Optimising Business Processes for Managing Service Stations

Author: Msimango, Thabo
Supervisor: Professor Pieter Steyn
Date: September 2006

The research aims to elucidate the key business strengths and weaknesses associated with the performance of fuel service stations in the network of TOTAL South Africa (Pty) Ltd. The effects of accountability and responsibilities of dealers, pertaining to operational procedures and guidelines, are evaluated in the light of these findings. Further objectives of the research are: to gain a basic understanding of the flow of information from service stations, particularly the convenience shops (La Boutiques); to evaluate the effects of the system on various role players; to recommend improvements; and to define an appropriate system solution that will, by means of cost and service improvements, derive bottom-line benefits for the dealers and, ultimately, TOTAL South Africa.

The business processes already implemented by TOTAL, when it diversified its service stations into shops (La Boutiques) in order to reduce its reliance on petrol sales over the years, have added some benefits; however, these benefits have not proved to be particularly tangible, nor have they added lasting value in the long term. The research accordingly further aims to propose business processes that will be of immediate benefit and impact, at minimum cost.

Unlike British Petroleum South Africa (BPSA) and SASOL, TOTAL does not operate franchises, and thus the objective of this research is to investigate the current operations of service stations and their crossing point to TOTAL. The research was conducted at selected Dealer Training Service Stations (PRIMA), some company-owned dealer-operated (CODO) service stations and Retail Entrepreneurship Empowerment Programme service stations (REEP), and the focus was in the Johannesburg area. A PRIMA service station is where TOTAL is wholly in control of the management lease (100%), and a REEP service station is partly controlled by TOTAL (40%) while the Entrepreneurs control 60% of the business.

It is the custom in TOTAL that, when a new dealer is placed at a service station, the service station’s assets are handed over to the dealer and TOTAL relies on the consumerist style of each dealer to meet customer expectations and to represent the TOTAL brand in an acceptable manner. Although general guidelines on operating standards and retailing principles of the business are provided when the dealer takes over the service station, they are not strictly enforced.

The research report suggests better ways that will allow TOTAL to have increased control over its network through managing the service stations; this includes clear operational standards and procedures. New business processes are examined and a franchise model is proposed. The new franchise model will next be tested, and, once proven successful, will be rolled out to the whole network.

The introduction of a franchise model will enable TOTAL to embark on a new relationship with the dealer network, where both parties will clearly understand their roles and responsibilities through a new franchise agreement. They will benefit from the management skills and daily hands-on improvement abilities and expertise of TOTAL international, and this will in turn benefit both the dealers and TOTAL.  It is logical to assume that this will ultimately provide positive consistency, focussed delivery by the dealers, and a common vision for the organisation