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ChevronTexaco Corporation

12/4/2013

BY GROUP 8

ASWIN KUMAR V

AMIT PAI

RATNA PRASHANTH

VIPUL DEWANI

VINEETH MENON

CHEVRON CORPORATION

INTRODUCTION: Chevron is one of the world's leading integrated energy companies and conducts

business worldwide. They are involved in virtually every facet of the energy industry. They explore,

produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and

lubricants; manufacture and sell petrochemical products; generate power and produce geothermal

energy; provide energy efficiency solutions; and develop the energy resources of the future, including

research for advanced bio fuels. The company’s history dates from 1879 where an oil discovery at

Pico Canyon, north of Los Angeles, led to the formation of the Pacific Coast Oil Co. That company

later became Standard Oil Co. of California and, subsequently, Chevron. The name Chevron came

when they acquired Gulf Oil Corporation in 1984, nearly doubling the worldwide proved crude oil

and natural gas reserves. Their merger with Gulf was then the largest in U.S. history.

Another major branch of the family tree is The Texas Fuel Company, formed in Beaumont, Texas, in

1901. It later became known as The Texas Company and, eventually, Texaco. In 2001 Chevron

merged with Texas Company and finally became ChevronTexaco. The acquisition of Unocal

Corporation in 2005 strengthened Chevron's position as an energy industry leader, increasing the

crude oil and natural gas assets around the world.

VISION: “At the heart of The Chevron Way is our vision ... to be the global energy company most

admired for its people, partnership and performance.”

The vision aims

To provide safely provide energy products vital to sustainable economic progress and human

development throughout the world;

To make people and an organization with superior capabilities and commitment;

are the partner of choice;

To earn the admiration of all the stakeholders — investors, customers, host governments, local

communities and the employees — not only for the goals we achieve but how we achieve them;

To deliver world-class performance.

BUSINESS AREAS: At Chevron, businesses work in concert to provide the energy that drives

human progress.

The core business areas are:

Exploration and production

Manufacturing, products and transportation

Chemical production

Mining

Energy research

Nanoscience(technology)

CHEVRONTEXACO’S MODERNIZED SUPPLY CHAIN

Two problems have plagued the industry: running out of gasoline when needed at each pump, and a

delivery that is aborted because a tank at the gas station is too full which is called “retain”.

The causes of the twin evils have to do with the supply chain: Gasoline flows in the supply

chain, starting with the upstream part of the chain which includes oil hunting, drilling, and extracting.

Then the oil is processed, and finally it goes to the downstream, customer–facing part of the supply

chain. The difficulty is to match the three parts of the chain.

Problem statement: The Company faces a direct planning problem where, there is lack of

coordination between the different aspects of the company. It then fails to recognize the aggregated

demand and lose millions.

Solution: To implement the IT support, the company is investing $15 million each year, in the

U.S. alone, in proprietary supply chain software that can capture data in real time. Each tank in each

gas station is equipped with an electronic monitor that conveys real-time information about the oil

level, through a cable, to the station’s IT-based management system, and then via a satellite, to

the main inventory system at the company’s main office. There, an advanced DSS- based planning

system processes the data to help refining, marketing, and logistics decisions. This DSS include also

information collected at trucking and airline companies. Using an enterprise resource planning (ERP)

and the business planning system, ChevronTexaco determines how much to refine, how much to

buy at spot markets, and when and how much to ship to each of its retail stations.

The system used demand forecasting to determine how much oil it would refine on a monthly basis,

with weekly and daily checks. This way production is matched to customer demand. It is necessary to

integrate the supply and demand information systems, and this is where the ERP software is useful.

Planners at various points across the supply chain (e.g., refineries, terminals, stations, transportation,

and production) have to share date constantly.

Recent corporate IT projects that support the ChevronTexaco supply chain and extend it to a global

reach are NetReady (which enables 150 e-business ini- tiatives), Global Information Link (GIL2,

which enables connectivity throughout the company), e-Guest (which enables sharing of information

with business partners), and the Human Resources Information System.

