group 8 mis chevron
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ChevronTexaco Corporation
12/4/2013
BY GROUP 8
ASWIN KUMAR V
AMIT PAI
RATNA PRASHANTH
VIPUL DEWANI
VINEETH MENON
CHEVRON CORPORATION
INTRODUCTION: Chevron is one of the world's leading integrated energy companies and conducts
business worldwide. They are involved in virtually every facet of the energy industry. They explore,
produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and
lubricants; manufacture and sell petrochemical products; generate power and produce geothermal
energy; provide energy efficiency solutions; and develop the energy resources of the future, including
research for advanced bio fuels. The company’s history dates from 1879 where an oil discovery at
Pico Canyon, north of Los Angeles, led to the formation of the Pacific Coast Oil Co. That company
later became Standard Oil Co. of California and, subsequently, Chevron. The name Chevron came
when they acquired Gulf Oil Corporation in 1984, nearly doubling the worldwide proved crude oil
and natural gas reserves. Their merger with Gulf was then the largest in U.S. history.
Another major branch of the family tree is The Texas Fuel Company, formed in Beaumont, Texas, in
1901. It later became known as The Texas Company and, eventually, Texaco. In 2001 Chevron
merged with Texas Company and finally became ChevronTexaco. The acquisition of Unocal
Corporation in 2005 strengthened Chevron's position as an energy industry leader, increasing the
crude oil and natural gas assets around the world.
VISION: “At the heart of The Chevron Way is our vision ... to be the global energy company most
admired for its people, partnership and performance.”
The vision aims
To provide safely provide energy products vital to sustainable economic progress and human
development throughout the world;
To make people and an organization with superior capabilities and commitment;
are the partner of choice;
To earn the admiration of all the stakeholders — investors, customers, host governments, local
communities and the employees — not only for the goals we achieve but how we achieve them;
To deliver world-class performance.
BUSINESS AREAS: At Chevron, businesses work in concert to provide the energy that drives
human progress.
The core business areas are:
Exploration and production
Manufacturing, products and transportation
Chemical production
Mining
Energy research
Nanoscience(technology)
CHEVRONTEXACO’S MODERNIZED SUPPLY CHAIN
Two problems have plagued the industry: running out of gasoline when needed at each pump, and a
delivery that is aborted because a tank at the gas station is too full which is called “retain”.
The causes of the twin evils have to do with the supply chain: Gasoline flows in the supply
chain, starting with the upstream part of the chain which includes oil hunting, drilling, and extracting.
Then the oil is processed, and finally it goes to the downstream, customer–facing part of the supply
chain. The difficulty is to match the three parts of the chain.
Problem statement: The Company faces a direct planning problem where, there is lack of
coordination between the different aspects of the company. It then fails to recognize the aggregated
demand and lose millions.
Solution: To implement the IT support, the company is investing $15 million each year, in the
U.S. alone, in proprietary supply chain software that can capture data in real time. Each tank in each
gas station is equipped with an electronic monitor that conveys real-time information about the oil
level, through a cable, to the station’s IT-based management system, and then via a satellite, to
the main inventory system at the company’s main office. There, an advanced DSS- based planning
system processes the data to help refining, marketing, and logistics decisions. This DSS include also
information collected at trucking and airline companies. Using an enterprise resource planning (ERP)
and the business planning system, ChevronTexaco determines how much to refine, how much to
buy at spot markets, and when and how much to ship to each of its retail stations.
The system used demand forecasting to determine how much oil it would refine on a monthly basis,
with weekly and daily checks. This way production is matched to customer demand. It is necessary to
integrate the supply and demand information systems, and this is where the ERP software is useful.
Planners at various points across the supply chain (e.g., refineries, terminals, stations, transportation,
and production) have to share date constantly.
Recent corporate IT projects that support the ChevronTexaco supply chain and extend it to a global
reach are NetReady (which enables 150 e-business ini- tiatives), Global Information Link (GIL2,
which enables connectivity throughout the company), e-Guest (which enables sharing of information
with business partners), and the Human Resources Information System.
