THE CASE STUDY OF SASOL OIL (LUBRICANTS)

Sasol Oil's Lubricants division is a key role player in the South African economy. Consisting of only 60 personnel, headed up by the Sales and Marketing team, supported by functions such as Technical, Financial and Warehousing.

The ever-increasing persistence from a major customer to comply with their customers service levels, pressurised Sasol Oil (Lubricants) management to pursue the implementation of the customers required supplier based quality management system.

In January 1999, a project was launched for the development and implementation of a quality management system, in conformance to the customer's standards. A project team, under the guidance of a management consultant was appointed to oversee the development, integration and implementation of the quality system.

The completion date of the project was set for June 2000, but due to additional customer requirements that had to be met and in-house restructuring, the completion date was re-scheduled to September 2001. In October 2001, Sasol Oil (Lubricants) was accredited with the prestigious award i.e. Ford Q1. Simulatenously in November 2001, the division was re-certified and upgraded to be in compliance with the new version ISO 9001:2000 quality management standard.

The main objective of Sasol Oil (Lubricants) is to satisfy the customers' product and service needs by delivering quality products on time and to provide superior service support with a view to becoming the preferred supplier for the industrial and commercial markets.

Sasol Oil (Lubricants) was always committed to:

Providing products that conform to international and national standards.

Providing products and services that conform or exceed customer's specifications - first time, every time.

Insisting on quality products and services from suppliers and supporting functions.

What did Sasol Oil (Lubricants) do differently?

Surprisingly not much except to define their strategic position in the long term and to adopt an attitude of improving their business in order to obtain competitive advantage by obtaining a strategic niche in the market place.

In brief, what became institutionalised was:

The development of a strategic management system to embrace all levels of performance measurements i.e. the balanced scorecard.

The development of a continuous improvement process, which became central to the companies improvement efforts by actively involving personnel on all cross-functional levels.

A customer interface system, in the form of a customer review process, to determine customer satisfaction and dissatisfaction results on an annual basis. These results were drawn into the continuous improvement process, whereby the teams would analyse each result and come up with the best plan of action to exceed customer requirements. The actions taken would then be measured; performance trends compiled and data reviewed by improvement teams.

A formalised meeting structure on two levels. One on management level and the other on team level, which ensured involvement, participation and performance review by management and staff respectively. The team members were empowered to improve processes within their own defined functionality.

Cross-functionality evolved as being a definite key to the success of all initiatives undertaken, including the sharing of information [lessons learned] within and amongst teams.

A practical, aligned and fully functional documentation system in conformance to quality standards and key business perspectives.

Sasol Oil (Lubricants) has in conjunction with its customers identified key business indicators, which have a major impact on service levels and resulting in long-term customer loyalty:

Five key indicators, derived from customer interaction and feedback, were identified as customer specific objectives for the years 1999/2000:

1. Delivery within 48 hours: Delivery of all orders within 48 hours more that 95% of the time.

2. Product Quality: Ensuring technical specification of products, including packaging and labeling, to meet the customers' required standards.

3. Accurate Invoicing: Accurate processing of invoices, including confirmation of agreed price levels, correct order capturing and proof of delivery.

4. Customer Contact: Enhancing contact with customers by ensuring that all relevant customer information is accurately recorded and related to the visit reports of Sales Advisors.

5. Incident Reporting: Ensuring that all customer-related problems are accurately captured, analysed, and appropriate action taken and feedback given within 48 hours from the time of receipt of the incident.

To manage and improve these objectives, Sasol Oil (Lubricants) had to develop a business operating system with a defined and central continuous improvement process that would guide the company on its journey of continuous business improvement and exceeding customer expectations.

For each of these key indicators an initial performance standard had been set. The performance objective for 1999/2000 was firstly to meet these performance standards on a continuous basis and then to gradually predict downstream performance. The objectives were also debriefed on an annual basis to ensure the road ahead and conformance to customer expectations.

Sasol Oil (Lubricants) also had to define a system to accommodate all measurements undertaken and to collate the performance measurement within one management system. This gave rise to the introduction of the Balanced Scorecard as a strategic management tool to encompass the measurements of key performance indicators. This resulted in an effective business tool through which management could review key performance indicators on a monthly basis and ensure strategic direction.

Sasol Oil (Lubricants) needed to know - in depth - how they are doing now, and what their prospects are for the future. They needed to define indicators that will give them a good idea of the organisation's fitness and performance. They needed to watch the indicators. If the indicators go south, the organisation needed to react.

A customer interface system "voice of the customer" had to be developed to encapsulate the results of customer interviews. Formal customer interviews (face-to-face discussions with the customer) were introduced to be undertaken on an annual basis to review customer satisfaction / dissatisfaction results - customer satisfaction index. The results of all customer reviews were analysed, objectives defined and incorporated within the continuous improvement system. Teams were set up to analyse, action plan and review each objective with the purpose of improving those aspects pertaining to the customer.

Performance improvements per key indicator: 1999/2000

1. A major contract in the pipeline on conformance to the customers supplier specifications.
2. Recognised by similar industries as conforming to their own specifications, which will culminate in business expansion and growth through other business sectors.
3. Niche market penetration and the potential increase in supply of products and services locally and internationally due to being recognised as an approved supplier within the customer's logistical supply chain, internationally.

The journey was not without stumbling blocks:

1. Resistance to change on certain levels.
2. Customer changing requirements and moving goal posts.
3. Lack of involvement from certain personnel.
4. Slow buy-in and initial understanding the strategic vision and "what's in it for us".
5. System and hardware problems.
6. Transfer and unavailability of key personnel.

Strengths

1. Top management involvement and commitment.
2. Frequent training, awareness sessions and sharing of information.
3. Involving the customer throughout the development stage.
4. Initiative and driving force of the project team.
5. Dedicated middle management.
6. Cross-functional teamwork.
7. Attitude, perseverance and hard work.

Eventually the endurance race and team effort paid off. The pursuance and hard work by company personnel ensured a well-designed and functional performance based delivery system, which ensured an effective and efficient proposition to customer value.

Conclusion

Sasol Oil (Lubricants) business is well segmented within the market place and the potential for growth has been identified and strategically aligned for the coming years.

The experience gained in the development of their new business systems has ensured a greater understanding of business processes and systems especially the impact that inefficient business practices has on their customers.

The customer value proposition and "what's in it for us" has become an inherent reality for the personnel of Sasol Oil (Lubricants).

(Published with permission from Sasol Limited (Corporate Communications) on 11 Jan 02.)

Further information: TQM Associates, 083-291-0223. E-mail: tqma@icon.co.za