ongc report 105
TRANSCRIPT
“To find the Impact of IMPETUS Rate Contracts on
Maintenance & Procurement systems and to improve the Operational Efficiency”
“PROJECT IMPETUS”
OIL & NATURAL GAS CORPORATION LIMITED
SUMMER INTERNSHIP PROJECT
Submitted by:
V.S.S.KARTHIK.N
PRN: 09020741105
In partial fulfillment of the requirements of MBA program of
Symbiosis Institute of Operations Management.
Acknowledgement
I sincerely thank OIL & NATURAL GAS CORPORATION LIMITED for giving me this opportunity to undertake my summer project with them. It has been a wonderful experience to work in this esteemed organization and with the people of amazing caliber.
I would like to extend my special thanks to Mr. ASHOK BABU, CM (MM), ONGC who was my mentor for this project, for his valuable initial briefing and constant guidance through out the project, without his support the successful completion of this project would not have been possible.
I am grateful to Mr.K.MANOHAR, F & AO. His guidance at every stageof the project provided new aspects to think of and incorporate possibilities andwork from there on.
I appreciate and thank the staff of the Materials Management Department and Internal Audit Department for cooperating through out the project.
Last but not the least; I would like to extend my gratitude to Mr.ABHAY LIDBEfor his guidance and encouragement towards the successful completion of this project.
TABLE OF CONTENTS
EXECUTIVE SUMMARY 4
INTRODUCTIONProject IMPETUS 5
Rate contracts 6Purchase overview 7
DEFINITION & SCOPE OF THE PROJECT 10
COMPANY BACKGROUNDFinancial results 11Production and Sales 12Organizational structure 13
MAJOR STRATEGIC ASPECTS 16
MAJOR FUNCTIONAL ASPECTS 17
CONCEPTUAL REVIEWProcurement process 18Guidelines for entering into RC’s 20
NEED FOR THE PROJECT 21
ANALYSIS & FINDINGSIdentification of problems 21Selection of problem 31Defining the problem 34Identification of causes 35Selection of the root causes 41Findings 42
CONCLUSION & RECOMMENDATIONS 43
FINAL VALUE ADDITION 45
NEXT STEPS 46
ANNEXURE 1 list of materials purchased under RC’s 47ANNEXURE 2 list of materials selected for final sample 57BIBLIOGRAPHY 59GLOSSARY 60
TABLE OF ILLUSTRATIONS
S. No NAME PAGE NO
1 Procurement process 7
2 Sub steps involved in the tendering process 8
3 Production & sales figures 12
4 Operational highlights of FY 09 14
5 Financial highlights of FY 09 15
6 Fow chart of procurement 18
7 Flowcharts for tender 19
8 Comparisons of purchases for with and without RC 19
EXECUTIVE SUMMARY
Rate Contracts have been initiated by IMPETUS GROUP in ONGC for Supply of Spares, Services and Overhauls. Executive Purchase Committee deliberated the proposals of Impetus and observed that, contrary to the benefits envisaged there has been an increase in the inventory of certain items and desired that a special study may be carried out on all the Impetus Rate Contracts.
In the course of this project, I was required to examine and review the Stock Levels of Materials vis-a-vis consumption where Rate Contracts were entered and to find its impact on inventory, lead time and price. It required an in depth analysis of all the purchases which were entered under rate contracts from April 1st 2007 to March 31st
2010.
From the study which I conducted, I found that there is a positive impact on the price of the material and the lead time where Rate Contracts have been entered by Impetus Group; there is a substantial decrease in the price and the lead time except in a few cases where there are delays in delivery of the Material. However there is no decrease in the stock levels of Material where Rate Contracts were entered, instead in many cases there is a considerable increase in the Stock Levels without any increase in the consumption of the Material. Based on the study work performed it was found that
1. Purchase Orders are being placed even though sufficient quantity of Material was lying in the Stores. The total amount of Stock (as on 31st March 2010) which was not utilised even once from the time it was bought is Rs. 88 Lakhs (as per sample study of 70 items out of a total of 330 Material).
2. There was an increase in the Stock Levels.3. In many case the Quantities purchased were more than the average
consumption during the Last three Years.Prioritizing all the defects which were found as the result of study on the basis of loss incurred due to that defect, the most vital problem is identified as “ procurement disparate to consumption “. Various causes leading to this problem were analyzed and the root cause is identified as inadequate input and internal controls of SAP/ERP and recommendations were given on the basis of strengthening the input and internal controls of ERP.it is also recommended to organize regular training programs for employees to raise the level of user awareness in SAP/ERP.