Results: The integrated system, which allows data to be shared across the company, has improved

decision making at every point in the customer-facing and processing parts of the supply chain. Better

decision making has increased the company’s profit by more than $300 million in 1999 and by more

than an additional $100 million in 2000. Managers attribute the increase to various company

initiatives, but mostly to the change in the supply chain.

Q1. How Did Chevron Use Emerging Information Technologies for Indirect Procurement?

With a total of $40 billion in revenues, San Francisco-based Chevron is currently the U.S. third largest

Petroleum Company (second after soon-to-be-merged Exxon and Mobil). Operating in roughly 100

countries the company of close to 40,000 employees reported a net income of $3.2 billion in 1997.

Chevron’s purchasing budget amounts to $9.9 billion per year (excluding raw materials, such as crude

oil). Two thirds of the budget is spent for services, including pumping and construction services and

oilrig leases, one third for materials and other supplies. Commodities such as valves, pipes, and

fittings account for the biggest shares in MRO purchases (Segev, Gebauer, Färber 1999).

In 1994, Chevron started a major effort to overhaul its corporate procurement function. In order to

improve the balance between centralized and decentralized supply chain management purchasing was

realigned by moving more than 400 buyers out to the operating companies which are dispersed

nationally as well as internationally. With this move, decentralized order placement was facilitated as

well as decentralized coordination of local contracts and alliances, local planning and forecasting.

Central purchasing was put in charge of more general functions such as alliance contracts,

identification and implementation of best practices, training and development as well as systems

implementation, support, and maintenance.

In the same context, Chevron also started to consolidate its supplier base, which included almost

60,000 suppliers in 1994. Three years later the number was reduced to 38,000. Two hundred of these

suppliers are considered alliance partners accounting for as much as 27% ($2.7 billion) of Chevron's

annual spend. Although the percentage of contracted buying has already more than tripled between

1994 and 1997, which allowed Chevron to realize savings of $400 million, the project is still far from

its medium-term goal of 60%. Especially in the service area, contract spending is still very low.

During the past years Chevron has been implementing several best purchasing practices

including:

Alliances and supplier management initiatives

Purchasing cards for low dollar transactions

Asset redeployment initiatives

Electronic commerce applications (EDI, autofax, Internet)

Small business program

Information technology has been identified as a key factor to help glue the different efforts together.

Since 1993, Chevron started to implement ERP systems from SAP and J.D.Edwards for accounting,

material and inventory management. Later, an Intranet was deployed to help MRO buyers keep track

of preferred suppliers, alliance information, purchasing best practices, and sourcing information.

However, when buying functions needed to be made accessible to the occasional user in addition to

the purchasing experts, both systems, SAP and J.D.Edwards turned out to be too difficult to handle.

User interfaces were too complex and the processes of finding materials and issuing purchase orders

were so cumbersome that users started to invent workarounds in order to make their lives easier.

Soon, it became clear that the targeted increase in expenditures under alliance contracts was not

achievable with the current ERP-based purchasing solution. In 1997, the project team decided to

implement an additional procurement frond-end specifically designed to help end users perform

purchasing activities and channel them to alliance suppliers. The system included the following

elements:

Central database with information about materials, services, vendors, and contracts

Customized electronic catalogs, fully priced and accessible throughout the corporation

Electronic forms and electronic commerce such as EDI and EFT to support the submission of

purchase orders, invoices, price updates, and evaluated receipt settlement, i.e., payment upon

receipt

The project promised immediate cost savings in two ways through reduced administrative overhead

and processing time and discounts from alliance buys compared to off-contract buys. Future savings

were expected from renewed contract negotiations, where Chevron would be able to leverage its

corporate purchasing power to fuller extent.

