RSCFA also. Hence, it is clear that the poor improvement in next year.
performance of the firms during the three years is mainly
due to poor current asset management and, hence, had SWCP showed steady deterioration from 2014-15 to
an impact on the revenue productivity. All the firms have 2016-17 for BPCL and HPCL primarily due to higher
generated positive returns in the last two years ending inventory holding non-commensuration with incremental
2016-17 and the best return was recorded by BPCL in net sales. For IOCL, there is not much difference between
both the years (Table 12 in Appendix-1). 2014-15 and 2015-16 but a deterioration observed from
2015-16 to 2016-17.
Finally as an absolute measure, TCS is calculated, which
indicates the costs incurred by the firms through supply High inventory holding results in low ITR. All three
chain to serve the consumers. TCS was higher for IOCL companies experienced drastic fall in ITR from 2015-16
as it being the bigger firm compared to the other two. to 2016-17. Both inventory and net sales in monetized
Least cost was incurred by HPCL to serve the customers. terms increased but increase in inventory holding was
However, IOCL has managed to reach the same cost much higher than net sales.
levels as recorded by them in 2010-11 compared to BPCL Companies with higher own sourcing of products have an
(23% increase in 2016-17 over 2010-11) and HPCL edge on profitability. HPCL’s own sourcing of products is
(30% increase in 2016-17 over 2010-11) (Table 13 in just half of its sales; whereas, for other two, it is on higher
Appendix-1). side. HPCL has to churn out big money for external
SCL and IDOS experienced a sharp fall (improvement) sourcing of products. Therefore, HPCL may look for
from 2013-14 to 2014-15 whilst a sharp hike (deterioration) enhancing its refining share.
from 2014-15 to 2015-16 and 2015-16 to 2016-17. The BPCL is consistent outperformer in ROA. Both IOCL and
sustained high price of crude oil and associated products HPCL have to focus on improving ROA.
for long time compelled the firms to minimize their
inventory-holding days which started getting relaxed
with crude oil price started falling steadily from above Benchmarking of Performance of
100 $/Bbl in Apr. 2014 until Jan. 2016 when it reached Indian PSU Downstream Petroleum
its nadir at $20 level. Significant increase in days of Companies
inventory holding for both raw material and finished good
inventory was noticed during low-price regime. Inventory The supply chain performance of the firms can be further
was built up taking advantage of lower crude price albeit analyzed using performance-benchmarking approach.
fall in market share for sales from expansion of sales by The benchmarking process has considered measures
private players like Reliance and Essar. Storing additional only related to asset management efficiency attributes in
inventories are seen during 2015-16, though decline in downstream oil PSUs. The performance benchmarking
crude price continued throughout 2014-15 also, which of the three attributes namely C2C, RSCFA, and RWC
reflects oil companies were too skeptical about crude are considered in time t, where t = 2016-17. The values
price movements and took a very cautious approach for of all components of each KPI and the KPI itself are
any change in strategy in this aspect. This is primarily arranged in descending order of performance. Such
because raw materials cost account for ~70-80% of total arranged values are classified into ‘Superior’ and ‘Parity’
expenses and any move, if goes wrong, may put a firm in positional performance under each component and KPI,
financial jeopardy. Inventory holding alone brought down which are the 90th and 50th percentile values as per the
company profitability by around 50-60% in 2014-15 and SCOR analysis. The 70th percentile value is considered as
boosted 70-80% in 2016-17. Oil price volatility shapes
 18   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