INTRODUCTION
PROJECT IMPETUS
Project IMPETUS (IMPLEMENTING MAINTENANCE & PROCUREMENT EFFORTS THROUGH UPGRADED SYSTEMS) was initiated by Oil & Natural Gas Corporation Ltd. (ONGC) in 1999. The aim of Project IMPETUS is to improve upon the operational efficiency and assets utilization. Project IMPETUS has been integrated with Project ICE (INFORMATION CONSOLIDATION FOR EFFICIENCY) for ensuring an organization wide uniformity for Maintenance and Procurement for maintenance. CMD of ONGC Shri R S SHARMA is continuously encouraging new initiatives being undertaken by Project IMPETUS to facilitate world class maintenance system.
Objectives of IMPETUS Project Facilitating
a) Maintenance activities compliance: >95% at the facilities.b) Equipment availability: > 95% at the facilities.
c) System availability: > 99% at the facilities. Minimizing Inventory. Reduction in the Procurement Cycle.
The analysis of documentation work completed under IMPETUS Project has revealed that the problems encountered by ONGC are:
Non-availability of spares in time (Procurement cycle is very large)
Existing procurement cycle is 6 months to 18 months plus delivery period.
Non-availability of sufficient working level Maintenance manpower
Existing gap to some extent is covered by un-experienced manpower though out sourcing.
As a methodology for bridging spares gap, Long Term Rate Contracts for 3 years having alliances / relations with major OEMs (original equipment manufacturers) have been finalized. For items required continuously throughout the year in large quantities, it is advantageous to have a rate contract. The Implementation and Procedure of Rate Contract with OEM was approved by EPC (executive purchase committee) on 19.1.2004. The approved procedure has been incorporated in the MM Manual.
The following are the suppliers with whom the Rate Contracts are finalized.
Bharat Pumps and Compressors Ltd. CLYDE UNION Cummins Diesel Sales and Services (I). DMW CORPORTATION. DRESSER-RAND (I) PVT LTD. Ingersoll Rand. KOKUSAI COMMERCE CO. LTD. MAN Turbo AG Germany. National Oil Well. RUBBER REGENERATING & PROCESSING CO. Techno strength Pvt Ltd
Rate Contracts
Rate contracts are mutual agreements between the buyer and the seller to operate a set of chosen items, during a given period of time, for a fixed price or price variation. Under this system the rates are fixed and at times even the quantity of the selected items. As and when the need arises the buyer issues a Purchase order directly on the basis of the rate chart available on the supplier who in turn supplies the items.
Application of rate contract helps organizations cut down the internal administrative lead time as individual workcentres need not go through the central purchasing departments and can place orders directly with the suppliers. It also helps in building Buyer-supplier relationship as the contract period is usually three years and then there is always a chance of the same players doing the next contract. The system works well normally in a situation where the selected items are routinely consumed. Items for which rate contract should be concluded will be specifiedand this list will be reviewed and additions made every year depending upon the past consumption or on anticipated consumption. Rate contracts will not be entered into in the case of items for which the market shows downward trend.
Purchase overview
Fig 1: procurement process
By fixing the rate contracts the MM (materials management) Department is reducing the procurement cycle by limiting the steps from “FORMATION OF TENDER COMMITTEE” to “ISSUE OF LOI” only for the first time of procuring a particular item. The various sub steps involved in procurement process that can be eliminated by introducing rate contracts are from “FORMATION OF TENDER COMMITTEE” to “RELEASING OF EMD OF UNSUCESSFUL BIDDERS” in the below flowchart ,the duration of which is more than 3 months.
Fig 2: sub steps involved in the tendering process
Besides reducing the procurement cycle and minimizing the transactions involved in purchasing, there are a quite many benefits in fixing rate contracts for both buyer ( ONGC) as well as suppliers with whom rate contract is finalized.
Benefits with the Rate Contract Scheme
To ONGC
Facility of bulk rate at lowest competitive price.
Saves time and effort in tedious and frequent tendering at multiple user locations.
Enables buying as and when required.
Just in time availability of supplies reduces inventory carrying cost.
Availability of quality goods with full quality assurance back up.
To Suppliers
Access to large volume of purchase without going through tendering and follow up at multiple user locations – saving in administrative and marketing efforts and overheads.
Rate contract lends respectability and image enhancement
DEFINITION OF THE PROJECT
Executive Purchase Committee of ONGC deliberated the proposals of Impetus and
observed that, contrary to the benefits envisaged there has been an increase in the inventory of certain items. EPC desired for a special study to be carried out on all the Impetus Rate Contracts in all respects, including the following:
Impact of Rate Contracts on:
1. Inventory of Spares in absolute terms and as a ratio to the consumption level.
2. System and Equipment availability. Impact of Impetus Rate Contracts on Cost of Spares. Impact of Rate contracts on lead time.
