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CALTEX’S MAGAZINE FOR EMPLOYEES, FRANCHISEES & RESELLERS ISSUE 35 / FEB – MAR 07 Facing the threat from abroad THE STAR
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Caltex’s magazine for employees, franChisees & resellersissue 35 / feB – mar 07
Facing the threat from
abroad
THESTAR
Managing DirectorFrom the
LPS at work
Safety first for Captains StarlightWhen the Starlight Captains started their journey to brighten the lives of sick and hospitalised kids in 50 towns across Australia, safety was a priority. After all the Starlight Children’s Foundation’s 50 towns in 50 weeks tour would involve hundreds of hours of driving through every state and territory.
Applying the principles of the Loss Prevention System (LPS) sponsors Caltex made sure the Starlight van was technically sound and its drivers well prepared. Thanks to the company’s support, each Captain Starlight was able to take a driving course at the NSW Driver Education Centre Australia (DECA). Training focused on “defensive” techniques rather than “race track” style.
Training was in two parts. The first was in the classroom, where drivers learned about the theory of defensive driving. Topics covered included pre-journey planning, safe braking, safe separation distances, overtaking, anticipation techniques and pre-drive vehicle checking.
The second aspect of training involved an on-road practical session, where participants received an individual evaluation of their driving and suggestions on how to improve their defensive driving ability.
According to Captain Averil Yeo, the training helped enormously. “All the journey’s Captains undertake Caltex’s driver training course,” she said. “Mine had an immediate effect on my driving. I became more observant and defensive on the road.”
Despite the spectre of bushfires and scorching heat – it was 42 degrees when the van visited Mildura – the 27,000 kilometre (and counting) trip has been incident free.
This great outcome has been helped by a diligent attitude to safety. Aside from their defensive driving training, the Captain Starlights have been encouraged to apply the LPS Safe Performance Self Assessment tool (SPSA) to assess possible risks at the start of each leg of each trip.
Just another example that Caltex takes LPS and safety seriously – always and everywhere.
loss prevention system
In the latest climate survey of Caltex employees, over 90 per cent said they were proud to be an employee of Caltex and that they were optimistic about the future of the company.
This is a heartening and positive response from those who are the key to the company’s continued strength and success. The evolution and strong performance of Caltex in the last few years is testimony to Caltex people’s commitment, competence and willingness to meet new challenges.
These qualities are going to be crucial to the company’s future. Our highly competitive operating environment is going to get even tougher and the pace of change is accelerating.
This issue of The Star takes a hard look at what’s coming up on the horizon.
Members of the Caltex leadership team discuss how our refineries will face competition from low-cost economies, how customer preferences are changing and issues like climate change have added urgency.
The company is well advanced in responding to these pressures, but to survive and thrive in the future environment there is a lot still to be done.
We need to punch above our weight in everything we do. This means lifting our safety and operational performance, making significant investments in our plant, equipment and processes, executing everything with excellence and ensuring our priorities are right.
Caltex is the largest refiner and marketer of fuels in Australia and operates the country’s number one convenience store network. But we can’t be complacent. We are a small player on the global stage on which we operate and things are changing.
Let’s make sure we’re ready!
Des King
There is also the escalating cost of doing business in Australia and a tightening of the availability of the people with the skills and experience we need.
These pressures are occurring at a time when Caltex must meet constantly higher expectations from customers in commercial and consumer markets, the public and politicians in such areas as introducing cleaner fuels and biofuels, tackling climate change and having a compelling retail offer.
More competitionThe biggest long term threat lies not at home but abroad. And Australia’s least efficient refineries may not survive it. One, Mobil’s Port Stanvac refinery in Adelaide, is already closed and mothballed.4
Over the last four years Caltex has risen from nearly going out of business to being a strong company. The rapid change in the company’s fortunes was fuelled by market changes in the oil refining and marketing industry and Caltex’s ability to capitalise on them.“We have built up a firm foundation for Caltex over the last four years,” said Managing Director and CEO Des King. “Our challenge now is to build on that success to create a long term future for Caltex in a rapidly changing competitive landscape.”
So what exactly are the competitive challenges we face? Caltex people know about some of them already. They include increasing competition from big new refineries in our region and the new retail competitors. Local demand for petrol in Australia is slowing. Our refineries have limitations on the availability and types of crude oils they can process and the volumes they can produce.
CoVer: safety investing for the future: fire protection specialist steve otto sets a high pressure jet of water streaming from a tower at the lytton refinery’s crude oil receiving wharf as he tests a new fire fighting system. the $5 million automated system exceeds safety standards and equips the wharf to handle bigger tankers carrying crude to the refinery from oil fields greater distances from australia.