the ‘Advantage’ positional performance, which can also performance at least to a parity level, they need to improve
be obtained as the average of Parity and Superior. upon their SCR and SCFA. They will be able to improve
provided their overall SCR improves along with SCFA
The table so developed is matched with the actual productivity. Secondly, for IOCL, though it is in parity
performance of respective KPIs for each firm against position among the three, they need to relook at their TCS
the benchmark values. The feasibility of performance and SCFA. They have to focus on control of overheads as
improvements for each component against the benchmark well as improving their SCFA productivity.
values are tested and futuristic improvements are
suggested. In RWC (Table 16 in Appendix-1), IOCL is a poor
performer and it has to focus on better inventory and
The benchmarking process has been followed for all the receivable management which can bring down their TCS.
three firms for all these three KPIs. For C2C (Table 14 in In case of HPCL to go beyond parity, its Supply Chain
Appendix-1), IOCL is identified as a poor performer. As revenue and lag of payables should be improved. It may
can be seen, the actual position of IOCL is much lower be noted that BPCL has performed better on all the three
than Parity benchmark identified. Based on the table, KPIS.
IOCL may be able to improve upon its performance by
focusing on improvement in IDOS and DPO. They may
not be able to improve their performance in DSO as it is
Findings
beyond the feasibility zone. In short, they have to lag their
payments for improvement in DPO and reduce the level Inventory holding, be it crude oil or finished goods or
of inventory in IDOS. work-in-progress, impacts substantially on profitability
of petroleum sector. All three companies incurred huge
A similar exercise for HPCL suggests that the firm setback in 2014-15 and huge boost in 2016-17 from
needs to improve on IDOS to perform better in C2C. inventories. In both the years, days of inventory holding
Their payable and receivable managements are already were very high and product price shifted downwards
performing well. The superior benchmarking of HPCL in and upwards, respectively. The firms incur loss when
DPO at more than 90 days does not match well with the price shifts downwards from higher inventory cost
maximum general commercial credit, which is maximum against lower selling price and reap benefits when price
of 90 days. Hence, the superiority derived in the table is shifts upwards from lower inventory cost against higher
only showing the best among the mediocre performers. selling price. This results from wide variation in price-
However, the inventory levels are leading towards poor changeover cycle.
C2C performance. In case of BPCL, their performance as
benchmark is already superior in C2C among the given Comparative performance of sample firms during 2010-
firms. It can improve its performance in C2C beyond 17 as analyzed through different parameters may be
superior by improving DPO and DSO. summarized to indicate the areas of improvement for
the firms. The following matrix prioritizes the areas of
In RSCFA (Table 15 in Appendix-1), the performance improvement for the firms.
of HPCL is found to be poor. In order to improve their
Company Priority 1 Priority 2 Priority 3
IOCL ITR,SCL,SCI,SWCP,IDOS DCER,ROA,RSCFA,RWC,DPO, DSO
BPCL DPO,DSO SCL,SWCP,IDOS ITR,DCER,SCI,
HPCL DCER,SCL,IDOS ITR,SCI,ROA,RSCFA,RWC SWCP,DSO

Just by maintaining lower inventory, performance can be 1755 Crores, respectively, which got enhanced to INR
enhanced for many of these metrics, e.g., ITR, DCER, 19,108 Crore, 8040 Crore, and 6209 Crore, respectively,
SCI, SCL, IDOS, and C2C. However, all three companies due to price changeover gain from inventory. Contrary
gained very high profit in 2016-17 due to higher inventory to this, in 2014-15, IOCL, BPCL, and HPCL net profit
availability at lower cost. without inventory impact was INR 13,489 Crores,
9598 Crores, and 6482 Crores, respectively, which got
In 2016-17, IOCL, BPCL, and HPCL net profit without reduced to 5273 Crores, 5085 Crores, and 2733 Crores,
inventory impact was INR 3848 Crores, 2442 Crores, and respectively, due to price changeover loss from inventory.
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  19
Therefore, these companies should strengthen their Cadden, T., Marshall, D., & Cao, G. (2013). Opposites
price-forecasting model and keep their special focus on attract: Organizational culture and supply chain perfor-
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Return on Investment of the firm in the industry. The weathered the perfect storm. World Trade, p.48.
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are Human Resource loaded, hampering Human Resource flows and its application to the Alaskan crude oil sup-
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 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  21

Appendix-1

Table 1: Annual Result Comparison of Indian PSU Downstream Petroleum Companies

(14-15 to 16-17)(in INR crore)

