SCT Fygir To Lubricate Valvoline’s Supply Chain

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SCT Fygir To Lubricate Valvoline's Supply Chain
S. McVey - July 25, 2000

Event Summary

On the heels of its win at Equilon, SCT Corporation recently secured another high-profile contract in the petroleum products sector with Valvoline, the $1.1 billion lube oil division of Ashland Inc. Valvoline will use Fygir Supply Chain Planning suite as part of a larger initiative to support its e-business efforts. The contract has a total value of more than $4 million in license fees and services.

Acquired by SCT in 1998, Fygir supply chain suite provides the critical ingredient for SCT's integrated enterprise planning and execution suite, iProcess.sct. iProcess.sct binds together SCT's Adage Supply Chain Execution software, advanced planning features from Fygir, and ecFoods' Internet Trading Exchange. The combination neatly unites ERP, Supply Chain Management (SCM), and e-procurement.

The Fygir suite itself consists of modules for advanced planning, advanced scheduling, and demand planning. The Fygir products enable users to improve their supply chain management performance and make their manufacturing process more efficient by applying mathematical techniques to optimize the supply chain.

Market Impact

Lube oil represents just one component of Valvoline's growing business that now includes antifreeze, automotive chemicals, refrigerants, appearance products, and lube services franchising. As companies like Valvoline/Ashland expand their product mix, it becomes increasingly important to maintain visibility across multiple business units to avoid overlap and ensure best use of common resources.

In Valvoline's case, Fygir can help address inefficiencies that erode margins and pull down profits. For example, though Valvoline's operating income increased 40% to $74 million in 1999, compared to $53 million in 1998, increased expenses in Latin America and lower international revenues robbed the company of an even stronger bottom line. In 1998, large inventories of its R-12 automotive refrigerant product at the distributor and retail levels reduced demand and resulted in lower gross profit.

These problems are by no means unique to Valvoline but are common in the industry and represent a golden opportunity for supply chain management tools like Fygir. The petroleum sector is not among SCT's core industries but shares similar processes and problems with chemicals manufacturing and food & beverage, both of which are well-represented in SCT's client base. The king of petroleum supply chain management is indisputably Aspen Technology, which counts among its clients 17 of the top 20 refining and exploration companies. We expect Fygir to continue to do well within petroleum as it offers more "out-of-the-box" functionality than Aspen Technology.

User Recommendations

Fygir has found wide success in the process manufacturing industries and these users would do well to include this component of iProcess.sct in selections with other best-of-breed supply chain management software from Logility, and Aspen Technology.

For users considering a migration to Oracle based servers, SCT could help ease the transition. The company currently has an agreement with Oracle Corporation allowing it to sublicense a limited-use Oracle system, which enables a client to use Oracle with its software products at a significantly lower cost than a full-use Oracle license. The agreement expires in July 2003.

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