My role in this project was to study the impact of IMPETUS Rate contracts on the inventory of spares with respect to consumption, lead time of delivery & price of materials which were entered between April 1st 2007 to March 31st 2010, and to identify the major loop holes in the process and to recommend the necessary steps to be taken to improve the operational efficiency.
SCOPE OF THE PROJECT
My scope in this project included examine and review the Stock Levels of Materials vis-a-vis consumption
where Rate Contracts were entered. Study the impact of rate contracts on inventory of spares, leadtime taken for
delivery & price of the material. Analyze the in efficiencies that were found during the study and to find the
major causes leading to the negative impact of rate contracts on inventory, lead time & price.
Highlighting and giving recommendations on processes to eliminate the major causes.
Scope of this project is limited to purchases which are under only Rate contracts during the last 3 years in K-G basin, which belongs to only RAJHAMUNDRY ASSET of ONGC.
COMPANY BACKGROUND
Oil and natural gas Corporation limited (ONGC) is the highest profit making public sector Company in India. The mission of the company is to stimulate, continue and accelerate exploratory efforts to develop and maximize the contribution of hydrocarbons to the economy of the country. ONGC was formed in August 1956 as commission with a Parliamentary Act. Later it has become a statutory body in 1959. In consonance with Government of India’s liberalization policy, ONGC was incorporated in June 93 as a Public Limited Company. With effect from February 1, 1994 the undertakings of the erstwhile Oil and Natural Gas Commission and the reserves were transferred to Oil and Natural Gas Commission and the reserves were transferred to Oil and Natural Gas Corporation Limited (ONGC).
At present ONGC is a ‘Fortune Global 500 company’ and has been ranked as Number One E&P (Exploration and Production) Company in the world as per the Platt’s Top 250 Global Energy Company Ranking 2008. The fiscal 2008-09 can well be termed as the year of exploration successes for ONGC as it accreted 284.81 Million Metric Tonnes of Oil Equivalent (MTOE) of Initial In-place volume of hydrocarbons, the highest in last two decades and 56 % more than the previous year (182.23 MTOE), with 28 discoveries (Oil:17; Gas:11) spread across the Indian sedimentary basins. The total number of employees in ONGC are 33,035 including technical and non technical.
Financial Results
Despite volatile oil markets and crude oil prices, ONGC has earned a Net Profit of Rs.161,263 million (down 3.45% from Rs. 167,016 million in 2007-08).During the year under review, ONGC registered a gross revenue of Rs. 650,494 million, (up 5.7 % from Rs. 615,426 million in 2007-08), despite sharing under recoveries of Rs. 282,252 million (Rs. 220,009 million in 2007-08), of the Public Sector Oil Marketing Companies by way of discounts in the price of Crude Oil, Domestic LPG and PDS Kerosene, on administrative instructions of the Ministry of Petroleum & Natural Gas, Government of India
Highlights
• Sales Revenue: Rs. 639,682 million
• Profit after Tax (PAT): Rs. 161,263 million
• Contribution to Exchequer: Rs. 280,496 million
(ONGC’s contribution to Central and State Government by way of Cess, Royalty, duties, taxes and Dividend on Central Government Shareholding).
• Return on Capital Employed 49.9 %
• Debt-Equity Ratio 0.0003:1
• Earning Per Share (Rs.) 75.40
• Book Value per Share (Rs.) 365
Production & Sales
Highlights of production and sales of Crude Oil, Natural Gas and Value-added Products:
Fig 3: production & sales figures
Information technology
ONGC became the first PSU to launch SAP powered “e-procurement” process. This process will ensure standardization of the procurement process of ONGC and will ensure transparency in the tendering process. It will also speed up procurement process. Along with this, your Company has also institutionalized centralized electronic payment system for employees and the vendors. The system will reduce manual interventions thereby reducing delays in payments and improving transparency to the satisfaction of the stakeholders.
ONGC is also implementing Project SCADA (Supervisory Control and Data Acquisition) covering entire production and drilling facilities. The first phase of the project covering six assets has already been commissioned. Once implemented, production and drilling facilities can be monitored on 24x7 real-time bases.
Organizational structure
Chairman cum Managing Director supported with 6 functional Director Heads of the company. Each Director is looking after one of the activities like Operations, Finance, Technical, Drilling, Personnel and Exploration. Directors are responsible for effective functioning of their segment. The entire company is administratively divided into 6 Regional Business Centers. Executive Director/Regional Director is heading each
region. All the 26 work centers fall under any one of the six regions. Every work center head directly reports to ED/RD.
Its organizational structure is functional and centralized at top level and it is decentralized at middle and bottom level. Hence financial, administrative authority and responsibility has been delegated at every level.