The electronic procurement solution had to meet several requirements:

Ease of use, especially for the occasional user

Integration with existing and projected enterprise resource planning systems

Compliance with Chevron’s individual purchasing needs, particularly regarding services and

complex items

In 1998, Chevron started to pilot a desktop purchasing system. While first aimed at handling

Chevron’s business with contracted suppliers, the system will eventually been large to cover all of the

company’s procurement. Plans are that during the first stages, 400-450 users will be given access to

the system, mainly buyers of the departments. The next stage will include all buyers (about 2,000

people), and eventually the system will reach all end users with purchasing authority. After

implementation throughout the U.S., international sites were also included.

The system allows employees to source multiple supplier catalogs; to fill in a requisition form and

have it routed through the approval process; and to issue a purchase order. Apart from information

about products, services, and contracts, the system also gives access to compliance data of suppliers

and other attributes.

Chevron chose a two-fold solution involving software and services from Ariba Technologies and

Harbinger (formerly Acquion), a provider of EDI and electronic catalog services. While Ariba’s

Operating Resources Management (ORM) system is used as a Web-based front end and user interface

for catalogue search and purchase order and requisition creation, Harbinger facilitates the interaction

with the suppliers. It manages catalogue content and takes care of the current customer base and

supplier ramp-up. The procurement system will be integrated tightly with Chevron’s two ERP

systems, SAP and J.D. Edwards.

Ariba’s ORM system was chosen in part for its intuitive interface that makes it easy to use for the

occasional non-professional buyer. The system is flexible enough to display a large number of

different items, including services and third party catalogs. The latter is important as Chevron plans to

integrate the new procurement solution with other applications such as its excess inventory

management system, FasTrack.

After the pilot phase, Chevron started to roll out system in early 1999. In the initial phase, three

operation companies were included: an upstream production company located in Bakersfield,

Houston-based Overseas Petroleum, and the IT department located in San Francisco. The initial group

of 30 users is scheduled to reach more than 200 by June of 1999 and 3,000 by the end of 1999 upon

full rollout. Additional supplier catalogs will be added as required by the individual operating

company; an estimated 20 suppliers per month. This will be done in cooperation with Harbinger,

which already has a significant portion of Chevron’s suppliers as customers.

Chevron estimates a total of $10-13 million in tangible savings per year, to be achieved through

simplified sourcing and procurement ($3 million), more effective catalog management ($0.5 million),

improved data accuracy, reconciliation, and reporting ($2 million), and increased alliance utilization

($5-6 million). The costs for the procurement and catalog front-end were estimated at $6-8 million.

Chevron essentially considered the project an “incremental investment on a huge investment,” i.e., an

add-on to the three-digit million dollar ERP implementations to achieve the expected benefits. It

chose two sole solution suppliers, mainly because the ERP vendors were unwilling and unable to

provide them with the required functionality.

In addition to the IT system itself, the new system also leads to a number of organizational and

cultural changes. The project team identified the following issues as particularly important:

Central ownership and control of catalog data and price updates

Maintenance of business rules for managing views of catalog data

Re-alignment of roles and responsibilities in the context of master data maintenance

Introduce accountability for using the new system including rewards for users

Regarding the use of innovative technologies in procurement, Chevron was an early mover.

Systems available at the time of the project design were limited in terms of scope and scale. After

reaping the "low-hanging fruit", support for the procurement of sophisticated technical equipment, for

complex service agreements, and for large-scale projects will become key in order to reach the initial

vision. So far, the vendors responded well to Chevron’s specific needs, e.g., by developing a module

to support service procurement. Additional functions still need to be implemented such as real-time

integration with backend systems.

Q2. How Chevron manages internal communication among employees for information

exchange by Collabra software?

Chevron Corp. is trying to meet its employees' needs by taking them into the Information Age. One of

the ways it is doing so is through a discussion database technology that gives staff a forum for

exchanging ideas and information. In November 1994, the company negotiated an agreement with

Collabra Software Inc. regarding its Share 1.0 product. This agreement was followed by an aggressive

pilot program, with 250 users, in the beginning of January 1995.

