Oil Giant INA Clarifies Supplier Relationships With SAS

INA is Croatia's leading oil and gas company with an annual turnover in 2002 of $2.4 billion (€2.1 billion). The most important issue for INA at present is the move to privatization, which the company is currently undertaking.

The idea behind the privatization process is that growth and development through strategic partnerships will strengthen INA's competitive position in the industry. INA starts from the advantageous position of having a strong national presence, good knowledge of its market, strong logistics, experience in selling many different types of goods, excellent retail locations and a high average fuel turnover.

One of the steps the company has taken to attract investors is to increase the transparency of its various business practices. To this end, INA has chosen SAS to provide business clarity, specifically in regard to its relationships with its suppliers. This is highly significant because INA's retail division oversees the distribution of more than 1,500 consumer products.

"The SAS system provides a great benefit to both INA and its suppliers in that it gives fast, transparent and easy access to important retail data via a Web browser," says Darko Hertarić, director of INA's Commercial Department. "We can now monitor and control retail inventories and also define the optimum type and amount of specific goods to be stocked at targeted gas stations."

Instant Access to Timely Data
INA's domestic retail segment is responsible for the procurement, transportation, storage, and bulk and retail sale of oil and gas products and consumer goods. The retail network is organized in five business centers made up of 16 regional units. The role of the business centers is to provide business and operational support, oversee the retail network, and manage commercial transactions, pricing and marketing. The business centers and regional units offer assistance to the network of 397 gas stations and 30 special retail points owned and operated by INA.

INA's Commercial Department first worked together with SAS in 1999 and, encouraged by the good relationship they enjoyed, decided to develop a new, robust data warehousing system and client server application to furnish its suppliers, and their own managers, with useful and timely information. INA chose SAS/Warehouse Administrator, SAS OLAP Server and AppDev Studio to extend access to data and analysis results to a wider range of users at business units all over Croatia at minimal cost. INA's SAS data warehouse contains more than 50 million observations, with approximately 10 million added to that per year. Five years of history are contained within 9 gigabytes of storage.

"The company has worked intensively on the introduction, development and improvement of our SAS business intelligence system," says Hertarić. "We used to give our suppliers information by mail or by fax, but now we can give it to them online. It is so much easier now. All they need is a password, and they have instant access to current information via an extranet developed by SAS. Reports are presently updated on a weekly basis, but will soon be refreshed on a daily basis." INA is initially offering use of the system to its top suppliers at no cost during a trial period and is looking into charging for its use in the future.

Suppliers now have quick access to information on precise sales of stock, which helps them to decrease their own distribution costs, including labor and transport costs and inventory management. Response from the suppliers using the system has been enthusiastic. Says Hertarić, "The biggest suppliers, such as Coca-Cola, are the ones benefiting the most from the system so far, and they have had a very good reaction and provided positive feedback."

Enhanced Reporting and Improved Decision Making
In addition to providing important information to their suppliers, the system also puts data required for general, as well as strategic, decision making at every manager's disposal within the company. "The SAS system analyzes the relevant information for the regional managers, who get reports over our intranet on all our different business units and their contributions to INA's business activities," says Hertarić.

"The regional managers then have the ability to report on business activities directly applicable to them and to share the information throughout the enterprise," he continues. "The result is that business units can be more flexible, and they can focus on developing business activities that will contribute to the company's bottom line. Further, sales can be analyzed both during and after marketing campaigns in order to make decisions about short-term and long-term promotional activities, depending on turnover results. We can also define the exact brands and products that are most popular and those that are the least popular in particular regions, and this knowledge will help us determine which consumer goods should be stocked at specific retail sites."

This project has successfully enabled INA to identify its main suppliers – those companies whose business activities and consumer goods generate the best margin. Using this knowledge, INA hopes to establish long-term business relationships with the most profitable suppliers, while lowering site-operating costs.

A Very Good Return on Investment
According to Hertarić, the system took only six months to put into place from the idea stage to project completion. "We have had a very positive experience working with SAS. The company is very professional, their analytics are very powerful and they helped us achieve what we wanted. SAS gives us different methods to see our data, providing us with a new perspective on our suppliers, customers and sales."

Asked to quantify the results of their SAS system, Hertarić says, "We have achieved a very good ROI, I believe. We are currently developing a piece of software that will monitor the activity of the suppliers with the system, and that will give us a definite way of measuring the system's effectiveness.

Concludes Hertarić: "The most significant benefit is bolstering decision making regarding the stocking of consumer goods at the gas stations – decisions that will be enhanced by detailed knowledge of sales issues throughout the years, and that makes all the difference."

About INA
INA, founded in 1964, is Croatia's leading oil and gas company. INA has approximately 15,000 employees and an annual turnover of $2.4 billion (€2.1 billion). Principal group activities include exploration and production, refining and wholesale, marketing and retail services. Headquartered in Zagreb, INA has begun privatizing and has recently sold a 25+1 percent stake in the company to Hungarian oil company, MOL plc.

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