Operational highlights of financial year 2009
Fig 4: operational highlights of FY 09
Financial highlights of financial year 2009
Fig 5: financial highlights of FY 09
MAJOR STRATEGIC ASPECTS
ONGC has been able to maintain production levels and due to intensified exploratory efforts, it is able to accrete record hydrocarbon reserves. During 2008-09, ONGC accreted 284.81 MMT of initial in-place volume of hydrocarbons from its domestic acreages; the highest in last two decades.
As is global trend, the major domestic fields of your Company have also entered in the natural decline phase. However, the IOR/ EOR schemes, which ONGC is systematically implementing since 2001, have successfully been augmenting production and neutralizing decline from these matured fields. Recovery factor from fifteen major fields, where fourteen IOR/EOR schemes were implemented with an investment of more than Rs.140, 000 million, have increased from 27.5% in 2000-01 to 33.1% in 2008-09. ONGC is contemplating of investing additional Rs. 160,000 million on seven more IOR/EOR and re-development projects which are under implementation. These projects will play crucial role in arresting decline from the matured fields.
Further, indigenously developed MEOR (Microbial EOR)-the Microbial bacterial consortiums (S-2 for huff-n-puff mode and PDS-10 for control of wax deposition in oil wells) have successfully been applied in fields of Ahmedabad, Mehsana and Assam Assets for improving well productivity of stripper wells. The total oil gain realized is approximately 43,000 m3. ONGC also helped M/s Oil India Limited (OIL) in implementing this MEOR job in 8 of their wells.
It has always been the endeavor of ONGC to expeditiously develop discovered fields. 45 discoveries, out of 111 made during FY’03 to FY’09, have already been brought to stream. Accelerated development and production for the remaining discovered fields has also been launched.
During the year 2008-09, a new and dedicated business unit Eastern Offshore Asset has been constituted with an aim to put East Coast discoveries on a fast track development through an integrated East Coast hub.
Besides focus on exploiting brown fields and fields already discovered, it is also important to discover new fields. ONGC has been intensifying its exploration efforts and 28 discoveries in the last fiscal testify its resolve to that effect.
Induction of new advanced equipment as well as up gradation of existing resources with state-of-the-art equipment to remain competitive in the global E&P business is mandatory for the company. The process of refurbishing and upgrading the On land Drilling and Work over rigs is already underway in various phases. ONGC has inducted and absorbed several state-of-the-art technologies. It is also collaborating and having alliance with technologically rich and expert companies and academia and has also empanelled several Domain Experts on its roll.
MAJOR FUNCTIONAL ASPECTS
Work in the Oil & Natural Gas Corporation Ltd. (ONGC) has been organized on the basis of functional Business Groups with commercial working relationship among these groups.The Business Groups are:
a) Exploration b) Drilling c) Operations d) Technical
Director concerned of the above Business Groups assume effective charge of all functional aspects of Materials Management.
The procurement and stocking of materials is decentralized to the respective Business Groups at Headquarters and Regions. Every Business Group has a structured Materials Management set up with suitable structure at the Regions and Headquarters. The Headquarters' Materials Management set up with the concerned Director is responsible for the following:-
Procurement and related work including Steering Committee cases, Executive Purchase Committee cases. However policy matters including liaison with the Govt. will be done by the Materials set up under Director (T).
Providing superintendence to the Materials set up at the Regions under the concerned Business Group with regard to different functions of Materials Management for
Bulking of all high value indigenous and critical items to be procured centrally for taking maximum advantage in price discount. Such exercise would be done by the Headquarters Materials set up for all Regions under the group.
The above functions are to be discharged by personnel of Materials Management discipline who will be so allocated to each Business Group both at Headquarters and at the bases. However, the procurement of all indigenous materials except as mentioned above is decentralized with their respective Business Group.
Materials procurement powers are to be exercised only by exception by functional executives other than Materials Management executives by special nomination by the Competent Authority as a stop gap arrangement till such time Materials personnel are in position.
The Materials Management Support Groups will function strictly within the policy guidelines and such administrative norms as may be prescribed by Director (Technical).
Provisions of Materials Management Manual are duly approved by Executive Committee/steering Committee and ratified by the ONGC Board. Therefore, any deviation from the prescribed policy guidelines or norms on Materials Management will require reference to Director (Technical) through the Director In charge of the Business Group for approval / ratification of Competent Authority wherever considered necessary.
CONCEPTUAL REVIEW
PURCHASING PROCESS
Fig 6 : flow chart of procurement
The above flow chart represents the entire purchasing process that undergoes in ONGC. Materials management department is responsible for the procurement of items. TENDER PROCESS is the most time consuming stage in the entire procurement process. \
The steps involved in the tender process are as follows.