New challenges on the horizon4
WorlD Class refining Competition the massive 650,000 barrels per day Jamnagar facility on india’s northwest coast (below) will soon have a similar-size refinery alongside producing petrol, diesel and jet fuel for world markets. the new $8 billion export refinery owned by reliance petroleum will produce fuels to the latest international clean fuels specifications.
around 4,500 engineers and managers and 80,000 workers are involved in the construction of the new facility. reliance refinery console operators typically have engineering degrees.
When the new plants are completed in 2008 the Jamnagar operations will be the largest refining complex in the world producing 1.2 million barrels of petroleum products a day – nearly twice the volume of the seven operating australian refineries combined.
The biggest lon g term threat lies not at home but abroad. And Australia’s least efficient refineries may n ot survive it
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Caltex faces a stiff increase in competition as huge new export refineries – whose construction, operating and unit costs are much lower than ours – come on stream.
These facilities in India, China, Korea, Vietnam and Indonesia will seek to buy the crudes that Caltex has traditionally bought from the region, increasing demand for them and reducing available supply. New Middle East refineries will also be seeking to export into the region. These refineries will be designed for heavy sour crudes but will be a competitor for regional light sweet crudes. The availability of these is declining and some new refineries are designed for local crude (eg in Vietnam).
Inevitably the new Asian refineries’ increased production will affect Singapore refiner margins and Caltex’s profitability. A concern is that they may be able to sell their product into our open market cheaper than what we can refine it for. Already one litre of fuel in four sold in Australia is imported.
“Export oriented refining will put extra competitive forces into the region,” said General Manager Supply and Corporate Services Alex Strang. “That can be a positive for us because it means we have an additional supply source as an importer. But it can also be a big challenge.”
“With industry fundamentals changing there may be further rationalisation of refineries in Australia in years to come,” added Des.
“Not all Australia’s refineries may weather the change. It is important to Caltex that the Kurnell and Lytton refineries prosper in the changing environment even if some of our competition do not.”
The new Reliance Industries Ltd export refinery being built at Jamnagar on India’s northwest coast is planned to be at full production by 2009-2010 and points to the magnitude of the challenge. Its refining capacity of 1.2 million barrels a day will be almost double that of all seven operating refineries in Australia combined.
The premium Caltex currently enjoys because of the advanced Australian specifications of its fuel products is potentially under threat too. Not all refineries in Asia can make product to Australian specs at the moment. But the new ones will make these products – and at lower cost.
In addition, we’re likely to encounter more competition domestically. Some large customers in the Australian market place are seeking more secure and reliable supply of petroleum products so they’re looking for the security of two suppliers, says General Manager Marketing Mark Burrowes. This is opening up opportunities for Caltex to build on our reputation as a secure and reliable supplier.
Still more competition may come from big commercial customers importing their own fuel. Very big customers can do it in their own
right but they need to consider whether its their core business or should they let someone like Caltex manage that risk, he says.
Crude availabilityChanges to the availability of crude, occurring more rapidly than we expected, are limiting Caltex’s options.
All Australian refineries are designed to handle light sweet crudes that are low in sulfur, yet these are becoming scarcer around the world.
“We have high dependence on a narrow basket of crudes and there may not be enough of them, ultimately, for us to buy,” explained Alex. “The fact that these production fields are declining and we’re not the only potential buyers for these can be seen as a major strategic threat.”
The new Asian refineries will be able to process the heavy sour crudes high in sulfur from the Middle East and other places. Our refineries have very limited ability to process these crudes. A major question therefore is where will we get our crudes from, and at what price? Caltex is already paying premiums for light sweet crudes.
Increasing costsCaltex is having to deal with increases in its fixed costs, partly a result of the company’s strong recent growth.
Injuries and accidentsIssues around safety are a key potential risk to the company and its future profitability. They include the personal injury type incidents and major accidents or events that businesses involved in refining and marketing and major oil and gas operations can face.
In a global measure of personal injuries – the lost time injury frequency rate – Caltex has a significantly higher rate than the average for the major petroleum companies. And though it’s been on an improving trend, the rate of improvement has plateaued, says Peter Wilkinson, Group Manager Operational Excellence and Risk.
“We’ve made progress in managing risks but there’s still a long way to go,” said Peter. “The lessons of the Texas City disaster in the uS, which killed 15 people and injured 170, and the devastating Buncefield terminal explosion and fire in the uK are graphic reminders of the hazards we face and the reason for the increased focus we’re placing on our safety culture, process safety management and our management systems.”