Results: The integrated system, which allows data to be shared across the company, has improved
decision making at every point in the customer-facing and processing parts of the supply chain. Better
decision making has increased the company’s profit by more than $300 million in 1999 and by more
than an additional $100 million in 2000. Managers attribute the increase to various company
initiatives, but mostly to the change in the supply chain.
Q1. How Did Chevron Use Emerging Information Technologies for Indirect Procurement?
With a total of $40 billion in revenues, San Francisco-based Chevron is currently the U.S. third largest
Petroleum Company (second after soon-to-be-merged Exxon and Mobil). Operating in roughly 100
countries the company of close to 40,000 employees reported a net income of $3.2 billion in 1997.
Chevron’s purchasing budget amounts to $9.9 billion per year (excluding raw materials, such as crude
oil). Two thirds of the budget is spent for services, including pumping and construction services and
oilrig leases, one third for materials and other supplies. Commodities such as valves, pipes, and
fittings account for the biggest shares in MRO purchases (Segev, Gebauer, Färber 1999).
In 1994, Chevron started a major effort to overhaul its corporate procurement function. In order to
improve the balance between centralized and decentralized supply chain management purchasing was
realigned by moving more than 400 buyers out to the operating companies which are dispersed
nationally as well as internationally. With this move, decentralized order placement was facilitated as
well as decentralized coordination of local contracts and alliances, local planning and forecasting.
Central purchasing was put in charge of more general functions such as alliance contracts,
identification and implementation of best practices, training and development as well as systems
implementation, support, and maintenance.
In the same context, Chevron also started to consolidate its supplier base, which included almost
60,000 suppliers in 1994. Three years later the number was reduced to 38,000. Two hundred of these
suppliers are considered alliance partners accounting for as much as 27% ($2.7 billion) of Chevron's
annual spend. Although the percentage of contracted buying has already more than tripled between
1994 and 1997, which allowed Chevron to realize savings of $400 million, the project is still far from
its medium-term goal of 60%. Especially in the service area, contract spending is still very low.
During the past years Chevron has been implementing several best purchasing practices
including:
Alliances and supplier management initiatives
Purchasing cards for low dollar transactions
Asset redeployment initiatives
Electronic commerce applications (EDI, autofax, Internet)
Small business program
Information technology has been identified as a key factor to help glue the different efforts together.
Since 1993, Chevron started to implement ERP systems from SAP and J.D.Edwards for accounting,
material and inventory management. Later, an Intranet was deployed to help MRO buyers keep track
of preferred suppliers, alliance information, purchasing best practices, and sourcing information.
However, when buying functions needed to be made accessible to the occasional user in addition to
the purchasing experts, both systems, SAP and J.D.Edwards turned out to be too difficult to handle.
User interfaces were too complex and the processes of finding materials and issuing purchase orders
were so cumbersome that users started to invent workarounds in order to make their lives easier.
Soon, it became clear that the targeted increase in expenditures under alliance contracts was not
achievable with the current ERP-based purchasing solution. In 1997, the project team decided to
implement an additional procurement frond-end specifically designed to help end users perform
purchasing activities and channel them to alliance suppliers. The system included the following
elements:
Central database with information about materials, services, vendors, and contracts
Customized electronic catalogs, fully priced and accessible throughout the corporation
Electronic forms and electronic commerce such as EDI and EFT to support the submission of
purchase orders, invoices, price updates, and evaluated receipt settlement, i.e., payment upon
receipt
The project promised immediate cost savings in two ways through reduced administrative overhead
and processing time and discounts from alliance buys compared to off-contract buys. Future savings
were expected from renewed contract negotiations, where Chevron would be able to leverage its
corporate purchasing power to fuller extent.
