Best Practices: Taking Business Process Automation by the Horns

When propane company Blue Rhino says it's serious about automating inventory procurement and ordering processes, that's not just a lot of hot air

Blue Rhino, a Winston-Salem, N.C.-based division of Ferrellgas, is a top national provider of branded propane cylinder exchange and propane-fueled products to consumers. The company distributes its cylinders to more than 27,000 retail locations in 48 states plus Puerto Rico through a national network of 52 independent and affiliated distributors.

Founded in 1994 at a time when tank exchange represented a small percentage of the consumer propane market, Blue Rhino has experienced significant growth as it built a nationwide distribution network, established key retail partnerships and rode the wave of increasing gas grill sales and the rise of year-round barbecuing. However, even as the company expanded, it retained its largely manual processes for interacting with its distributors and tracking millions of 20-pound propane cylinders.

"The movement of full cylinders from our production facilities to the distribution points, and then the movement of the empty cylinders back to the production facilities, was handled mostly on paper," explains Tamria Zertuche, senior director of information systems at Blue Rhino. That left management with little visibility into the disposition of a large number of the company's assets at any given moment. In addition, the paper-based process was slowing down Blue Rhino's accounting department, which took days to close out the books at the end of each month.

Taking a BPM Approach

With the company continuing to grow at a rapid pace, Blue Rhino realized that it needed to automate its processes in order to maintain and improve its inventory controls, provide management with visibility into critical information about the business and support the company's steady expansion. Looking for a business process management (BPM) solution, Blue Rhino conducted a competitive review of BPM offerings based on a set of requirements that included the capability to quickly incorporate new Department of Transportation documentation into the workflow as government reporting mandates changed, and the ability to integrate with the company's existing infrastructure, particularly Microsoft SQL Server, which is the company's main database environment.

Eventually the company invited three solution providers to a "bake-off" that involved installing the solutions on Blue Rhino's servers and getting an automated form up and running as a demo. The winner turned out to be Columbia, Md.-based Metastorm, which offers a BPM solution called e-Work. "Metastorm sent in their team, they got here about 9:30 in the morning, and we were in a demo at 1 o'clock, looking at a finished product," Zertuche says. "At that point in time the other teams hadn't even figured out which discs they were supposed to use."

Zertuche adds that Blue Rhino's solution selection team also was impressed with Metastorm's help desk support and the solution provider's corporate culture, which jibed well with that of Blue Rhino. "They were all about people being their greatest resource, and that was important because we wanted the product to be with us for a long time," Zertuche says.

Running the Pilot

Once the selection had been made and the e-Work solution was installed at Blue Rhino, Zertuche and her team set about running a pilot project involving five distributor areas and one production center. For the month-long pilot, Blue Rhino asked the distributors to continue using the previous paper-based process but also to incorporate an online reporting process into their workflow as well. The distributors would file the normal paperwork regarding cylinders moving to and from Blue Rhino's production facility, but they would also report on the movement of cylinders back to Blue Rhino through an online distributor portal.

At the end of the month, the company compared the process for reconciling the inventory using the database created by the distributors' online input with the manual process of reconciling all the paperwork that the distributors had filed over the past month. Not surprisingly, the automated process won hands-down. "We were done in about five minutes," says Zertuche in describing the impact of the automated process, "while the guy that actually does the reconciliation on paper was still adding up all the paperwork. We basically went from a three-day process to just running a report at the end of the month."

With the pilot a success, Blue Rhino rolled the system out to the rest of its distributor network. The company now has an automated ordering process that allows the distributors to work through the Web-based portal to order cylinders. The workflow allows Blue Rhino to set spending limits for the distributors and provide approval codes authorizing orders. When an order is placed through the portal, the system generates a notice to the receiving area for the cylinders, which the receiving area can then use to approve the shipment or reject it upon arrival if the shipment's contents differ from what's in the paperwork that the system automatically generates. The portal also allows the parties to generate the necessary bill of lading and, importantly, Department of Transportation documentation to accompany shipments of the cylinders back and forth — a key feature since it allows Blue Rhino to quickly update the necessary forms as the government introduces new documents or requirements.

Increasing Integration

The portal provides the distributors with a calendar showing incoming and outgoing loads of cylinders for varying timeframes (the month, the week, a given day), essentially providing them with a tool kit for running their business with Blue Rhino. On Blue Rhino's end, the constantly updated information on where cylinders are in the pipeline has given top management visibility into the state of the company's assets at any given moment. This has afforded them greater control over inventory, as they now have the ability to order and transfer inventory between the distributors as necessary to meet ebbs and flows in demand, according to Zertuche.

With the inventory and cylinder procurement processes behind them, Zertuche and her team have gone on to automate other processes at the company, including the IT change control management process, an internal process that allows Blue Rhino employees to request changes to internal systems. The main benefit of this process has been to help the company satisfy Section 404 of the Sarbanes-Oxley Act, which requires that all internal controls with a direct effect on financial reporting be documented. This process also helps to segregate duties of employees. Elsewhere, the company's Customer Care department now has automated processes for ordering, replacing and shipping parts, as well as handling warranties, among other things. This process links up with the company's inventory system to track inventory numbers.

But Zertuche says that one of the greatest benefits the solution has brought to the company has been the greater degree of integration that the automated processes have afforded between Blue Rhino's dispersed facilities. "The system, being so visible and so easy to use, allowed production facilities to produce for other areas that they hadn't produced for before," she says. "So when there are areas affected by things like the hurricanes that we've experienced, and one production facility is not be able to service those distribution areas in total, it's much easier to automatically involve other production facilities to serve those areas. That's a huge win right upfront."