“Taken together with our newly developed risk management framework,” said Peter, “our 2007 Business Plan initiatives in these areas lays the foundations for improved safety and reliability.”
Across the board, operating costs have been increasing at a greater rate than inflation in recent years and this is not sustainable particularly given the more competitive environment ahead.
Clean fuels production has a requirement for more expensive and intense processing of crude to achieve higher quality standards. Other costs have surged in the face of booming demand for skilled tradespeople and rising prices of materials.
Slowing petrol sales growthPetrol sales growth in Australia is essentially flat and Caltex petrol sales growth has slowed with the maturing of the rollout of our retail arrangement with Woolworths.
The outlook for growth in diesel sales is better thanks to the expansion of the industrial and mining sector. When the drought breaks, agricultural demand for diesel will help drive diesel sales growth of about four per cent a year. Fortunately as Asian countries see their economies expand diesel is in strong demand, which is reflected in robust diesel margins. however, Caltex is facing stiff competition in the diesel market and will need to work hard to win its share of the increase in demand.
Terminal infrastructureCaltex’s seaboard facilities, through which all imported crude and fuel must come, are of great strategic importance. For Caltex to deliver secure and reliable supply through its 20 million interactions with customers a month, our infrastructure will play a more important role then ever, observes Mark.
“We’ve done a lot of work around our marketing terminals to make sure customers have secure and reliable supply,” he said, “but we still have a way to go.”
We are not well represented in some areas of the country where big growth opportunities exist, such as the Pilbara region.
Alternative fuels and climate changeMany of Caltex’s people and customers are concerned about climate change and sustainability. “Customers and our people are asking us about matters like climate change, alternative fuels and carbon trading because they’re deeply concerned about them,” explained Mark.
“They want to know our position on climate change and what role we and our industry can play to mitigate its effects. It’s part of our business and we must be able to communicate a comprehensive, clear position on it.”4
1 peter Wilkinson, group manager operational excellence and risk
2 alex strang, general manager supply and Corporate services
3 safety the massive explosion and fire that devastated the Buncefield fuel depot in the uK in 2005 reinforced community demand for companies to demonstrate the highest safety standards in design and operation of such sites – high priority areas in the 2007 Caltex business plan.
4 ComplianCe Caltex operates a comprehensive training and compliance program to ensure relevant employees are provided with the necessary knowledge to comply with the trade practices act which is one of the most significant laws affecting Caltex. the act ensures that a competitive environment exists to give consumers a choice in price, quality and service, outlaws conduct which is anti-competitive and carries significant penalties for companies that do not comply.
5 Capital steWarDship supporting growth in an expanding market, a new 15 million litre diesel storage tank was built in 2006 at Caltex’s gladstone fuels terminal in central Queensland. the tank (left) is part of Caltex’s national major terminal infrastructure expansion and upgrade program to meet increasing customer demand and the need for imports.
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On the culture side, an important initiative in 2007 is to incorporate into our operations an Incident and Injury Free (IIF) program. This involves moving safety from just being a priority to a living core value – part of our culture – so that caring for each other is part of “the way we do things” at Caltex, explains Brian. It will also give extra impetus to our existing Loss Prevention System.
On the process safety side, we are assessing the risks from relief valves and vents which could release harmful gases into the atmosphere, assessing the risks to people from occupying buildings close to process plants and moving them to further reduce the risks. Our safety infrastructure is being improved, such as upgrading the fire fighting equipment on the products wharf at Lytton Refinery. “We are also investing in improved management systems by implementing the Chevron developed Operational Excellence Management System,” said Brian.
What can be done?how is Caltex addressing these pressing issues?
“A key consideration is that there’s no reason for knee-jerk reactions,” said Group Manager Corporate Planning Mike McMenamin. “Armed with good market intelligence, people, organisational capability, systems and strategies, the company will respond to the challenges in a broad variety of ways. Indeed it already is.
“We’re moving decisively on all these matters. And where we don’t have all the answers yet we’re making it a priority to find solutions.”
Many immediate priorities to ensure the company stays strong are represented by the five main drivers to improve profitability in 2007: safety, reliability, cost efficiency, compliance and capital stewardship.