Performance Parameters 2016-17 2015-16 2014-15

Financial Performance IOCL BPCL HPCL IOCL BPCL HPCL IOCL BPCL HPCL
(INR Crores)
Gross Sales/Income from 445,373 242,048 213,803 406,828 217,895 197,744 467,932 238,087 217,061
operations
Other Income 4209 2601 1515 2322 1776 1144 4146 2200 1952
Total Income 449,582 244,649 215,318 409,150 219,671 198,888 472,078 240,287 219,013
Consumption of Raw 156,910 67,711 45,138 142,266 61,007 40,812 205,312 94,424 56,158
Materials
Purchase of Traded Goods 141,925 114,220 122,732 143,629 100,829 115,948 177,534 117,052 129,278
Increase/Decrease in Stocks (15,260) (5,578) (4,454) 3,479 834 91 8,216 4,513 3,749
Employees Cost 9,658 3,429 2,946 7,114 2,758 2,321 7,105 2,086 2,415
Depreciation/amortization 6,223 1,891 2,535 4,819 1,845 2,653 4,529 2,516 1,979
Excise Duty 85,500 39,837 26,779 59,652 29,490 20,043 30,408   11,720
Finance Cost 3,445 496 536 3,090 565 654 3,435 583 707
Transport Expense     5,317     5,262     4,999
Exploration Cost     15     21     27
Other Expenses 34,858 11,599 4,753 29,640 11,952 5,307 29,212 11,697 3,831
Total Expenses 423,259 233,605 206,297 393,689 209,280 193,112 465,751 232,871 214,863
Exceptional Item       1,364     1,668    
Prior Period Expenses /                 (4.47)
Income
Tax 7,215 3,004 2,812 5,584 3,335 2,050 2,722 2,331 1,421
Net Profit/(Loss) 19,108 8,040 6,209 11,241 7,056 3,726 5,273 5,085 2,733
Physical Performance (MMT)
Crude Throughput 65.19 25.39 17.81 56.7 24.1 17.2 54 23 16
Market Sales (including 83.49 37.74 35.23 80.7 38.4 34.2 77 37 32
export)
Other Parameters                  
GRM ($/Bbl) 7.8 5.4 6.2 5.1 6.4 6.7 0.27 3.62 2.84
Equity Share Capital 4739 1311 1016 2428 723 339 2428 723 339
EPS 40.31 61.31 61.12 43 103 114 22 70 81
Public Share Holding                  
- No. of Shares (Crores) 207.16 97.77 49.67 76 33 17 76 33 17
- Share Holding (%) 42.66 45.06 48.89 31 45 49 31 45 49
Dividend per equity share 19 32.5 30 9 15 16 6.6 23 25
(Rs.)
Share Price - NSE 385.77 433.18 525.65 419 1004 911 356 850 675
Date 31.3.17 31.3.17 31.3.17 02.06.16 02.06.16 02.06.16 29.05.17 29.05.16 29.05.15
 22   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

Performance Parameters 2016-17 2015-16 2014-15

Financial Performance IOCL BPCL HPCL IOCL BPCL HPCL IOCL BPCL HPCL
(INR Crores)
Observations
Crude throughput as % of 78 67 51 70 63 50 70 62 50
Total Sales
Gain(-ve)/Loss(+ve) from (1,828) (1,478) (1,264) 431 217 27 1,067 1,220 1,172
Inventory per MT of Sales
(INR)
Income per unit of of Sales (INR/MT)
Sales Income (Net of excise 43,104 53,580 53,087 43,021 49,064 51,959 56,821 64,348 64,169
duty)
Cost per unit of of Sales (INR/MT)
Employee Cost 1,157 909 836 882 718 679 923 564 755
Finance Cost 413 131 152 383 147 191 446 158 221
Expense per unit of Sales (INR/MT)
Raw mat & Product Purchase 35793 48206 47650 35427 42145 45836 49720 57156 57949
Total Expense (including 51560 62694 59355 49645 55368 57065 61057 63568 67587
Excep Item and Tax)
Net Profit per unit of Sales 2289 2130 1762 1393 1838 1089 685 1374 854
Expense efficiency ratio %
Raw mat & Product Purchase 71 78 81 73 77 81 82 91 86
cost as % of Total expense
Expense other than raw 33 25 21 26 22 19 16 7 12
materials, product purchase
and inventory as % of Total
Expense
Total Expense as % of Gross 95.0 96.5 96.5 96.8 96.0 97.7 99.5 97.8 99.0
Sales
Expense on employees as % 2.2 1.4 1.4 1.7 1.3 1.2 1.5 0.9 1.1
of Gross Sales
Raw mat & Product Purchase 67 75 79 70 74 79 82 89 85
cost as % of Gross Sales
GRM – Gross Refining Margin = Combined selling price of all products at refinery gate – cost of crude oil
Source: Authors deduction based on annual Reports of IOCL, BPCL, and HPCL