Goals: To facilitate information sharing and identify the best business practices while reducing travel

costs.

One person in Chevron's San Ramon facility monitored all the Collabra Sharetraffic that went

over the Microsoft Mail network.

The other traffic on the network was normal Mail traffic as well as applications, file transfer,

and SQL inquiries. Users in 5 states shared information on a variety of subjects.

Apart from a few shortcomings, such as the glaring absence of a spell checker in Version 1.0,

the company has been happy with the discussion database capabilities of Collabra.

As the novelty of electronic mail wears off in some companies, users are starting to demand the next

revolutionary step--information sharing. Chevron Corp. in San Francisco is trying to meet its

employees' needs by taking them into the information age. One of the ways it is doing so is through a

discussion database technology that gives staff a forum for exchanging ideas and information. Several

advantages along the way, the company hopes to reap many benefits, such

Reduced travel costs,

Logical order to group discussion and

Common forum for sharing best practices.

Through the use of mail, it became intuitive to share information and manage the information

environment that mail was giving to users. The company had already standardized on Microsoft

Corp.'s Office suite of products, and some of the more technologically savvy users were clamouring

for a discussion database. Chevron had pockets of Lotus Development Corp.'s Notes.

With Novell, Inc.'s NetWare as the LAN operating system of choice and the adoption of Office

making an upgrade to Exchange inevitable, it soon became clear that the company's solution lay

outside Notes. Besides, most users at Chevron did not need the application development capabilities

of Notes, so it seemed a waste to put Notes on every desktop that required basic collaborative

computing. In October, firm started evaluating Collabra Software, Inc.'s Share 1.0. In November,

firm negotiated an agreement with the company. This agreement was followed by an aggressive pilot

program, with 250 users, in the beginning of January. "The aggressive thing was to prove to the E-

mail group in San Ramon, Calif. that supports the Microsoft Mail network that we were not going to

adversely impact the Microsoft Mail users in Chevron.

The network used Cisco Systems, Inc. routers with T1 and switched 56K bit/sec.

telecommunications lines. As a result, one person in the San Ramon facility monitored all the

Collabra Share traffic that went over the Mail network. The other traffic on the network was normal

Mail traffic as well as applications, file transfer and SQL inquiries. Employee tested at full capacity

and replicated 20M-byte databases and put those on continuous replication to see the maximum traffic

that could generate. Apart from a few shortcomings, such as the glaring absence of a spell checker in

Version 1.0, there was overall satisfaction on this product that is because it is often hard for remote

employees to find the expertise they need on a particular subject locally. In the larger offices, it may

not be all that important. Despite the obvious benefit of discussion databases, managers were

concerned that they could be a distraction. But in the long term, if the databases reduced the mass

mailings of messages in the company, then they would be seen as a definite plus by managers. This

mind-set is keeping with analyst predictions about the popularity of discussion databases.

For example, Michael Bragen, a principal at Business Management Consulting in Lexington, Mass.,

said users should see some of the benefits of discussion database software this year. "Lotus has done a

good job of showing the importance, but the market has been hesitant in jumping with both feet," he

said. Companies such as Chevron may well spearhead the movement to adopt such technology. ON

SITE Chevron Corp. San Francisco Challenge: To give employees at diverse locations ways to share

ideas and knowledge.

Strategy: Collabra's Share groupware and Microsoft's Exchange running over high-speed networks.

Q3. How Chevron used Microsoft Sharepoint in 180 countries?

Chevron is standardising on Microsoft Sharepoint in the third phase of a project to overhaul its

IT infrastructure linking 56,000 employees in 180 countries.

Sharepoint allowed teams to set up content collaboration sites quickly and it is tightly integrated with

Office applications, which are used to create most of the documents. The energy company is spending

10% of its information management budget from 2007 to 2010 on its three-stage Global Information

Link (GIL) project. The project is expected to save the company about £20m a year in system

management costs through standardisation.