The longer term direction is being developed by Project TSR (Total Shareholder Return). To be completed in the second half of this year, TSR seeks to develop the company’s strategy for the next ten to 20 years, considering all risks and opportunities and charting the best course.
here’s a closer look at current initiatives to make Caltex the Australian oil refining and marketing company most admired for its people, partnership and performance well into the future:
Improve safety and reliabilityThe focus on safety and zero incidents will see significant additional investment, particularly in Refining and Marketing, to remove hazards, improve reliability, utilisation and hence profitability. “Major incidents are usually associated with culture problems, process safety issues and management system failures, explained General Manager Refining, Brian Waywell, “and we are investing in all three.”
Caltex is focusing on operational excellence, improving safety and reliability, ensuring we are able to process a wider variety of crudes, having the right product mix and quality, and operating smarter in our scheduling and production processes so we get better value for the money we invest back into the company.
Plans are underway to reduce unit costs so we become more efficient in our operations and in preparing to take on the challenge of the Asian export refineries.
Existing major initiatives in the current business plan like the Refining Performance Improvement Program (RPIP), Integrated Marketing Plan (IMP) and the Supply Chain Improvement Plan (SCIP) have helped to set direction and address some of the challenges already.
We have already spent $500 million on the Clean Fuels Project and hundreds of millions of dollars more on marketing investments such as rebranding, terminal upgrades and new tanks under the IMP over the past three years.
Boost profits through RPIPAlong with the IMP, this program is optimising the way we do business today, bringing efficiencies and cost savings. A major objective of RPIP is to increase production of the high value transport fuels petrol, diesel and jet.
Major and minor RPIP projects will make a difference. For example a team of 40 is managing, at Kurnell, projects that include a new 82 million litre crude tank, a new 18 million litre diesel tank, the processing of new crudes, the crude oil import sub berth upgrade and the diesel hydrotreater de-bottlenecking. At Lytton, there are such initiatives as octane enhancement projects and a new diesel hydrotreater unit. Jointly these initiatives are expected to reap net benefits of more than $150 million a year.
Smarten scheduling through SCIPThe Supply Chain Improvement Project is radically improving the way we schedule our crude refining and its effects will be felt for years to come. The launch of new crude scheduling technology and processes at Kurnell in August marked a major step in the project. It will be introduced at Lytton in March 2007.
The Operations Planning team at Kurnell is using new software and systems that allow them to view and analyse all the elements of the crude scheduling picture on one screen – a far cry from the old method of gathering information from a range of systems and putting the schedules together in spreadsheets.
A new data management technology and graphic display system lets schedulers come up with solutions to problems earlier and results in schedules that optimise production.4
1 refining performanCe improVement a new bitumen storage tank at the Kurnell refinery commissioned in 2006 has increased the site’s bitumen storage capacity by 50 per cent. it helps ensure continuity of supply when the plant is shut down for maintenance while also enabling the production of an additional grade of bitumen. Kurnell refinery environmental Co-ordinator pam meers and rpip major projects operations manager steve harrison were at the completion handover of the 2,700 tonne capacity tank.
2 ComplianCe Caltex invested $500 million in facilities to produce diesel with less sulfur and petrol with less benzene at both its refineries to meet 2006 australian government standards for cleaner fuels. refinery operator geoff turner checks a heater in lytton refinery’s new diesel hydrotreating unit.
3 reliaBility lytton refinery has just invested $22 million in replacing the key lifeline to the refinery, the three-kilometre-long 600mm pipeline that delivers crude oil from the crude receiving wharf on fisherman’s island to the refinery. alongside it is a new multipurpose pipeline that will allow the refinery to load out a variety of products at the wharf. marine operations and yield specialist mark Branks flushed the line during pre-commissioning operations.
4 mike mcmenamin, group manager strategy and planning
5 Brian Waywell, general manager refining
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Use our alliancesWorking closely with Chevron on crude sourcing and shipping can help us to source the crudes we need in future. Chevron, which owns half the shares of Caltex Australia, is the second largest uS oil company.
We can draw increasingly on Chevron’s expertise in refining, operations and the industry generally, says Mike.
Our relationship with Woolworths will continue to be an important part of our marketing strategy. Supermarkets have changed the retail fuel business and with Woolworths Caltex is delivering a compelling and competitive offer to customers.
Alliances with service partners ranging from IT to refining agreements with engineering design and maintenance partners will remain vital. The new convenience store logistics arrangement that is reducing costs and providing much more efficient deliveries of store goods to Caltex service stations is another example of an innovative business partnership.
Process heavier crudesThough it doesn’t have all the answers yet, Caltex is exploring options to solve the issues associated with scarcity of appropriate crudes, says Alex.
