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Petroleum company Caltex taps TSC to host e-payments system

Chicago  June 28, 2001  Petroleum refiner and service station operator Caltex is part of a major e-procurement integration project, according to an announcement this week from TSC.

TSC began working with Singapore-based Caltex about two years ago when the $20 billion petroleum company, a joint venture between soon-to-be-merged Texaco and Chevron, selected the solution provider to assist in upgrading its Ariba system, move it to a TSC-managed environment and integrate the procurement system with Caltex's regional SAP centers in Singapore and Cape Town, South Africa.

Caltex decided last year to develop the e-payments system to augment the e-procurement system as a way to overcome complex currency and tax issues that the company faced doing business with more than 8,000 suppliers in 60 countries across Asia and Africa, according to Mike Mahon, general manager for procurement at Caltex. "We needed a way of making the international sourcing easier and to overcome those problems," Mahon said.

The petroleum company developed the e-payments system in conjunction with JP Morgan Chase and initially looked for a provider to host the system in Singapore. However, Caltex found that the local providers could not compete on price with those in the United States. Ultimately the company opted to use TSC's Extended Support Services group to help integrate the system into the e-procurement platform and continue hosting the system.

"We had some early experience with TSC," Mahon said. "Once we made the decision to put the payments system in the United States, it was really no decision at all to put it with TSC." TSC will provide support services for the system, including around-the-clock tech support.

Caltex has just finished user-acceptance testing and is due to begin implementing the e-payments system in July with a pilot in the Philippines that will include six suppliers. The company plans to add a new country in each of the subsequent four weeks, moving into Hong Kong, Malaysia, Thailand and Singapore, also encompassing six suppliers in each country. After an initial pilot period of up to two months, the company plans to open it the system to all its 8,000-plus suppliers. "We hope to get the vast majority of them on the system within a year," Mahon says.

Caltex, its affiliates and joint venture partners are involved in the refining, distribution and commercial and retail marketing of fuels, lubrication oils, motor oils, LPG and gas products. It is also involved in shipping, storage, supply and trading operations. Caltex has interests in 11 refineries and 7,800 retail outlets, and it operates about 700 Star Mart outlets located throughout the Asia Pacific region and Africa. The company's area of operations includes the Middle East, New Zealand and Australia.

Joseph Brucia, vice president of e-procurement at TSC, singled out Caltex as being among the e-procurement pioneers within the oil industry. "Caltex is way ahead of the curve," Brucia said. "They have gone out and developed a payments system that is second to none."

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