Re‐engineering materials management

Abstract

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 processws 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.