Table 2:  Inventory Turnover Ratio (ITR) of Indian PSU Downstream Petroleum Firms (Higher the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 7.43 12.54 10.46 7.70 7.94 7.34 6.94
BPCL 12.45 16.26 16.78 13.83 14.72 13.47 9.99
HPCL 11.85 15.97 16.64 12.09 12.78 9.28 8.97
Source: Authors deduction based on financial data taken from Prowess database
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  23
Table 3: Distribution Cost Efficiency Ratio (DCER) of Indian PSU Downstream Petroleumfirms
(Lower the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 0.029 0.051 0.042 0.036 0.033 0.031 0.035
BPCL 0.023 0.025 0.021 0.017 0.0159 0.0157 0.019
HPCL 0.034 0.037 0.032 0.028 0.025 0.025 0.029
Source: Authors deduction based on financial data taken from Prowess database

Table 4: Length of Supply Chain(SCL) (in Days) of Indian PSU Downstream Petroleum Firms
(Lower the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 129 78 62 83 89 98 115
BPCL 96 70 49 59 58 68 83
HPCL 127 89 67 98 83 127 136
Source: Authors deduction based on financial data taken from Prowess database

Table 5: Supply Chain Inefficiency Ratio (SCI) of Indian PSU Downstream Petroleum Firms
(Lower the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 0.0560 0.0665 0.0613 0.0622 0.0581 0.0585 0.0641
BPCL 0.0395 0.0371 0.0329 0.0316 0.0295 0.0305 0.0388
HPCL 0.0511 0.0496 0.0440 0.0442 0.0409 0.0469 0.0514
Source: Authors deduction based on financial data taken from Prowess database

Table 6: Supply Chain Working Capital Productivity (SWCP) of Indian PSU Downstream
Petroleum Firms (Higher the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 11.71 23.04 22.72 12.88 11.79 12.95 12.41
BPCL 18.90 30.45 56.27 23.97 20.79 22.73 16.32
HPCL 22.46 29.46 49.43 16.81 20.62 15.25 14.07
Source: Authors deduction based on financial data taken from Prowess database& Company Annual Reports

Table 7: Summary of Performance Measures of Indian PSU Downstream Petroleumfirms (2015-16)

Companies SCL (Days) SCI SWCP ITR DCER

IOCL 78 0.0665 23.04 12.54 0.051
BPCL 70 0.0371 30.45 16.26 0.025
HPCL 89 0.0496 29.46 15.97 0.037
Source: Authors deduction based on financial data taken from Prowess database& Company annual report
 24   Journal of Supply Chain Management System Volume 7 Issue 2 April 2018

Table 8: Summary of Performance Measures of Indian PSU Downstream Petroleumfirms (2016-17)

Companies SCL (Days) SCI SWCP ITR DCER

IOCL 129 0.0560 11.71 7.43 0.029
BPCL 96 0.0395 18.90 12.45 0.023
HPCL 127 0.0511 22.46 11.85 0.034
Source: Authors deduction based on financial data taken from Prowess database & Company annual report

Table 9: Return on Asset (ROA) Values of Indian PSU Downstream Petroleum Firms (Higher is Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 0.0765 0.0399 0.0188 0.0210 0.0165 0.0140 0.0307
BPCL 0.0987 0.0756 0.0577 0.0419 0.0299 0.0148 0.0206
HPCL 0.0744 0.0424 0.0324 0.0168 0.0092 0.0096 0.0190
Source: Authors deduction based on financial data taken from Prowess database& Company annual report

