At Sumitomo, IT Fuels The Oil Well Supply ChainAt Sumitomo, IT Fuels The Oil Well Supply Chain

Most people don't think about the source of the fuel that powers their cars and heats their homes. But one primary concern at Sumitomo Corp. of America is providing the logistical support necessary to extract crucial natural resources from the beneath the earth's surface.

That's why the company, a Houston subsidiary of Japan's $80 billion Sumitomo Corp., is rolling out a Web-based portal that will provide online access to supply-chain data for its clients in the worldwide oil-country tubular-goods industry. Sumitomo will extend similar access to its suppliers and service providers by the middle of year.

Sumitomo acts as a supply-chain manager between buyers and sellers of tubing and casing used to build oil wells. Its clients, typically large oil and gas companies such as Exxon, BP, and Marathon, rely on Sumitomo to find the right suppliers for the tubing and casing materials used to reach underground natural resources.

To keep ahead of its clients' needs without uprooting its existing Oracle database applications, Sumitomo called on service provider Stonebridge Technologies Inc. to design and build a Web site that provides these oil companies with access to information such as inventory forecasts, materials quotes, order status, invoicing data, and the status of credit for unused materials.

"We have a tremendous amount of data-collection applications built specifically to run on Oracle. I wanted to stay with Oracle, instead of having someone come in and create an independent environment," says Rick Bowden, Sumitomo's manager of information systems engineering. Bowden outsourced the work because his IT team didn't have the experience required to develop the site's front-end Web components. He tapped Stonebridge for its Oracle experience and its knowledge of the oil business.

The physical layout of Sumitomo's environment was the biggest challenge, because the company has worldwide sites that need to transfer information, says Tim Fredrickson, Stonebridge's Houston-area consulting manager. Remote locations require secure access, which is why, for example, Stonebridge created a virtual private network over the Internet to ensure consistent connections to faraway areas such as Australia.

Sumitomo has brought about 100 of its clients live on the site in the past few months, and plans to add another hundred. This doesn't include the company's entire client base because not all of them conduct enough business to benefit from access to such information. Bowden says Sumitomo's sales staff can communicate the necessary order status and logistics information with these smaller clients.

Sumitomo's next phase is to reach up the supply chain to the suppliers and service providers who play a major role in the delivery of piping materials to the end client. Whereas suppliers are the mills and factories that manufacture these tubular materials, service providers are the inspectors, shippers, and holding yards critical to ensuring Sumitomo's shipments arrive on time and in good condition. While no suppliers or service providers are online yet, Ron Freeman, Sumitomo's director of alliance and supply-chain management, is shooting for the middle of next year. "We're trying to align ourselves with a limited number of suppliers and service providers who would need access to the portal," he says.

Both Bowden and Freeman agree that simply providing Sumitomo's clients and supply-chain partners with an online catalog of supplies isn't enough. Inventory forecasts, for example, are critical to ensuring that the right amounts of the correct materials are shipped. Because of the nature of drilling, a project's requirements can change as workers delve farther below the earth's surface. By storing and analyzing data from its clients and suppliers worldwide, Sumitomo wants to be able to better provide inventory forecasts that will ensure the right materials are shipped on time, without a lot of inventory collecting dust in the suppliers' yards.