The last phase, GIL3, focused on collaboration and information sharing. With the firm's electronic

information growing by 60% a year, GIL3 is aimed at managing the terabytes of content being

created. As well as Microsoft Sharepoint, GIL3 was introduced as software from Schemalogic to

standardise the way files are labelled and make company information easier to find across the global

network.

The employees were now be able to name and tag their information consistently and accurately so it

can be found when it is needed. As a result, productivity has increased. The first and second phases of

the GIL project standardised desktops across the company and provided enhanced connectivity.

Q4. How Chevron deployed Avena portal for floating Nigerian gas site?

Chevron has selected Avena to provide and implement a critical-information web portal to

support its Agbami oil operation in Nigeria.

When completed, the Agbami floating production, located 70 miles offshore, will be the biggest of its

kind in the world, producing 250,000 barrels of oil per day. The Avena Net Portal is a web-enabled

system for the integration and collaborative use of all engineering information. Three-dimensional

models, schematics, documents and data from any application can be accessed and navigated in

context, with full intelligence, without needing the source application that originally created the data.

When operational, the system will be managed from the Chevron offices in Lekki, Nigeria. The

design and engineering work will be co-ordinated over a number of sites internally in Nigeria, with

specialist contractors internationally and with the Agbami system itself. Using the Avena Net Portal

platform, information will be continuously updated on the master hub and then synchronised with the

replicated data onboard the system. The data included the three-dimensional ship-facility model,

documents and other information, ensuring that reliable and accurate data is available online at any

time during operation.

Q5. How IT helped ChevronTexaco in its procurement?

At its many company locations around the world, ChevronTexaco regularly conducts business with

hundreds of international and local suppliers. The Procurement department is responsible for

negotiating corporate purchasing agreements and managing orders, invoices, and payments to

suppliers. These responsibilities involve tracking and approving thousands of purchase orders and

invoices. One measure of the process efficiency is the speed and accuracy with which the company

conducts these transactions – and ChevronTexaco saw room for improvement. Most transactions ran

smoothly, and the majority of invoices were paid accurately and quickly. The bulk of invoices were

received and processed as paper documents, but a small percentage of these invoices would go astray.

When this problem occurred, both ChevronTexaco employees and suppliers spent valuable time

manually recovering old documents and piecing together the history of transactions. Invoices received

through electronic methods also were subject to certain inefficiencies. Some suppliers sent invoices

through electronic data interchange (EDI), but routing these transactions was not a user-friendly

process. As a result, EDI transactions sometimes sat for a few days without action, slowing the

payment process TIBCO-enabled e-procurement System Streamlines Transactions To benefit both the

company and its suppliers, ChevronTexaco decided to implement an e-procurement system to

improve order placement and invoice handling procedures. The company wanted to ensure that bills

were paid promptly and accurately, and that internal approvals took place in a timely manner.

One of the biggest goals was to provide visibility into spending transactions to ensure that the

company lived up to its negotiated spending commitments with select suppliers. A secondary

objective was to drive down internal costs and raise worker productivity. To streamline transaction

processing,

ChevronTexaco decided to deploy a project that would enable data to pass in real time from the

company’s Aribae-procurement product to the SAP and J.D. Edwards ERP applications and plant

maintenance system. To integrate the Ariba product with these applications, the e-procurement

solution team selected the business integration solution of TIBCO, a leading enabler of real-time

business.

E-procurement transactions are now performed in a standardized, electronic format. Near-

instantaneous routing has eliminated time-consuming manual processes, and better visibility into

transactions has enabled ChevronTexaco to fulfil spending commitments with suppliers. Because

managers now can view transaction information as needed, some managers can forego participation in

the approval chain – and shorter approval chains speed payment processes. Since integrating e-

procurement and ERP applications using TIBCO, about 30 percent of the company’s invoices in

North America are approved in just one day and suppliers are paid more quickly, based on their

contract term. TIBCO integration project has streamlined the e-procurement processes and made them

more efficient.