Fig 7: flowchart for tender
As the lead time for procuring items is very high (3 months to 1 year) & considering the fact of increase in inventory of spares, Rate contracts were introduced as an initiative under PROJECT IMPETUS.
The number of steps involved in the procurement process is reduced to maximum limit for the spares which were fixed in Rate contracts. It is a contract for the supply of store at a specified rate during the period of contract.
The process of procurement in the case of spares which were under the rate contracts and for materials which were procured normally is shown below.
Fig 8: comparisons of purchases for with and without RC
The various Types of Rate Contracts in ONGC
Item Rate contract
Quantity Rate contract
INDEG Rate contract
DGS&D Rate contract
Item rate contract: For this contract, contractors are required to quote rates for individual items of work on the basis of schedule of quantities furnished by the client’s department
Quantity rate contract: for this contract, suppliers are bound to supply the items of specified quantity fixed in the contract.
INDEG rate contract: the contracts fixed with only Indian suppliers
DGS&D Rate contract: The Director General of Supplies and Disposals (DGS & D) constitutes the central purchasing organization of the Govt. of India. It is responsible for the procurement and purchase of supplies required by the departments of Defence Organization, Railways etc. DGS & D concludes Rate Contracts for purchase of materials, stores, equipment etc. with various Indian and foreign firms.
Guidelines for Entering into Rate/Running Contracts
(a) Normally the duration of a rate contract should be for a specific period. In special cases shorter or longer period of contract may be entered into. No extension to validity of the contract is required when deliveries against outstanding supply orders continue after expiry of the validity period. The contract will remain alive for the purpose of delivery for all the stores ordered during the validity of the contract until deliveries are completed.
(b) No new rate contract should be placed with the firms having backlog against existing contracts and also if the backlog is likely to continue for the major portion of the new contract period.
(c) Rate contract should be placed only on registered and/or reputed and established firms, which are capable of supplying the stores as, required.
(d) Quotations for rate contracts should be invited for slab quantities and contracts concluded, accordingly.
(e) In case where a firm has already a rate contract with any other Government Department, Central/State Public Undertaking, etc. it should be ensured that the contract is entered into not less favourable terms and conditions than those agreed to by it with the other departments, undertakings etc.
NEED FOR THE PROJECT
It is believed by EPC that, though the objectives of the IMPETUS group are achieved by introducing Rate contracts, there still exits some inefficiency in implementing them. So, I conducted a study on all the IMPETUS RATE CONTRACTS of K-G BASIN region i.e RAJAHMUNDRY ASSET of ONGC with the objectives to find the impact of IMPETUS Rate contract on inventory, lead time and price.
ANALYSIS AND FINDINGS
Identification of problems
Methodology of study
The following procedures were used to achieve the STUDY objectives:
Collected the list of all the Suppliers and Material for which Rate Contracts were finalized from the Materials Management Department.
T Code ME2L was used to download all the Purchase Orders placed during the Years 2006-07 – 31st March 2010. From this List all the cases where the Tender Process is 10 were filtered. Tender Process 10 stands for Rate Contracts.
There are 330 numbers of Materials which were purchased on Rate Contracts during the last three years. Out of this a sample of 70 numbers of Materials was taken for analysis.
Methodology adopted for selecting the Sample: Out of 330 Materials, all cases where the Net Price of Material was
more than Rs.50, 000 were selected (18 Nos.). After this, cases where more than 100 units of Material were
purchased during the last three Years were selected (22 Nos). Subsequently all Material which were purchased more than 4 times
during the last three Years were taken.( 30 Nos) The Price of the Material was taken from the website
www.etenders.ongc.co.in T Code MB5B & MC.9 were used to check the consumption pattern of the
Material and stock levels. All the cases where no Material was available in the Stores were taken.
Detailed study analysis with observations
I examined the impact of Impetus Rate Contracts on the price of the Material, Lead time taken for delivery, consumption pattern of the materials, stock out situations, the impact on Equipment availability and the impact on inventory level after the implementation of impetus Rate Contracts. Based on the study performed, I found that there is a decrease in the prices of the Material and lead time, where Rate Contracts were entered.
Based on the review I observed that there exists some inefficiency in managing the quantity of Spares that need to be maintained, these need to be eliminated. The following are the main areas of concern:
There are a few cases where there is an increase in the lead time for delivery of Material.
In some cases where there was no stock of Spares for more than six months.
There are cases where the Material was purchased repeatedly, even though there was no consumption of that Material. There were no controls to prevent rising of requisitions where there is a sufficient quantity of the Material in the Stores.
In many cases it was observed that there is an increase in the stock of the Materials even after the Rate Contracts were finalized.
Study results
1. The following are the cases where there was increase in the Lead time. (Such cases constitute 7 % of the sample cases)
SlNo.