The electronic procurement solution had to meet several requirements:
Ease of use, especially for the occasional user
Integration with existing and projected enterprise resource planning systems
Compliance with Chevron’s individual purchasing needs, particularly regarding services and
complex items
In 1998, Chevron started to pilot a desktop purchasing system. While first aimed at handling
Chevron’s business with contracted suppliers, the system will eventually been large to cover all of the
company’s procurement. Plans are that during the first stages, 400-450 users will be given access to
the system, mainly buyers of the departments. The next stage will include all buyers (about 2,000
people), and eventually the system will reach all end users with purchasing authority. After
implementation throughout the U.S., international sites were also included.
The system allows employees to source multiple supplier catalogs; to fill in a requisition form and
have it routed through the approval process; and to issue a purchase order. Apart from information
about products, services, and contracts, the system also gives access to compliance data of suppliers
and other attributes.
Chevron chose a two-fold solution involving software and services from Ariba Technologies and
Harbinger (formerly Acquion), a provider of EDI and electronic catalog services. While Ariba’s
Operating Resources Management (ORM) system is used as a Web-based front end and user interface
for catalogue search and purchase order and requisition creation, Harbinger facilitates the interaction
with the suppliers. It manages catalogue content and takes care of the current customer base and
supplier ramp-up. The procurement system will be integrated tightly with Chevron’s two ERP
systems, SAP and J.D. Edwards.
Ariba’s ORM system was chosen in part for its intuitive interface that makes it easy to use for the
occasional non-professional buyer. The system is flexible enough to display a large number of
different items, including services and third party catalogs. The latter is important as Chevron plans to
integrate the new procurement solution with other applications such as its excess inventory
management system, FasTrack.
After the pilot phase, Chevron started to roll out system in early 1999. In the initial phase, three
operation companies were included: an upstream production company located in Bakersfield,
Houston-based Overseas Petroleum, and the IT department located in San Francisco. The initial group
of 30 users is scheduled to reach more than 200 by June of 1999 and 3,000 by the end of 1999 upon
full rollout. Additional supplier catalogs will be added as required by the individual operating
company; an estimated 20 suppliers per month. This will be done in cooperation with Harbinger,
which already has a significant portion of Chevron’s suppliers as customers.
Chevron estimates a total of $10-13 million in tangible savings per year, to be achieved through
simplified sourcing and procurement ($3 million), more effective catalog management ($0.5 million),
improved data accuracy, reconciliation, and reporting ($2 million), and increased alliance utilization
($5-6 million). The costs for the procurement and catalog front-end were estimated at $6-8 million.
Chevron essentially considered the project an “incremental investment on a huge investment,” i.e., an
add-on to the three-digit million dollar ERP implementations to achieve the expected benefits. It
chose two sole solution suppliers, mainly because the ERP vendors were unwilling and unable to
provide them with the required functionality.
In addition to the IT system itself, the new system also leads to a number of organizational and
cultural changes. The project team identified the following issues as particularly important:
Central ownership and control of catalog data and price updates
Maintenance of business rules for managing views of catalog data
Re-alignment of roles and responsibilities in the context of master data maintenance
Introduce accountability for using the new system including rewards for users
Regarding the use of innovative technologies in procurement, Chevron was an early mover.
Systems available at the time of the project design were limited in terms of scope and scale. After
reaping the "low-hanging fruit", support for the procurement of sophisticated technical equipment, for
complex service agreements, and for large-scale projects will become key in order to reach the initial
vision. So far, the vendors responded well to Chevron’s specific needs, e.g., by developing a module
to support service procurement. Additional functions still need to be implemented such as real-time
integration with backend systems.
Q2. How Chevron manages internal communication among employees for information
exchange by Collabra software?
Chevron Corp. is trying to meet its employees' needs by taking them into the Information Age. One of
the ways it is doing so is through a discussion database technology that gives staff a forum for
exchanging ideas and information. In November 1994, the company negotiated an agreement with
Collabra Software Inc. regarding its Share 1.0 product. This agreement was followed by an aggressive
pilot program, with 250 users, in the beginning of January 1995.