First it will find ways to process less sweet and slightly heavier crudes. Though Caltex wouldn’t be able to handle the heaviest sour
crudes without very large further investment, it can make some changes to refinery capabilities, which is where the people involved with TSR have already done a great deal of work, says Alex.
“We’re exploring options around what crudes are out there, what we’d need to do if we wanted to process them and how much it would cost,” said Alex. “The work isn’t finished but it’s encouraging. It looks like there’ll be solutions that will allow us to incidentally ‘heavy up’ and ‘sour up’ our crude processing capability which will significantly increase the range of crudes we are able to process.”
Blending lighter crudes is a potential part of the solution. Condensates (very light crudes produced with natural gas) are plentiful. If Caltex can mix these with heavier crudes it will help to minimise the plant changes required. “That also looks promising,” said Alex.
Complete infrastructure upgradesWhile Caltex must manage costs, it must also spend on vital infrastructure. That’s why we’re constructing new crude and diesel tanks at Kurnell, planning a new diesel hydrotreating unit and sulfur recovery plant at Lytton and have seen the river channel dredged at Lytton to give access to bigger ships.
Increasing shipping and port capabilities so we can handle larger cargoes of crude in
The company will continue to buy resellers in regional areas and grow and improve the reseller business. Initiatives implemented to raise retail returns, such as branding initiatives, new franchise agreements and the dry goods arrangements with Woolworths will have an impact over the next few years. There will be continued rationalisation in the retail network.
And we will soon launch the first of our new experimental convenience store formats: the “twenty first century” convenience stores with new layouts and specifically tailored offerings.
“All these initiatives will drive better returns from our retail business,” said Mark. “Meantime to ensure major customers are less likely to seek other suppliers, we must work doubly hard so that every day they’re delighted with their experience dealing with us.”
Giving good service can extend to discussing the pros and cons of direct fuel imports openly with big customers who have contemplated it.
“If it’s not your core business then the risks of importing outweigh the benefits,” said Mark. “To date only one of our customers has gone the import route.”
Suezmax tankers will allow the company to bring in supplies from as far afield as West Africa, improving economies of scale.
The investments we have made in our terminal infrastructure over the last few years in Newport, the company’s busiest terminal, and in Gladstone, Cairns and Darwin, are critical, says Mark.
“The job isn’t finished,” he said. “We must evaluate further investments in Mackay to complete the Queensland upgrade, ensure we have the right capacity in the NSW storage and pipeline infrastructure and find long term solutions for Adelaide, Perth and the Pilbara in Western Australia.”
More marketing improvementsMarketing has achieved much in many areas of business over the past three years, having refreshed the Integrated Marketing Plan (IMP) in 200� and completed such essential projects as the east coast rollout of Vortex 98.
The most significant Marketing challenge over the next business planning period is to implement the principles and practices of operational excellence so it becomes second nature to everyone, says Mark.
“That desire is embedded in our vision, values and strategic intents and organisational enablers for marketing,” he said. “And it’s embedded in the Caltex foundations of safety, reliability, cost efficiency, compliance and capital stewardship.”
Explain our position on climate change To understand better what people think about Caltex’s role in the community and how the business plan can address people’s concerns, Caltex is stepping up its focus on its public reputation, says Group Manager Corporate Affairs Richard Beattie.
“In 2007 we will develop a clear Caltex position on climate change,” Richard said. “Among other activities we will conduct a public reputation survey to help understand what the community thinks and expects of Caltex and then how we can better meet those aspirations. We’ll also more closely address sustainability issues and build the outcomes into the next years’ business plans.
“Included in work on improving sustainable operations will be the development of a more comprehensive understanding of the climate change issue, how we can best minimise greenhouse gas emissions and help our customers limit theirs.”
Not many in the broader community know it, but Caltex has done much preparatory work in one critical area of sustainability. As large potable (drinking) water users, for instance, both refineries will be using mostly recycled water as soon as it becomes available from the local suppliers.
Caltex has made great progress with the introduction of biofuels and last year met its sales volume undertakings to the Australian
Government with a big expansion of the availability of E10 unleaded petrol with 10 per cent ethanol and the introduction of New Generation Diesel with 2 per cent biodiesel.
“We’ve made a good start in biofuels and did what we said we would,” said Des. “Now over the next three years we need to roughly double our biofuels sales volumes each year to meet our 2010 sales target of 100 million litres of biofuels, or at a 10 per cent blend rate, one billion litres of blended products.”
