Reengineering helps improve materials procurement in Indian oil refinery

The materials management function is always a major concern to the management of any organisation as high inventory and inefficient procurement processes have a significant effect on profitability. The problems multiply in the face of a very dynamic business environment, as is the present case in India. Hence, the existing system of materials planning, procurement processes and inventory management require reviewing with respect to the changed business environment. This study shows a radical improvement in materials procurement function of an Indian petroleum refinery through Business Process Reengineering (BPR) by analysing current process, identifying key issues, deriving paradigm shifts and developing reengineered processes through customer value analysis. BPR has been carried out on existing processes of 'material planning and procurement' and 'warehousing and surplus disposal'. The reengineered processes for the materials management function triggered several improvement projects that were identified by the group of executives who took part in the reengineering exercise. Those projects were implemented in an integrated framework, with the application of state of the art information technology tools and building partnership alliance among all stakeholders. Considerable improvements in overall functions of the organisation are observed, along with financial benefits.