Goals: To facilitate information sharing and identify the best business practices while reducing travel
costs.
One person in Chevron's San Ramon facility monitored all the Collabra Sharetraffic that went
over the Microsoft Mail network.
The other traffic on the network was normal Mail traffic as well as applications, file transfer,
and SQL inquiries. Users in 5 states shared information on a variety of subjects.
Apart from a few shortcomings, such as the glaring absence of a spell checker in Version 1.0,
the company has been happy with the discussion database capabilities of Collabra.
As the novelty of electronic mail wears off in some companies, users are starting to demand the next
revolutionary step--information sharing. Chevron Corp. in San Francisco is trying to meet its
employees' needs by taking them into the information age. One of the ways it is doing so is through a
discussion database technology that gives staff a forum for exchanging ideas and information. Several
advantages along the way, the company hopes to reap many benefits, such
Reduced travel costs,
Logical order to group discussion and
Common forum for sharing best practices.
Through the use of mail, it became intuitive to share information and manage the information
environment that mail was giving to users. The company had already standardized on Microsoft
Corp.'s Office suite of products, and some of the more technologically savvy users were clamouring
for a discussion database. Chevron had pockets of Lotus Development Corp.'s Notes.
With Novell, Inc.'s NetWare as the LAN operating system of choice and the adoption of Office
making an upgrade to Exchange inevitable, it soon became clear that the company's solution lay
outside Notes. Besides, most users at Chevron did not need the application development capabilities
of Notes, so it seemed a waste to put Notes on every desktop that required basic collaborative
computing. In October, firm started evaluating Collabra Software, Inc.'s Share 1.0. In November,
firm negotiated an agreement with the company. This agreement was followed by an aggressive pilot
program, with 250 users, in the beginning of January. "The aggressive thing was to prove to the E-
mail group in San Ramon, Calif. that supports the Microsoft Mail network that we were not going to
adversely impact the Microsoft Mail users in Chevron.
The network used Cisco Systems, Inc. routers with T1 and switched 56K bit/sec.
telecommunications lines. As a result, one person in the San Ramon facility monitored all the
Collabra Share traffic that went over the Mail network. The other traffic on the network was normal
Mail traffic as well as applications, file transfer and SQL inquiries. Employee tested at full capacity
and replicated 20M-byte databases and put those on continuous replication to see the maximum traffic
that could generate. Apart from a few shortcomings, such as the glaring absence of a spell checker in
Version 1.0, there was overall satisfaction on this product that is because it is often hard for remote
employees to find the expertise they need on a particular subject locally. In the larger offices, it may
not be all that important. Despite the obvious benefit of discussion databases, managers were
concerned that they could be a distraction. But in the long term, if the databases reduced the mass
mailings of messages in the company, then they would be seen as a definite plus by managers. This
mind-set is keeping with analyst predictions about the popularity of discussion databases.
For example, Michael Bragen, a principal at Business Management Consulting in Lexington, Mass.,
said users should see some of the benefits of discussion database software this year. "Lotus has done a
good job of showing the importance, but the market has been hesitant in jumping with both feet," he
said. Companies such as Chevron may well spearhead the movement to adopt such technology. ON
SITE Chevron Corp. San Francisco Challenge: To give employees at diverse locations ways to share
ideas and knowledge.
Strategy: Collabra's Share groupware and Microsoft's Exchange running over high-speed networks.
Q3. How Chevron used Microsoft Sharepoint in 180 countries?
Chevron is standardising on Microsoft Sharepoint in the third phase of a project to overhaul its
IT infrastructure linking 56,000 employees in 180 countries.
Sharepoint allowed teams to set up content collaboration sites quickly and it is tightly integrated with
Office applications, which are used to create most of the documents. The energy company is spending
10% of its information management budget from 2007 to 2010 on its three-stage Global Information
Link (GIL) project. The project is expected to save the company about £20m a year in system
management costs through standardisation.