PlantMaterial Code
PR No.PR Date
PO No.PO Date
GR Date
Lead time before RC
Lead time after RC
Price fixed in rate contract ( INR )
Cost @ which material is bought ( INR )
1 41D1210456485 1090002484
19-05-2008 4010039564
30-05-2008
15-12-2009 365 575
3,52,519.81 4,37,124.56
2 41D1210456179 1090002484
19-05-2008 4010039564
30-05-2008
15-12-2009 300 575
7,00,887 8,76,108.75
3 41D1215308679 1090002036
03-12-2007 4010036788
14-01-2008
24-03-2008 84 112
1,10,556 -
4 41D1215330888 1090002036
03-12-2007 4010036788
14-01-2008
24-03-2008 96 112
2,94,254 -
5 41D1210618330 1090002036
03-12-2007 4010036788
14-01-2008
24-03-2008 84 112
1,03,371.21 1,28,180.300
2. The following are the cases where there was increase in price.
SlNo.
Material Code
PR No.PR Date
PO No.PO Date
GR Date
Qty Amount Rate before PO
Diff
Vendor Code
141D1
210456485 1090002484
19-05-2008 4010039564
30-05-2008
15-12-2009
13,97,270
3,34,268
-63,002
100785
2 41D 215308679 1090002036 03- 4010036788 14- 24- 38 2,552 2124 1012
112-2007
01-2008
03-2008 -428 33
341D1
215330888 1090002036
03-12-2007 4010036788
14-01-2008
24-03-2008 93 1,613 1543
-70
101233
Out of 70 cases scrutinized, in 60 cases no prior purchase was observed in the system. Therefore only 10 cases were found where there was either increase or decrease in cost after RC. There is 10% decrease in the Cost of Spares after IMPETUS Rate Contracts.
3. The following are the cases where there is no stock of Materials in the Stores. The column Date of Last issue is the date from which there was no stock in the Warehouse.
SlNo.
PlantMaterial Code
PR No.PR Date
PO No.PO Date
GR Date
QtyCurrent
Stock
Date of last issue
Vendor Code
141D1
210456471 109000248419-05-2008 4010039564
30-05-2008
12-08-2008
1 - 100785
210456471 1090003572
12-03-2009 4010045211
28-03-2009
31-07-2009
1 0 26.09.2009100785
241A1
210002209 109000339909-02-2009 4010044730
13-03-2009
Not Recd 1 0 101233
210002209 1020023312
09-11-2009 4010049414
17-12-2009
Not Recd 1 0 101233
341 E1 210019849 1090002487
15-05-2008 4010039499
27-05-2008
12-09-2008 4
20.03.2009 101233
41 E1 210019849 102002462728-12-2009 4010049639
30-12-2009
Not Recd 3
0 101233
441 E1 215308652 1090002561
28-05-2008 4010039513
28-05-2008
10-09-2008 2
016.12.2008 101233
541 E1 220012001 1090002561
28-05-2008 4010039513
28-05-2008
10-09-2008 2
016.12.2008 101233
41 E1 215308652 102002451606-01-2010 4010049848
12-01-2010
Not Recd 2
0 101233
641 E1 215301843 1090002561
28-05-2008 4010039513
28-05-2008
10-09-2008 2
020.03.2009 101233
741 E1 340408205 1090002561
28-05-2008 4010039513
28-05-2008
10-09-2008 7
028.10.2009 101233
841 E1 220923090 1090003078
18-09-2008 4010041448
18-09-2008
15-10-2008 1
009.06.2009 101233
41 E1 220923090 102002451606-01-2010 4010049848
12-01-2010
Not Recd 2
101233
941 E1 210019820 1090002487
15-05-2008 4010039499
27-05-2008
12-09-2008 3
013.12.2008 101233
41 E1 210019820 102002451606-01-2010 4010049848
12-01-2010
Not Recd 3
101233
1041 E1 215308764 1090002561
28-05-2008 4010039513
28-05-2008
10-09-2008 5
0 09.06.2009101233
41 E1 215308764 102002451606-01-2010 4010049848
12-01-2010
Not Recd 3
101233
The spares belonging to Engineering Services (41E1) i.e., Workshop are required only when requisition takes place for overhauling of Cummins Engines. The order for these Spares is placed 6 months before the Overhauling. So there is no necessity in keeping the spares in inventory.
The Spare related with Drilling mentioned at item No.1 (Material Code210456471 RESET RELIEF VALVE 3") is also repairable type and all the connected spares are available in Stock. Therefore the equipment is available even though the stock is nil
The spare related with asset mentioned at item No. 2 ( Material Code 210002209 )
Supplier base is near to the asset, so that this item can be supplied just in time. So it is not desired to keep the item in stock as inventory.
