GLOBAL TRANSFORMATION THOROUGH VCTThe Value Chain Transformation
Gypsa Vinod
THE INDUSTRYThe oil industry is basically divided into three major segments: Upstream: Oil Drilling & Exploration Mid-stream: Pipelines and Transportation Downstream: Refineries (Refining)
THE INDUSTRY It is a B2B industry The oil & gas and refinery industry
business and transactions consists of: The End user Companies like IOCL, BPCL,
HPCL, ONGC & RIL, in India Which are engineered and constructed by
Engineering, Procurement & Construction (EPC) companies
The Lump-Sum Turn Key (LSTK) contractors construct these facilities with EPCs
EPCs are supported by various pumps, turbines, boilers, cooling systems, heating units, and complex distillation units manufacturers
‘Process Licensors’ have the patents and rights for the various processes used by the EPCs to engineer the facilities
End User
Engineering, Procurement
& Construction
Company (EPC)
‘Process Licensor
s’
Vendors to EPCs
Lump-Sum Turn Key (LSTK)
contractors
THE INDUSTRY This study is about Kirloskar Pumps
which changed its business process and organisational structure to attain competitive edge over growing Indian competition, and attaining increased market share in International Market
The company manufactures Special Purpose Pumps for Critical applications for Oil & Gas, Refineries, Fertilizer industries
These are engineered custom made pumps for specific critical applications in these rigs, oil pipelines and refineries
BUSINESS TRANSACTION EPCs send requirement enquires to pump OEM companies The company makes offers and supports with its services to
the EPCs The EPCs place the order to the pump OEMs After order, the company manufactures these custom made
pumps and delivery is made at the End User Refineries Thus, pumps are sold to End User Refineries thorough EPCs
There are different departments viz Application Engineering, Design, Engineering Support, Procurement, Planning, Quality and Order Execution in this entire process
Each enquiry is different and needs attention from all departments to study the specifications and help make the offer correctly.
Their feedbacks and support is consolidated by the application engineering team which makes the offer for the EPCs
Since so many department were involved in offer making, and thereafter, the order execution (or manufacturing), the overall process becomes lengthy and errors are more likely to happen, which can lead to incorrect offer making or even order execution!
Application Engineerin
gDesign &
Engineering
Product Developm
entProcurement
Planning
Quality
Enquiry & Specifications
Offer to EPC
EPCTHE CHALLENGE
THE CHALLENGE The enquiries were required to be looked at by each of these departments
This was: Time Consuming & Lengthy Probability of miscommunication Comments and feedbacks were difficult
to incorporate, specially where more than one departments are involved
The knowledge sharing and coordination between departments was difficult
THE PROCESS TRANSFORMATION The company improvised many processes at the backend to support the
proposals and order execution The departments were dissolved and new concept of VCT (VCT stands for
Value Chain Transformation) was introduced The organisational structure was completely changed where three VCT
teams were now created These teams now consist for people from all the departments
Team Captain
Application Engineer Engineering Procurement Planning Costing &
Estimation Quality Order Execution
THE PROCESS TRANSFORMATION The team sits together and works together Headed by a ‘team captain’ it is responsible for complete enquiry-offer-
order cycle Each team is informally like a smaller company in itself, capable of
handling the complete process much faster with high efficiency
THE PROCESS TRANSFORMATION When the enquiry is received, all of
the team members sit together and study the specifications in detail
The feedbacks and comments are incorporated faster for better effectiveness of the offer
The offer is compiled by all the team members together
The final output : Offer and Order Execution: Just Before Time (JBT)
THE RESULT
2012 2013 2014 20150
2
4
6
8
10
12
14
No. of days for Offer Preparation
No. of days for Offer Preparation
THE RESULT
2012 2013 2014 20150102030405060708090
100
Percentage of Contractual Delivery Date (CDD) Adherence
Percentage of Contractual Delivery Date Adherance
THE RESULTIncreased Efficiency & EffectivenessCorrectness of OfferImproved Order Execution & On time DeliveryBetter Feedback and Support of other functionsFaster support to the customer
Reduced Time Taken for offer preparationReduced errors in offers and at order execution stage
THANK YOUGypsa Vinod
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