THE COMPLETE SOLUTION TO FULLY INTEGRATED ASSET CONTROL
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Asset Management Case Study: Hardcat at Shell Australia


Background


When Shell decided to consolidate hundreds of disparate fuel and oil distribution operations into four distinct business units, it needed a whole new approach to managing a fixed assets inventory of over 50,000 individual items.

The Company


Shell Direct, a distribution arm of Shell Commercial, is a wholly owned subsidiary of the Shell Co. Australia. It currently operates out of over 120 locations around Australia and employs in excess of 500 fulltime staff and is in the business of wholesaling fuel and oil products.

It purchases nearly all of its products from the Shell Co. Australia before selling them to a broad range of commercial wholesalers and retail outlets as well as corporations and operators in a variety of industry sectors such as resources, agriculture and transport.

Over the last six years, Shell's wholesale distribution has gone through a phase of massive consolidation. Through acquisition and internal rationalisation, it has merged its wholesale business from hundreds of smaller distribution companies into four super-size distribution businesses.

The Problem


According to Mr Sam Caruso, Project Leader For Shell Commercial, as part of the consolidation process, Shell acquired many businesses and took on all of their assets. This included thousands and thousands of individual items including office equipment, storage tanks, bowsers and vehicles in a vast array of locations. It also needed to bring into central control the fixed assets of its own vast array of operations that had previously each been administered independently.

"About two and a half years ago, as part of this consolidation phase, we recognized the need to do something about how we were going to manage all the different assets these businesses had accumulated," Mr Caruso said. "Not only did all of these businesses have their own methods for accounting for assets but there was also confusion as to who owned what.

"Some of the assets were owned by Shell, others were owned by the customers, others, or owned by the parent company. There were also owned assets that were loaned to customers.

"It was a huge hotchpotch of data from a multitude of sources and we had to sort it out as soon as possible. Each of the numerous businesses used their own imagination to manage fixed assets. There were a variety of spreadsheets and databases in varying states of disrepair storing the information we wanted to consolidate."

To comply with strict corporate governance requirements, Shell also needed to be able to have a real-time view into what assets it owned, where they were at any given time and what they were worth or what they were costing. It needed to be able to account for the full life cycle of its assets at a glance including their origins, depreciation, usage, maintenance and redundancy.

"The full inventory of assets from the consolidated businesses needed to be verified and reconciled back to our financials," Mr Caruso said. "It was a mammoth task."

The Solution

"Sometimes when you see a product, you just know that it is going to be good for your business. We had a feeling right from the start that this product was going to be successful and that Hardcat was the right software for the job."


Shell assessed about 50 different asset management software options before coming down to a final list of three. Most of them were based on the Windows 2000 platform using a browser that drilled down into an inventory database of assets, according to Mr Caruso.

"Hardcat's solution was the only one we saw that used bar-coding and scanner technology which meant that once the system was implemented, verifying, updating and tracking of the assets was very easy," he said. "Bar-coding and scanning takes away a lot of the labour involved. The alternatives required far more manual input to update data within the asset database."

Shell runs its Hardcat solution on a Citrix server with thin client terminals based in each of its regional focal points in NSW, Queensland and Victoria as well as the national asset administration centre which is based in South Australia.

Barcode scanners and data capture devices are used to verify assets and are located all over the country at Shell depots and other facilities. In addition to the Hardcat core system, Shell uses the optional asset maintenance module which is available as an extensions.

"By the end of Q1, 2004, we will have bar-coded approximately 50,000 assets, including SA, WA & NT at about 120 depots as well as all the equipment we have leased or loaned out to customers," Mr Caruso said.

The Benefits


Mr Caruso said that there has been numerous benefits from using the Hardcat fixed asset management software and they are continually finding additional ways to expand its functionality within the organization.

"Hardcat can manage any sort of file type that we care to put in there," Mr Caruso said. "There is an existing occupational health, safety, and environmental (HSE) project happening at the moment across the organization.

"To ensure that our self-imposed HSE standards are being fulfilled in the delivery of product, we are taking photos of above-ground tanks and bowsers etc. at customer sites and storing them all in a Hardcat database for further reference."