4. The following are the cases where there was no consumption, but still the Material was purchased. In the first 13 instances there was No consumption at all and in the next 9 instances only a few units were used.
SlNo.
PlantMaterial Code
PR No. PO No.PO Date
GR Date
Qty UsageCurrent
Stock
Unit Cost
Total Cost
Vendor
Code
1
41D1210456485 1090002484 4010039564
30-05-2008
15-12-2009
1 0 -3,97,270 100785
210456485 1090003572 4010045211
28-03-2009
21-01-2010
1 0 24,05,316
8,10,632
100785
2
41D1210456160 1090002484 4010039564
30-05-2008
15-12-2009 5 0 81,069 100785
210456160 1090003572 4010045211
28-03-2009
Not Recd 2 0
582,711
4,13,555
100785
3
41D1210456354 1090002484 4010039564
30-05-2008
12-08-2008 60 0
2,896
100785
210456354 1090003572 4010045211
28-03-2009
21-01-2010 60 0
1202,954
3,54,512
100785
4
41D1210004665 1090002036 4010036788
14-01-2008
24-03-2008 18 11,602
101233
210004665 1090002156 4010037106
29-01-2008
29-05-2008 96 0
36,105
101233
210004665 1090002843 4010040654
06-08-2008
04-09-2008 48 0
16229,065
47,08,467
101233
541A1 210073433 1090001248 4010028080
22-11-2006
05-02-2007 2 0
7,102
101233
41A1 210073433 1090001981 4010037830
28-02-2008
25-04-2008 1 0
38,352
25,057
101233
641 E1 210000016 1090003078 4010041448
18-09-2008
29-10-2008 2 0
3,990
101233
41 E1 210000016 1020024627 4010049639
30-12-2009
Not Recd 2 0
23,990
7,980
101233
741D1 210017716 1090002155 4010037097
29-01-2008
29-05-2008 6 0
63,121
18,724
101233
841D1 210017326 1090002155 4010037097
29-01-2008
24-03-2008 2 0
22,925
5,851
101233
941D1 215301970 1090002155 4010037097
29-01-2008
29-05-2008 15 0
142,631
36,837
101233
1041D1 215307330 1090002155 4010037097
29-01-2008
28-03-2008 5 0
52,880
14,398
101233
1141D1 215308652 1090002155 4010037097
29-01-2008
31-03-2008 10 0
10263
2,625
101233
1241D1 210073433 1090002155 4010037097
29-01-2008
31-03-2008 4 0
48,352
33,409
101233
13
41A1220923409 1090001248 4010028080
22-11-2006
18-01-2007 1 0
8,409
101233
220923409 1090001981 4010037830
28-02-2008
25-04-2008 2
8,829
101233
220923409 1090001981 4010037830 28- 25- 3 0 7 8,829 61,8 101233
02-2008
04-2008
06
1441D1 220923090 1090002155 4010037097
29-01-2008
31-03-2008 6 1
5246
1,228
101233
1541A1 220923090 1090001248 4010028080
22-11-2006
31-01-2007 10 1
9234
2,105
101233
16
41D1210004988 1090002484 4010039564
30-05-2008
25-02-2009 90 0
012,192 100785
210004988 1090003572 4010045211
28-03-2009
21-01-2010 100 19
17112,439
21,27,026
100785
1741D1 210019211 1090003312 4010044425
28-02-2009
13-07-2009 20 2
18795
14,301 101233
18
41A1 215308280 1090001248 4010028080
22-11-2006
12-03-2007 8 0
5,451
101233
41A1 215308280 1090001248 4010028080
22-11-2006
16-03-2007 8 0
5,451
101233
41A1 215308280 1090001981 4010037830
28-02-2008
25-04-2008 2 1
176,212
1,05,612
101233
19
41D1 210030855 1090002036 4010036788
14-01-2008
24-03-2008 1 0
869
101233
41D1 210030855 1090002155 4010037097
29-01-2008
27-03-2008 8
869
101233
41D1 210030855 1090002156 4010037106
29-01-2008
31-03-2008 6 4
15869
13,039
101233
2041D1 215311090 1090002155 4010037097
29-01-2008
13-03-2008 8 1
7524
3,665
101233
21
41A1215301141 1090001248 4010028080
22-11-2006
05-02-2007 4 0
956
101233
215301141 1090001248 4010028080
22-11-2006
05-02-2007 25 0
956
101233
215301141 1090001981 4010037830 28- 31- 24 0 1,157 101233
02-2008
03-2008
215301141 1090003399 4010044730
13-03-2009
16-07-2009 24 18
591,215
71,676
101233
22
41A1 210000016 1090001248 4010028080
22-11-2006
05-02-2007 2 0 3,332 101233
41A1 210000016 1090001248 4010028080
22-11-2006
05-02-2007 2 0 3,332 101233
41A1 210000016 1090001981 4010037830
28-02-2008
04-06-2008 2 1
53,799
18,994
101233
Total Cost 88,51,499
5. In the following cases there was an increase in the stock levels as the purchase of Spares was not based on the past consumption or the future requirement.