Table 10: C2C (in days) of Indian PSU Downstream Petroleum Firms (Lower the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 75.82 22.28 17.29 41.04 48.90 53.14 54.50
BPCL 49.58 25.86 5.71 26.67 32.06 28.59 43.34
HPCL 52.00 23.31 1.52 50.89 30.03 81.29 75.84
Source: Authors deduction based on financial data taken from Prowess database & Company annual report

Table 11: RSCFA of Indian PSU Downstream Petroleum Firms (Higher the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 1.99 0.70 -0.82 -1.10 -0.60 0.12 -0.61
BPCL 2.97 1.60 -0.05 -0.09 -0.16 0.57 -0.41
HPCL 1.65 0.86 -0.41 -0.52 -0.51 0.17 0.45
Source: Authors deduction based on financial data taken from Prowess database & Company annual report

Table 12: RWC of Indian PSU Downstream Petroleum Firms (Higher the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 2.29 2.41 -2.35 -1.48 -0.65 0.14 -0.73
BPCL 2.93 4.39 -0.20 -0.12 -0.16 0.66 -0.46
HPCL 2.48 2.23 -1.59 -0.60 -0.79 0.21 0.54
Source: Authors deduction based on financial data taken from Prowess database & Company annual report

Table 13: TCS(in INR million) of Indian PSU Downstream Petroleum Firms (Lower the Better)

Companies 16-17 15-16 14-15 13-14 12-13 11-12 10-11

IOCL 3,291,858 3,373,096 4,560,142 4,983,062 4,457,479 3,709,057 3,262,369
BPCL 1,940,086 1,784,121 2,310,985 2,531,261 2,348,963 1,993,216 1,500,481
HPCL 1,808,475 1,727,256 2,039,325 2,212,341 2,059,936 1,673,687 1,339,445
Source: Authors deduction based on financial data taken from Prowess database & Company annual report
 Benchmarking Supply Chain Performance: A Case Study in Indian Petroleum Sector  25
Table 14: Performance Benchmarking of C2C (in Days) of Indian PSU Downstream Petroleum Firms
(2016-17)

IOCL BPCL HPCL Parity Advantage Superior

2016-17
DSO 7.26 7.37 7.01 7.26 7.14 7.01
IDOS 132.81 100.50 141.09 132.81 116.66 100.50
DPO 64.26 58.28 95.15 64.26 79.71 95.15
C2C 75.82 49.58 52.95 52.95 51.27 49.58
th th th
Parity (50 percentile value), Advantage (70 percentile or average of Parity & Superior) & Superior (90 percentile)
Source: Authors deduction based on financial data taken from Prowess database& Company annual report

Table 15: Performance Benchmarking of RSCFA of Indian PSU Downstream Petroleum Firms (2016-17)

IOCL BPCL HPCL Parity Advantage Superior

2016-17
SCR(in INR million) 4,152,433 2,313,605 2,046,895 2,313,605 3,233,019 4,152,433
TCS(in INR million) 3,291,858 1,940,086 1,808,475 1,940,086 1,874,281 1,808,475
SCFA(in INR million) 431,518 125,748 144,528 144,528 135,138 125,748
RSCFA 1.99 2.97 1.65 1.99 2.48 2.97
th th th
Parity (50 percentile value), Advantage (70 percentile or average of Parity & Superior) & Superior (90 percentile)
Source: Authors deduction based on financial data taken from Prowess database& Company annual report

Table 16: Performance Benchmarking of RWC of Indian PSU Downstream Petroleum Firms (2016-17)

IOCL BPCL HPCL Parity Advantage Superior

2016-17
SCR(in INR million) 4,152,433 2,313,605 2,046,895 2,313,605 3,233,019 4,152,433
TCS(in INR million) 3,291,858 1,940,086 1,808,475 1,940,086 1,874,281 1,808,475
INV(in INR million) 591,823 193,488 181,999 193,488 187,745 181,999
AR(in INR million) 85,024 47,582 40,642 47,582 44,112 40,642
AP(in INR million) 301,075 113,598 126,581 126,581 213,828 301,075
RWC 2.29 2.93 2.48 2.48 2.71 2.93
Parity (50th percentile value), Advantage (70th percentile or average of Parity & Superior) & Superior (90th percentile)
Source: Authors deduction based on financial data taken from Prowess database& Company annual report

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