"Without a doubt, Hardcat has been a tool that we have been able to use to drive down costs in numerous ways. I would say that costs alone have been reduced by 25-30 per cent."


In its consolidation process, Shell has found that bar-coding all of its assets has been hugely beneficial in accounting.

"This entire exercise allowed us to cleanse our assets which has been crucial to good management of the consolidation," Mr Caruso said. "Once the assets were bar-coded, you were physically identifying and asset whereas in the other packages, you were just saying that it existed and manually entering the information into a database.

"Hardcat made it so much easier than the alternatives to implement a new asset record. Given that we had a huge number of assets that had to be initiated in the database, this was a huge plus and made the process much simpler. We just had to import the data and allocate a barcode to it. Once all the assets have been bar-coded the rolling asset verification exercise is a very simple and efficient procedure.

"You just scan the asset and the Hardcat software immediately knows what it is and where it is."

Hardcat has delivered a good return on investment for Shell. Not only has the company managed to save money in the managing its assets but because it now has a real time view of its entire inventory, there is far less loss through asset write-offs.

"Without a doubt, Hardcat has been a tool that we have been able to use to drive down costs in numerous ways," Mr Caruso said. "I would say that costs alone have been reduced by 25-30 per cent.

"We have saved time and money in staff and operations. There is now just two and half people running the assets where previously we would have had six working full time to manage our assets."

Another cost benefit Shell has achieved from its Hardcat solution has been through using the maintenance module which it uses to distributed bowsers and tanks.

"In the past when we had repair or maintenance needs with new bowsers or tanks, we would just pay repairers because we were too busy to check out whether it was under warranty or not," Mr Caruso. "There were often incidents where we just paid repairers when we had warranty cover or we would get them to fix the same problem four times over because we were unable to easily monitor such assets.

"Now we have a team in Queensland that uses a Hardcat database to monitor all these repairs and maintenance. This has noticeably driven costs down in that area."

Mr Caruso said that one attractive aspect about Hardcat is that the classification of that barcoded asset can vary. Shell has been able to specify whether an asset is an owned, leased, rented or borrowed.

"Hardcat does all of that for us," he said. "Meanwhile, bar-coding isn't the end of it all. We have some assets - such as underground storage tanks and vehicles - which we don't bar code. If it is impractical to barcode, Hardcat still allocates a unique asset number and it is managed it in the same manner."

Hardcat's professional services have been crucial to the success of Shell's asset management solution implementation according to Mr Caruso.

"Hardcat implements this sort of solution all the time, and it really is an expert at asset management projects," he said. "We needed to work in partnership and have had a dedicated Hardcat project manager with us all the way. Hardcat listened intently to our needs and gave us invaluable recommendations on how to achieve our goals."

The data searching and reporting capabilities of Hardcat have also been a boon to Shell. It is used to generate all of the financial reports relating to assets which give Shell's accounting department the data it needs for audit purposes.

"We get all financial information such as depreciation numbers, capital values, written down values and profit and loss on sales out of Hardcat," Mr Caruso said. "It gives us all of that which are the standard reports. It is also used to budget forward lease payments because all of the leased assets are in there as well.

"None of the other asset management systems that we looked at matched that functionality."

Other factors that steered Shell's asset management team toward using the Hardcat solution included the fact that it was located in Melbourne and that it garners a lot of business from large multinational corporations.

"Hardcat is a proven local success story with a mature product," Mr Caruso said. "It has been able to implement successfully with some fairly large international companies, so we see it as a proven product. Having local support is also great for our ongoing project. It means that if we have any issues with the software or need some technical support, they are just around the corner and not on the other side of the world.

Conclusion


According to Mr Caruso, Shell's asset management consolidation project has been a big one but it is very comfortable with the decision it made to go with Hardcat.

"The end result will far outweigh what we have invested," he said. "Sometimes when you see a product, you just know that it is going to be good for your business. We had a feeling right from the start that this product was going to be successful and that Hardcat was the right software for the job."


 
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