Caltex – the small company that can punch above its weightIn the world of global oil, Caltex Australia is a small company. “Our smallness has enabled us to develop that can-do family spirit that has led us to successfully battle the arms of the major international oil companies in Australia – Mobil, Shell, BP – and win!” Des said.
“As the competitive landscape changes and we have to increasingly compete against large offshore refineries and importers in the region, we are already looking for new and innovative ways to gain further efficiency and punch above our weight. Based on our track record, our people are more than up to the challenge. Caltex’s success over the last four years has positioned us well to take on these new competitors and cement a good, long-term future.”
1 mark Burrowes, general manager marketing
2 richard Beattie, group manager Coporate affairs
3 a ChoiCe of fuels Caltex petrol customers have an increasing choice – unleaded, e10 unleaded (with 10 per cent ethanol), and the premium fuels Vortex and Vortex 98.
4 allianCes partnerships with companies like Woolworths are an important part of the Caltex strategy.
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towards zero incidents,” said Caltex Sydney General Manager Steve Ferguson. “Safety for the drivers, community, environment and customers were paramount in the specs for the prime mover and tanker.”
Vehicles previously had been built on an ad hoc basis, adds Caltex Sydney’s Operations Manager Greg Massingham, one of the key people involved. This resulted in some vehicles being delivered without important safeguards, like an emergency shutdown capability.
The new specs included no fewer than 1�8 mandatory items, including air bags – previously unknown in this kind of vehicle
greg massingham (left) and driver paul phillips with the new super safe tanker
– good ergonomic design for ease of entry and exit, comfort, driving, visibility and all equipment and features relating to safety.
Now when Caltex Sydney drivers hit the road they have at their disposal such advanced features as disc brakes with ABS, anti lock electronics, traction control, electronic braking – which can “read” the truck’s speed when cornering and apply brakes to avoid potentially dangerous situations – and rollback prevention.
Rollback is a renowned problem for truck drivers trying to move off from a standing start on hills, especially when there are cars behind them, says Greg. “The anti-rollback system in
our new vehicles takes away the stress for the drivers and makes hill starts safer.”
Driver comfort is also a factor in safety, so the prime movers are fitted with power windows, heated power mirrors and cruise control.
The new specs included no fewer than 168 mandatory items, including air bags – previously unknown in this kind of vehicle
Barriers at the side and rear prevent other smaller vehicles from “running under” the trucks in a collision, and upper and lower sensors can tell drivers if they’re too close to people or objects. “Service alert” systems can let them know when a globe or brake pads, for instance, need replacing – factors which can also help reduce the risks for drivers and others.
Tanker trailers are safer too. The tanks never have to be manually dipped any more thanks to an electronic tank level meter with gauges displaying fuel levels on the side of the barrels.
All new Caltex Petroleum Services trucks in future will have the same specifications.
Drivers weren’t ignored in the design process. “having input from the drivers was a benefit because it gave them ownership,” said Steve. “After all, they have to drive them.”
The men behind the wheel are equally delighted with the results. The braking system with disk brakes all round makes for smooth, even braking, according to driver Paul Phillips. The vehicle electronics alert them to any problems, even “seat belt tension,” while the “intelligent” automatic transmission makes for safe, easy driving, allowing drivers to pay more attention to the road than changing gears, Paul says.
The trucks and tankers are the newest equipment in Caltex’s battle to wage war on risk and achieve zero injuries and incidents.
In the past when the reseller group bought trucks, it didn’t usually ask dealers to deliver vehicles with common specifications. Local branches around the country had their own criteria with the result that vehicles often couldn’t be moved from one area to another.
The specifications for the new trucks were drawn up by a group involving a number of CPS operations managers and Paul Skeggs from Caltex Procurement. “This team identified the safety features we thought were necessary to help us on our journey
Life has become a lot safer for Caltex Petroleum Services (CPS) truck drivers around the nation with the delivery of the first three “super safe” tankers to reseller Caltex Sydney.
‘Super safe’ truckshit the road
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All good, says TonyLife for Tony Nash, franchisee at Caltex Banora Point in northern New South Wales, is a lot easier these days. Stock receipting which once took up to two hours at the site now takes two minutes. Tony has been able to cut six hours a week off his staff roster. Incoming goods are being stored with remarkable speed. By the time a delivery truck left his premises recently, for example, all the new stock had already been packed away.
“That’s not all. I’ve reduced my cigarette stocks by about $8,000 and drinks by about $5,000. It’s much easier to control stock when your store room is not constantly full.”
