Re-engineering materials management: a case study on an Indian refinery

Materials management function is always a major concern to the management of any industrial organisation as high inventory and an inefficient procurement process affect the profitability to a great extent. Problems multiply due to a very current business environment in India. Hence, existing materials planning and procurement processes and inventory management systems require a re-look with respect to a changing business environment. This study shows a radical improvement in materials management function of an Indian petroleum refinery through business process re-engineering (BPR) by analysing current processes, identifying key issues, deriving paradigm shifts and developing re-engineered processes through customer value analysis. BPR has been carried out on existing processes of “materials planning and procurement” and “warehousing and surplus disposal”. The re-engineered processes for materials management function trigger a few improvement projects that were identified by the group of executives who took part in the re-engineering exercise. Those projects were implemented in an integrated framework with the application of the state of art information technology tools.