The last phase, GIL3, focused on collaboration and information sharing. With the firm's electronic
information growing by 60% a year, GIL3 is aimed at managing the terabytes of content being
created. As well as Microsoft Sharepoint, GIL3 was introduced as software from Schemalogic to
standardise the way files are labelled and make company information easier to find across the global
network.
The employees were now be able to name and tag their information consistently and accurately so it
can be found when it is needed. As a result, productivity has increased. The first and second phases of
the GIL project standardised desktops across the company and provided enhanced connectivity.
Q4. How Chevron deployed Avena portal for floating Nigerian gas site?
Chevron has selected Avena to provide and implement a critical-information web portal to
support its Agbami oil operation in Nigeria.
When completed, the Agbami floating production, located 70 miles offshore, will be the biggest of its
kind in the world, producing 250,000 barrels of oil per day. The Avena Net Portal is a web-enabled
system for the integration and collaborative use of all engineering information. Three-dimensional
models, schematics, documents and data from any application can be accessed and navigated in
context, with full intelligence, without needing the source application that originally created the data.
When operational, the system will be managed from the Chevron offices in Lekki, Nigeria. The
design and engineering work will be co-ordinated over a number of sites internally in Nigeria, with
specialist contractors internationally and with the Agbami system itself. Using the Avena Net Portal
platform, information will be continuously updated on the master hub and then synchronised with the
replicated data onboard the system. The data included the three-dimensional ship-facility model,
documents and other information, ensuring that reliable and accurate data is available online at any
time during operation.
Q5. How IT helped ChevronTexaco in its procurement?
At its many company locations around the world, ChevronTexaco regularly conducts business with
hundreds of international and local suppliers. The Procurement department is responsible for
negotiating corporate purchasing agreements and managing orders, invoices, and payments to
suppliers. These responsibilities involve tracking and approving thousands of purchase orders and
invoices. One measure of the process efficiency is the speed and accuracy with which the company
conducts these transactions – and ChevronTexaco saw room for improvement. Most transactions ran
smoothly, and the majority of invoices were paid accurately and quickly. The bulk of invoices were
received and processed as paper documents, but a small percentage of these invoices would go astray.
When this problem occurred, both ChevronTexaco employees and suppliers spent valuable time
manually recovering old documents and piecing together the history of transactions. Invoices received
through electronic methods also were subject to certain inefficiencies. Some suppliers sent invoices
through electronic data interchange (EDI), but routing these transactions was not a user-friendly
process. As a result, EDI transactions sometimes sat for a few days without action, slowing the
payment process TIBCO-enabled e-procurement System Streamlines Transactions To benefit both the
company and its suppliers, ChevronTexaco decided to implement an e-procurement system to
improve order placement and invoice handling procedures. The company wanted to ensure that bills
were paid promptly and accurately, and that internal approvals took place in a timely manner.
One of the biggest goals was to provide visibility into spending transactions to ensure that the
company lived up to its negotiated spending commitments with select suppliers. A secondary
objective was to drive down internal costs and raise worker productivity. To streamline transaction
processing,
ChevronTexaco decided to deploy a project that would enable data to pass in real time from the
company’s Aribae-procurement product to the SAP and J.D. Edwards ERP applications and plant
maintenance system. To integrate the Ariba product with these applications, the e-procurement
solution team selected the business integration solution of TIBCO, a leading enabler of real-time
business.
E-procurement transactions are now performed in a standardized, electronic format. Near-
instantaneous routing has eliminated time-consuming manual processes, and better visibility into
transactions has enabled ChevronTexaco to fulfil spending commitments with suppliers. Because
managers now can view transaction information as needed, some managers can forego participation in
the approval chain – and shorter approval chains speed payment processes. Since integrating e-
procurement and ERP applications using TIBCO, about 30 percent of the company’s invoices in
North America are approved in just one day and suppliers are paid more quickly, based on their
contract term. TIBCO integration project has streamlined the e-procurement processes and made them
more efficient.