No pressureDeliveries used to be a constant problem for Wayne harris, Caltex franchisee at Woodcroft, South Australia. Because they’d arrive mostly unannounced at any time of day, he would put on extra day staff to receive goods and pack them away.
Not any more. Since Wayne and his employees embraced the CLP, they’ve been able to ensure deliveries arrive only in quieter periods.
“It’s really taken pressure off,” said Wayne. “With the old system our people entered each incoming product on the console. Now all they have to do is check the quantity on the invoice matches what they’ve received. The invoice has the same item sequence as the purchase order which saves us a huge amount of time in back office stock receipting and cost price maintenance.”
“The computer and scanning tools mean sites can manage suppliers better and provide accurate data for price variations, product substitutions, short dated or damaged products,” said Rod Beardmore.
“It’s brilliantly documented,” added Lyndle. “Everything is itemised and simple.”
Deliveries when you want themInstead of having suppliers arriving with deliveries when it suits them, Caltex has agreed a routing arrangement with its logistics provider. This stipulates a delivery time for each site. There’s an agreed window of an hour on either side in which the truck must arrive.
Roll cagesGreater safety and convenience are resulting from having deliveries arrive on roll cages. “I’ve been in sites where you’re tripping over pallets to get to the ATM,” said Rod. “handling benefits will see a big improvement in shrinkage and waste.”
The news about the CLP is spreading and Caltex aims to offer the opportunity to all franchisees this year.
A key message is that by taking activities out of day-to-day operations that are non value adding and being more efficient, stores can free up time for their teams to deliver great customer service, drive operational excellence and grow sales.
“We’ve learned from experience in 200� that the readiness of retail partners is critical to a successful roll out,” said Rod.
To simplify the process, the CLP team has developed a range of procedures and training materials. Franchisees should contact their business managers as soon as possible to access this information, Rod suggests. More information is available on the franchisee page on the online business centre.
Dry goods are just the beginning. Caltex intends to move chilled and frozen products into the CLP in future, becoming a “one-stop shop” for retail sites.
Meanwhile Lyndle Rowe urges colleagues across the country to embrace the CLP. “The more franchisees that get involved the better discounts Caltex can get for all of us!” she said.
Over the 2005 Christmas period, Wayne harris held more than $100,000 in stock at his Star Mart at Woodcroft, 20 kilometres south of Adelaide. During the same period in 200� it had dropped to $70,000.
“I’ve experienced a �0 per cent reduction in the amount of stock I’m carrying at any time,” said Wayne. “The money that would otherwise be tied up is now sitting in my bank account. I’m also finding it easier to do back
“This is widely recognised as being a world class distribution system, developed specifically to suit Caltex’s operating environment,” explained Retail Operations Manager John Dulgaro. “The operational benefits are significant.”
Saving moneyThe program – already in operation in all �5 Calstores and around 80 franchise sites – can immediately reduce the amount of capital used in a retail business because of its “just in time” inventory system, according to the CLP Manager Rod Beardmore.
“Just in time” means just that. It allows goods to be delivered in smaller, more frequent batches, replacing items sold during each trading day.
Caltex has a distribution centre in every major capital city.
Buying power boostThe CLP can create greater buying power for Caltex by consolidating individual store orders into bulk orders, giving us the potential to negotiate bulk discounts with suppliers.
Access to these discounts has already saved money for WA franchisee Lyndle Rowe, whose site at Busselton two hours south of Perth is using the CLP. “I’m seeing the benefits in my accounts every week and I’m saving on freight bills,” Lyndle said.
Saving timeThe program’s inventory management system allows franchisees to streamline operations and cut labour costs by generating daily orders electronically. These can be automatically turned into stock receipts, which match the exact item sequence of the invoice that stores receive with their goods.
ClPRetailers who want to maximise sales and margins must have an efficient and reliable supply chain. That’s why the new Centralised Logistics Program is giving Caltex franchisees reasons to smile.
is on the money
office reconciliations. I don’t run out of goods for my customers any more and don’t need extra day staff to handle multiple deliveries.”