Q6. How Oil giant Chevron dropped its passwords in favour of smartcards?

ChevronTexaco has embarked on a multimillion-pound project to improve security by

replacing passwords used to access company networks with smartcards and smart tokens.

The multinational oil company will complete the replacement for its 70,000 employees worldwide by

the year. The introduction of Schlumberger smartcards and RSA smart tokens, which was sanctioned

as a priority by ChevronTexaco's board of directors, will significantly improve the security of the

company's internal information and slash the cost of helpdesk support. The company typically has to

reset between 2,000 and 4,000 passwords a month. Since passwords are easy to crack. Using off-the-

shelf software, it was found it could crack passwords within hours for weak passwords or days for

more complex ones.

One of the challenges that faced ChevronTexaco was the need to develop a secure log-on system that

would be capable of working in remote parts of the world that could only be networked through low-

capacity satellite data links. Being a very challenging project it touches a lot of their infrastructure.

Chevron needs to make sure applications will work with it and that information and security policies

are in line.

The company worked with Schlumberger and RSA Security to develop a smartcard management

system that could provide new employees with network access, control the issue of digital signatures,

and control access to ChevronTexaco's applications.

IT staff also had to work with suppliers to re-write and modify applications to replace password

access with access through smartcards and smart tokens.

ChevronTexaco's own staff were issued with Schlumberger 32k Java smartcards fitted with a

proximity sensor to allow them to log on to desktop PCs equipped with a remote card reader.

The company further issued RSA secure tokens, which generate one-time pass codes for business

partners and staff who need to access its system through their individual computer equipment.

Q7. What were the IT implications during Chevron-Texaco merger?

The announced merger of oil giants Chevron Corp. and Texaco Inc. will create the world's fourth-

largest energy company. It also will mean the integration of several electronic-business initiatives

now under way at both companies, which together will boast annual revenue of more than $80 billion.

Headnote Analysts predict eventual consolidation of electronic-business operations merger of oil

giants Chevron Corp. and Texaco Inc. will create the world's fourth-largest energy company. It also

will mean the integration of several electronic-business initiatives now under way at both companies,

which together will boast annual revenue of more than $80 billion. The combined ChevronTexaco

Corp., to be headquartered in San Francisco, expects to cut costs by $1.2 billion per year by

combining operations.

On the IT front, Chevron and Texaco officials believe that one of the key benefits of the merger will

be a broader portfolio in advanced technologies, including e-commerce ventures. Texaco has worked

with consultants from New York-based PricewaterhouseCoopers to implement buy-side procurement

software from Ariba Inc., a project that will cut current procurement costs substantially.

San Francisco-based Chevron is also using software from Mountain View, Calif.-based Ariba to

develop PetroCosm Corp., an independent, online business-to-business marketplace for oil and gas

companies that it created with White Plains, NY-based Texaco. Now, however, analysts said the

Chevron/Texaco merger could raise questions among other industry players about Houston-based

PetroCosm's status as an independent, neutral marketplace. Other Ventures Chevron's other key online

marketplace venture is Concord, Calif.-based Retailers-- MarketExchange.com, an online exchange

for convenience store retailers and their suppliers that was spun off from Chevron earlier this month.

Earlier this year, Texaco created an internal $20 million venture fund to finance e-commerce

initiatives put forth by its various business units. Texaco has also implemented an extensive intranet

application, known as People Net, which functions as a huge, worldwide knowledge base for its far-

flung workers.

Q8. What were the KNOWLEDGE MANAGEMENT INITIATIVES taken by Chevron?

The programme was famous as "Cook with Gas"

Chevron wanted to explore, develop, adapt, and adopt knowledge management methods to leverage

its expertise throughout the enterprise to maintain a competitive position in the marketplace. The

improvements gained from identifying, sharing, and managing intellectual assets can impact

positively on drilling, office work, safety, and refineries. Improvements were generated by focusing

on process, culture, best practices, and technology, including Internet technology.