Q6. How Oil giant Chevron dropped its passwords in favour of smartcards?
ChevronTexaco has embarked on a multimillion-pound project to improve security by
replacing passwords used to access company networks with smartcards and smart tokens.
The multinational oil company will complete the replacement for its 70,000 employees worldwide by
the year. The introduction of Schlumberger smartcards and RSA smart tokens, which was sanctioned
as a priority by ChevronTexaco's board of directors, will significantly improve the security of the
company's internal information and slash the cost of helpdesk support. The company typically has to
reset between 2,000 and 4,000 passwords a month. Since passwords are easy to crack. Using off-the-
shelf software, it was found it could crack passwords within hours for weak passwords or days for
more complex ones.
One of the challenges that faced ChevronTexaco was the need to develop a secure log-on system that
would be capable of working in remote parts of the world that could only be networked through low-
capacity satellite data links. Being a very challenging project it touches a lot of their infrastructure.
Chevron needs to make sure applications will work with it and that information and security policies
are in line.
The company worked with Schlumberger and RSA Security to develop a smartcard management
system that could provide new employees with network access, control the issue of digital signatures,
and control access to ChevronTexaco's applications.
IT staff also had to work with suppliers to re-write and modify applications to replace password
access with access through smartcards and smart tokens.
ChevronTexaco's own staff were issued with Schlumberger 32k Java smartcards fitted with a
proximity sensor to allow them to log on to desktop PCs equipped with a remote card reader.
The company further issued RSA secure tokens, which generate one-time pass codes for business
partners and staff who need to access its system through their individual computer equipment.
Q7. What were the IT implications during Chevron-Texaco merger?
The announced merger of oil giants Chevron Corp. and Texaco Inc. will create the world's fourth-
largest energy company. It also will mean the integration of several electronic-business initiatives
now under way at both companies, which together will boast annual revenue of more than $80 billion.
Headnote Analysts predict eventual consolidation of electronic-business operations merger of oil
giants Chevron Corp. and Texaco Inc. will create the world's fourth-largest energy company. It also
will mean the integration of several electronic-business initiatives now under way at both companies,
which together will boast annual revenue of more than $80 billion. The combined ChevronTexaco
Corp., to be headquartered in San Francisco, expects to cut costs by $1.2 billion per year by
combining operations.
On the IT front, Chevron and Texaco officials believe that one of the key benefits of the merger will
be a broader portfolio in advanced technologies, including e-commerce ventures. Texaco has worked
with consultants from New York-based PricewaterhouseCoopers to implement buy-side procurement
software from Ariba Inc., a project that will cut current procurement costs substantially.
San Francisco-based Chevron is also using software from Mountain View, Calif.-based Ariba to
develop PetroCosm Corp., an independent, online business-to-business marketplace for oil and gas
companies that it created with White Plains, NY-based Texaco. Now, however, analysts said the
Chevron/Texaco merger could raise questions among other industry players about Houston-based
PetroCosm's status as an independent, neutral marketplace. Other Ventures Chevron's other key online
marketplace venture is Concord, Calif.-based Retailers-- MarketExchange.com, an online exchange
for convenience store retailers and their suppliers that was spun off from Chevron earlier this month.
Earlier this year, Texaco created an internal $20 million venture fund to finance e-commerce
initiatives put forth by its various business units. Texaco has also implemented an extensive intranet
application, known as People Net, which functions as a huge, worldwide knowledge base for its far-
flung workers.
Q8. What were the KNOWLEDGE MANAGEMENT INITIATIVES taken by Chevron?
The programme was famous as "Cook with Gas"
Chevron wanted to explore, develop, adapt, and adopt knowledge management methods to leverage
its expertise throughout the enterprise to maintain a competitive position in the marketplace. The
improvements gained from identifying, sharing, and managing intellectual assets can impact
positively on drilling, office work, safety, and refineries. Improvements were generated by focusing
on process, culture, best practices, and technology, including Internet technology.