Wayne attributes this happy tale entirely to the Centralised Logistics Program (CLP), which is revolutionising the way dry goods are delivered and handled at Caltex convenience stores. Implemented last year, the program is saving franchisees money, time and hassle in their daily operations. aBoVe: Brian Joukhdar, right, the first franchisee to sign up for Clp, discusses the benefits of
roll cages with rod Beardmore and John Dulgaro at Caltex moorebank in southwestern sydneyBeloW: supplies in rolled cages are moved from the distribution centre at huntingwood, new south Wales, ready for “just in time” distribution to sites
12 CALTEx STAR / FEBRuARY – MARCh 07 CALTEx STAR / FEBRuARY – MARCh 07 1�
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The Star is a bimonthly magazine written and produced by Businesswriters & Design for Caltex employees, franchisees and resellers. Story ideas, letters, photographs and other contributions are welcome. For more information or for extra copies of the magazine, please email [email protected] or contact The Star, c/o Caltex Corporate Affairs, Level 24, 2 Market Street, Sydney 2000. Tel: (02) 9250 5000 Fax: (02) 9250 5��4. Published by Caltex Australia Petroleum Pty Ltd ABN 17 000 0�2 128.
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fuelling Change Chooses Charities Medical research, water conservation, animal protection and family welfare are among the causes Caltex people have chosen to support under Fuelling Change, the company’s new workplace giving program.
Employees can now donate to the charity of their choice by opting to have a monthly donation to one of six organisations automatically deducted from their pre-tax gross pay. The deduction will be matched by the company.
Workplace giving is widely acknowledged as a great way to support charities as it involves less administrative hassle for the donor and less cost and more predictability for the charity.
“If just �0 per cent of us make a pre-tax donation of $5 a week (an actual employee cost of only $2-$�) with company matching, we have the potential to donate more than $218,000 to our partner charities each year,” Managing Director and CEO Des King said.
Employees were surveyed to find out which areas they wanted to support and relevant charities were invited to give presentations to a committee of employees which selected the final six. They are the Cancer Council, the National heart Foundation, Oz GREEN (a water conservation organisation), the RSPCA, the Starlight Children’s Foundation and The Smith Family.
More information is available on the company intranet and in a brochure which will be distributed to employees.
Some employees have already signed up for the program.
To donate, employees should visit the Corporate Affairs site on the company intranet and follow the links under Caltex Employee Charity Donation Scheme.
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serViCe stations getting easier to finDAround 1,800 Caltex sites will soon appear on motorists’ in-car Global Positioning Systems (GPS) thanks to a new deal with Telstra’s Sensis company.
From May this year all new GPS models, which are provided with data via satellite by Sensis, (technology permitting) will include specific information for each site such as fuels available, ATM availability, StarCard facilities, opening hours and details of additional site offerings like rest site, carwash and workshop.
The outlets appearing on the high tech map will include Calstores as well as franchised, equity reseller and Caltex Woolworths sites.
“There’s a lot of benefit in this, especially in the simplicity of the new portable system which incorporates a button with a bowser icon on it,” explained Operations Market Analyst Sashi Fernando. “Drivers can easily locate their nearest Caltex, Ampol, or Caltex Woolworths service station. Where technology permits the delta logo will also appear on the system.”
Most car manufacturers are now making GPS standard in new models. This provides a good opportunity for us to raise awareness of the brand and direct customers to their nearest Caltex site, Sashi adds.
Championing a good cause. the Caltex leadership team endorses fuelling Change – the winning name for the employee charity donation scheme. from left: richard Beattie, group manager Corporate affairs, peter Wilkinson, group manager operational excellence and risk, simon Willshire, group manager human resources, Des King, managing Director and Ceo, simon hepworth, Chief financial officer, helen Conway, Company secretary and general Counsel, mark Burrowes, general manager marketing, alex strang, general manager supply and Corporate services, mike mcmenamin, group manager strategy and planning and Brian Waywell, general manager refining
opera on the beach – thirty thousand sydney residents spent australia Day on Cronulla beach listening to rousing opera and ensemble numbers carried on a cool sea breeze. as part of the Kurnell refinery’s partnership with the local community, Caltex has sponsored the sutherland shire’s unusual but popular celebrations for ten years since its inception
the new Camry in e10 unleaded livery
Biofuels Car hits the roaDIt’s been turning heads up and down the east coast and doing a great job promoting Caltex’s ethanol-blended fuel E10 unleaded.
The Camry provided by Toyota to be used as a promotional tool for Caltex’s biofuels has appeared at launches in Brisbane and Sydney and on highways between the cities.
“When we developed our new biofuels strategy we realised we needed to market our products at launches attended by politicians and the media,” explained National Fuels Marketing Manager Michael Ridley-Smith. “We asked Toyota to provide a Camry with stickers prominently promoting E10. They were happy to oblige.”
Michael has driven the car himself, as have Caltex business managers.
It obviously runs – extremely well – on E10 unleaded.
14 CALTEx STAR / FEBRuARY – MARCh 07 CALTEx STAR / FEBRuARY – MARCh 07 15
