Mobil

Case study Greasing Mobil’s Orders

How many times does an organization need to build an information system? In the case of Mobil Oil’s lubricants division the answer was to do it until they got it right. Mobil, the Fairfax Virginia Corporation had 1997 revenues of about $60 billion making it the second largest U.S. oil company. It ranks number 8 in the Fortune 500 list. Mobil is the largest marketer of finished lubricants in the United States. The lubricants division’s major products include bulk industrial oils and greases motor oils and waxes. These products are essential to the functioning of virtually all machinery because the lubricants can withstand the intense heat and pressure generated by combustion engines, allowing machines to operate at high speeds while virtually eliminating friction. The lubricants division distributes 60 to 70 percent of its product through about 300 small regional oil distributors. The division actually has two types of sales: Direct purchases are ordinary purchases by the distributors using purchase orders and buybacks occur when a distributor delivers products from its own inventory to a Mobil national account holder. In the case of buybacks, once the delivery has been made, the distributor requests that Mobil “buy back” the inventory it has delivered, the distributor is paid its cost plus a commission. Distributors submit 12 times as many buyback orders as purchase orders. Prior to 1995, the division processed all purchase and buyback orders manually. The manual system was based on telephone, fax and mail-in orders. All were paper based and involved a great deal of handling and filling. The process was very slow and extremely costly. The costs of the manual approach arose from paper, printing, mailing, order entry, telephone charges and customer telephone staff and its support. In 1995 the division abandoned the purely manual process and converted to a DOS-based electronic data interchange (EDI) system. It wanted to input data...