Chevron used knowledge management in drilling, refinery maintenance and safety management,
capital project management, and other areas. The electronic document management system impacts
on several different areas at Chevron.
Drilling
Chevron adopted an organizational learning system (OLS) that improved drilling performance by
sharing information globally. The system used a simple software tool to capture lessons from the first
wells in a new area, and then used that knowledge to drill the rest of the wells faster and cheaper.
Well costs had dropped by 12 to 20 percent, and cycle time had been reduced as much as 40 percent
in some cases (offshore drilling vessels can cost up to $250,000 a day). Oil & Gas Consultants
International developed the OLS for Amoco. Chevron found it through a best-practices survey.
Refineries
The company used knowledge management is to maintain six refineries. Sam Preckett, reliability-
focused maintenance-system manager, is developing a process to improve information and knowledge
sharing. Preckett and others realized that they were not effectively using the data and information
already stored in Chevron's enterprise information systems. Preckett has been developing an informal
best practices methodology for maintenance by "trying to learn how we do things."
Getting knowledge to users is only part of the system; another part captures the tacit knowledge and
experiences of workers. Chevron is trying to motivate workers to participate. Preckett said that at
Chevron creative thinking is promoted from the executive level, which "allows him to do interesting
things" to achieve efficiency gains through knowledge sharing.
Electronic Document Management
Another specific need under the knowledge management umbrella was addressed by the DocMan
system, initiated in December 1994 to improve the timeliness of document access, management, and
integration, and sharing of information among individual divisions to meet regulatory compliances. A
long-standing application, DocMan works for the Warren Petroleum Limited Partnership Mont
Belvieu complex in Texas (of which Chevron is a joint owner). To handle cultural resistance to
change, management emphasized the benefits of the DocMan system: faster access to documents,
elimination of wasted effort searching for documents, and assets protection. DocMan delivered a 95
percent return on investment over its 5-year project life. The investment payout period was 1.1 years
based on an annual savings of $480,000.
Capital Project Management.
Through knowledge management, Chevron implemented a new standard methodology for capital
project management. In one case, 60 companies shared data and practices, and so it was possible to
compare performance to determine which companies were best and why.
Improved management of knowledge was instrumental in reducing operating costs from $9.4 billion
to $7.4 billion from 1992 to 1998 and in reducing energy costs by $200 million a year. During the
1990s, efforts like this were essential in reducing costs, achieving productivity gains of over 50
percent (in barrels of output per employee), and improving employee safety performance more than
50 percent. Chevron now calls itself a learning organization. Some gains from knowledge
management at Chevron are qualitative: Employees' work is more interesting and challenging when it
involves finding and applying new knowledge. Jobs are potentially more fulfilling and more
personally rewarding.
References
Segev, Arie; Judith Gebauer; Frank Färber (1999). Impact of Emerging Technologies
onIndirect Procurement. Berkeley, Fisher Center for IT and Marketplace Transformation
(forthcoming).
Sokol, Phyllis K. (1995). From EDI to electronic commerce : a business initiative. New
York, McGraw-Hill. Sollish, Fred (1998). “An E-Commerce State of the Union.” Journal of
Internet-Purchasing 2(1).
Wilder, Clinton; Bruce Caldwell; Gregory Dalton (1998). Web Incentive. Informationweek.
Wilder, Clinton; Gregory Dalton; Jeff Sweat (1998). Changing the Rules. Informationweek.
Zenz, Gary (1994). Purchasing and the Management of Materials. New York, John Wiley and
Sons.
L. Velker, "Knowledge the Chevron Way," KMWorld, Vol. 8, No. 2, February 1,1999, pp. 20-
21; "The Means to an Edge: Knowledge Management: Key to Innovation," CIO, September
15,1999; M. Santosus, "ChevronTexaco's Soft Sell," In the Know at cio.com, March 2003.