Chevron used knowledge management in drilling, refinery maintenance and safety management,

capital project management, and other areas. The electronic document management system impacts

on several different areas at Chevron.

Drilling

Chevron adopted an organizational learning system (OLS) that improved drilling performance by

sharing information globally. The system used a simple software tool to capture lessons from the first

wells in a new area, and then used that knowledge to drill the rest of the wells faster and cheaper.

Well costs had dropped by 12 to 20 percent, and cycle time had been reduced as much as 40 percent

in some cases (offshore drilling vessels can cost up to $250,000 a day). Oil & Gas Consultants

International developed the OLS for Amoco. Chevron found it through a best-practices survey.

Refineries

The company used knowledge management is to maintain six refineries. Sam Preckett, reliability-

focused maintenance-system manager, is developing a process to improve information and knowledge

sharing. Preckett and others realized that they were not effectively using the data and information

already stored in Chevron's enterprise information systems. Preckett has been developing an informal

best practices methodology for maintenance by "trying to learn how we do things."

Getting knowledge to users is only part of the system; another part captures the tacit knowledge and

experiences of workers. Chevron is trying to motivate workers to participate. Preckett said that at

Chevron creative thinking is promoted from the executive level, which "allows him to do interesting

things" to achieve efficiency gains through knowledge sharing.

Electronic Document Management

Another specific need under the knowledge management umbrella was addressed by the DocMan

system, initiated in December 1994 to improve the timeliness of document access, management, and

integration, and sharing of information among individual divisions to meet regulatory compliances. A

long-standing application, DocMan works for the Warren Petroleum Limited Partnership Mont

Belvieu complex in Texas (of which Chevron is a joint owner). To handle cultural resistance to

change, management emphasized the benefits of the DocMan system: faster access to documents,

elimination of wasted effort searching for documents, and assets protection. DocMan delivered a 95

percent return on investment over its 5-year project life. The investment payout period was 1.1 years

based on an annual savings of $480,000.

Capital Project Management.

Through knowledge management, Chevron implemented a new standard methodology for capital

project management. In one case, 60 companies shared data and practices, and so it was possible to

compare performance to determine which companies were best and why.

Improved management of knowledge was instrumental in reducing operating costs from $9.4 billion

to $7.4 billion from 1992 to 1998 and in reducing energy costs by $200 million a year. During the

1990s, efforts like this were essential in reducing costs, achieving productivity gains of over 50

percent (in barrels of output per employee), and improving employee safety performance more than

50 percent. Chevron now calls itself a learning organization. Some gains from knowledge

management at Chevron are qualitative: Employees' work is more interesting and challenging when it

involves finding and applying new knowledge. Jobs are potentially more fulfilling and more

personally rewarding.

References

Segev, Arie; Judith Gebauer; Frank Färber (1999). Impact of Emerging Technologies

onIndirect Procurement. Berkeley, Fisher Center for IT and Marketplace Transformation

(forthcoming).

Sokol, Phyllis K. (1995). From EDI to electronic commerce : a business initiative. New

York, McGraw-Hill. Sollish, Fred (1998). “An E-Commerce State of the Union.” Journal of

Internet-Purchasing 2(1).

Wilder, Clinton; Bruce Caldwell; Gregory Dalton (1998). Web Incentive. Informationweek.

Wilder, Clinton; Gregory Dalton; Jeff Sweat (1998). Changing the Rules. Informationweek.

Zenz, Gary (1994). Purchasing and the Management of Materials. New York, John Wiley and

Sons.

L. Velker, "Knowledge the Chevron Way," KMWorld, Vol. 8, No. 2, February 1,1999, pp. 20-

21; "The Means to an Edge: Knowledge Management: Key to Innovation," CIO, September

15,1999; M. Santosus, "ChevronTexaco's Soft Sell," In the Know at cio.com, March 2003.