Hindustan Petroleum Corporation Ltd. (HPCL) is employing RFID to track a half million gas cylinders from the point of manufacture to delivery to consumers. HPCL, which has about 25 million domestic customers and 40 million liquid petroleum gas (LPG) cylinders currently in circulation, had signed a $2.2 million deal with IBM to design and deploy an RFID pilot to track 500,000 cylinders shipped from its manufacturing plant in Nashik.
The pilot, believed to be one of the largest rollouts of RFID in India, aims to automate the bottling and distribution process while also preventing the illegal diversion of gas cylinders to commercial operations. In India, gas cylinders are subsidized for domestic use in homes, says Nipun Mehrotra, VP and general manager of global technology services for IBM India.
“The government subsidizes the cylinders for domestic use, and this subsidy is worth as much as 300 rupees ($6.50) each,” Mehrotra says. “What HPCL discovered was that some gas cylinders were finding their way to commercial operations.” Gas cylinders intended for cooking use in domestic households were instead being diverted to restaurants, because domestic cylinders cost just 304 rupees ($6.56), compared with 700 rupees ($15.10) for commercial businesses.
“HPCL wanted to stop the diversions, which are a drain on government revenue,” Mehrotra says. “The Indian government has also issued an advisory to petroleum companies to tag and track gas cylinders to protect the subsidy. So there is encouragement from the government to use RFID, and HPCL is staying one step ahead of the game and ahead of its competitors.”
IBM is supplying passive low-frequency (LF) half-duplex (HDX) tags that will be attached to 500,000 cylinders originating at HPCL’s Nashik manufacturing plant, and RFID interrogators will be placed throughout the supply chain.
The system will be used to monitor the cylinders as they are transferred from the manufacturing plant to the bottling facility, then on to the distribution warehouse, where they are dispatched to customers. “It will track the movement of cylinders from end to end,” Mehrotra says, “and in this way, HPCL can be sure the cylinders are only used for domestic use. Once the cylinders are empty, they can also be traced back to the bottling plant.”
HPCL’s executive director of LPG, G.A Shirwaikar, says his company will evaluate the technology once the trial has run its course, but that if it proves successful, the firm plans to deploy the system across the entire supply chain in a phased rollout. “We expect to roll out this system to an additional 42 plants in India,” he says, “and extend it to dealers for an integrated supply chain. Given the magnitude of our operations, which continue to grow, it is imperative to bring greater efficiencies to our supply chain.”
Improving efficiency was the other great driver for adopting RFID, Shirwaikar says, given that 1 million new customers enroll with HPCL each year. “Managing an asset base of 40 million cylinders, in terms of utilization, maintenance and distribution to customers, is quite a challenge,” he states. “We expect RFID to address these issues by monitoring cylinder distribution and turnaround, automating the bottling process, linking cylinder delivery to customers and retrieval, and providing asset and inventory management.”
To achieve this goal, IBM has provided a layered architecture using its WebSphere, DB2, Lotus and Tivoli software. At the core of the system is WebSphere Premises Server software for extracting business intelligence from RFID. WebSphere Premises Server provides collaborative data sharing for trend analysis and traceability, automated data capture and verification for increased productivity, and increased data accuracy. HPCL intends to use the data to automate the bottling process and maintenance schedule, as well as provide supply and demand analysis.
HPCL will also utilize IBM’s WebSphere software to process RFID events and embed them into IBM’s DB2 relational database. WebSphere MQ Server will be used to transfer the RFID data to application-level components. And Java 2 EE components based on the WebSphere Application Server will be employed to create custom dashboards that will allow HPCL plant managers to gain business insights from sensor data. IBM’s software will also enable the use of handheld devices to perform such key functions as receiving, monitoring and management of RFID infrastructure.
According to Mehrotra, the pilot—which began in April and is expected to run for a year—is the largest of its kind in India and the petroleum industry. But the potential for growth is even larger, he notes, with some 40 million cylinders presently in domestic use.
“We are confident that it will be successful, and if we roll it out across the company, it will be the biggest such project in India—and one of the biggest in the world,” Mehrotra says. “And although we are focused on domestic cylinders, there is no reason why we could not tag cylinders for commercial and transport industries, which use a separate supply chain.”