Johannesburg, 18 Jun 2003
Easigas hopes to cut its capital expenditure by 5% a year, enhance its competitiveness and increase customer retention and spend since implementing the Realyst contract management system.
Easigas is a specialist liquefied petroleum gas (LPG) supply company and a wholly owned subsidiary of Shell Oil International. It has a 21% share of R2.3 billion LPG market in SA.
"The solution replaces a manual, paper-based system that Easigas, due to its distributed sales environment, was finding difficult to manage optimally," notes Gavin Beretta, financial manager at Easigas. "The LPG market is highly competitive and products are commoditised. Our strategy is thus to differentiate through excellence in service and become the supplier of choice. The roll-out of Realyst will play a large role in ensuring this.
"Easigas`s entire business is contract-driven," explains Beretta. "We have 10 000 customers with contracts that are, on average, renewable on a five-year basis. Increasing competition motivated us to streamline our processes to better service our customers and improve our contract management capabilities. We needed timeously to renew and service contracts, increase our asset utilisation and identify and revisit targeted and dormant customers to retain valued customers and grow our business with them."
Beretta expands on Easigas`s business model, highlighting the issues the company faces: "Dealers sell on our behalf into the packed, or commercial customer base, while we handle bulk sales ourselves. The contracts are administered at our head office, while the dealers manage the servicing of customers.
"Easigas installs physical components, namely dispensing equipment, manifolds, gas containers and protective steel cages at each new site. This constitutes a big investment for the company and we need to ensure the assets are properly used. On the `bulk` side, for example, tanks can cost up to R500 000 to install, and we don`t want our competitors` products going into these tanks. We thus need to ensure customers are serviced on time.
"These assets are linked to a fixed asset register and need to be tracked. Annual safety checks also need to be done on the equipment, as there are stringent safety regulations that have to be met."
Realyst integrates the asset information against the contract thus enabling Easigas to proactively manage the installed assets, contractual relationship and safety checks.
The problems faced by Easigas included the fact that contracts were held and managed by district and provincial offices, which in turn dealt with dealers and distributors.
Realyst director Tony Maddison notes: "Contract administration in business is still largely reactive. Proactive management can have a large impact on business. While many companies will manage the contracts manually or from within an ERP system, not many IT solutions cater for the management of the terms, negotiated relationships and deliverables contained in the contract. With an increased focus on corporate governance specifically within the areas of legal and financial risk management, these issues need to be addressed."
The hosted architecture of the solution is a plus for Easigas as a subsidiary of a multinational. It is restricted in terms of the IT solutions it installs onsite, and obtaining approval for any additional systems is a time-consuming procedure. For rapid roll-out, it was critical that the Metrofile and Realyst solution be hosted, secure, reliable and scalable.
The contracts are scanned and converted to electronic format and then archived by Metrofile to meet regulatory and legal requirements. The electronic information is then extracted to the XML-based Realyst application, which is hosted by Realyst and accessed by Easigas via a Web interface.
The solution is currently in phase one of deployment. "We have converted all of the contracts for the Gauteng region and all of the `bulk` contracts to electronic format," says Maddison. Easigas is in the process of checking the data for accuracy.
"Because of the impact on business, we are adopting a staged approach. Phase two will see the rest of the `packed` contracts converted by the end of June. Phase three involves the analysis and manipulation of data for better decision-making, allowing Easigas to better assess sales and purchase cycles, and implement better customer relationship management strategies, among others."
Thereafter, all procurement contracts will be loaded to enable Easigas to monitor supplier performance, service level agreements and to obtain savings through supplier consolidation and proactively managing renewals and escalations.
Beretta notes that the solution will not have too much of an impact on the back office: "Marketing staff and managers were consulted in workshops on the requirements for the system and for implementation. As most of the staff are computer literate and work off notebook computers, the Web-based solution is ideal."
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