Sl No.
Plant Material Code
Avgcons
PO No.PO Date
GR Date
POQty
Current
Stock
AvgStock Before RC
PR No.
AvgStock After RC
% increase in Stock
141D1
210456139 1 4010045211
28-03-2009
18-01-2010
4 4 1.001090003572
2.50 150.00
241D1
210456478 1 4010045211
28-03-2009
31-07-2009
2 3 2.001090003572
2.50 25.00
341D1
210000397 19 4010045211
28-03-2009
31-07-2009 40
69 23.501090003572
58.00 146.81
441D1
210000398 25 4010045211
28-03-2009
31-07-2009 40
66 50.001090003572
58.00 16.00
541D1
215308679 167 4010048389
22-10-2009
28-11-2009 148
146 66.001020022828
124.00 87.88
641D1
210456067 85 4010042037
22-10-2008
06-03-2009 50
117 39.001090002963
78.00 100.00
7
41D1 215301011 50 4010048389
22-10-2009
28-11-2009 192
187 34.001020022828
105.50 210.29
8
41D1 215308280 0 4010041723
02-10-2008
31-10-2008 26
52 17.001090002781
39.00 129.41
9 41D1 215301012 13 4010048389 22- 28- 50 91 34.50 1020022828 70.00 102.90
10-2009
11-2009
10
41D1 215308379 174 4010041723
02-10-2008
19-11-2008 204
103 115.001090002781
159.00 38.26
11
41D1 210000017 0 4010048410
23-10-2009
23-02-2010 6
22 11.001020023645
19.00 72.73
12
41D1 215308835 92 4010048389
22-10-2009
28-11-2009 192
174 39.501020022828
105.50 167.09
13
41A1 210079897 2 4010049416
17-12-2009
Not Recd 4
5 3.001020023313
5.50 83.33
14
41D1 215301843 180 4010048389
22-10-2009
28-11-2009 384
352 81.001020022828
216.00 166.67
15
41D1 340408205 0 4010037106
29-01-2008
26-03-2008 8
21 6.501090002156
17.00 161.54
16
41A1 220923405 17 4010037830
28-02-2008
24-06-2008 40
92 52.001090001981
93.00 78.85
17
41D1 220923405 84 4010048389
22-10-2009
30-11-2009 192
177 38.501020022828
106.00 175.32
18
41D1 210000016 3 4010048410
23-10-2009
31-12-2009 19
45 26.501020023645
36.00 35.85
19
41A1 210017422 7 4010044732
13-03-2009
17-07-2009 11
23 11.001090003399
17.00 54.55
20
41D1 210017422 1 4010037106
29-01-2008
31-03-2008 4
9 2.001090002156
5.50 175.00
6. In the following instances the quantity purchased was more than the Average consumption per Year.
SlNo.
PlantMaterial Code
PO No. PO Date Amount GR DatePOQty
Consumption
Avg consper Year
ExtraQty
Vendor
Code
141D1
210456139 401004521128-03-2009 7,18,478
18-01-2010
4 33 1 100785
241D1
210456478 401004521128-03-2009 2,28,980
31-07-2009
2 11 1 100785
341D1
210000397 401003956430-05-2008 52,306
26-02-2009 42 15 20 22 100785
41D1 210000397 4010045211 28-03- 53,366 31-07- 40 33 20 20 100785
2009 20094
41D1210000398 4010045211
28-03-2009 53,366
31-07-2009 40 27 20 20 100785
541D1 215308679 4010048389
22-10-2009 2,654
28-11-2009 148 104 83 65 839783
641D1
210456067 401003956430-05-2008 1,660
06-03-2009 200 6 53 147 100785
41D1210456067 4010042037
22-10-2008 1,685
06-03-2009 50 133 53 50 100785
741D1 215301011 4010040654
06-08-2008 656
04-09-2008 210 282 110 100 101233
41D1 215301011 401004838922-10-2009 656
28-11-2009 192 261 110 82 839783
841D1 215308280 4010041723
02-10-2008 6,548
31-10-2008 26 12 21 26 101233
41D1 215308280 401004838922-10-2009 6,548
31-12-2009 34 28 21 13 839783
941D1 215301012 4010041723
02-10-2008 2,743
31-10-2009 29 36 22 7 101233
41D1 215301012 401004838922-10-2009 2,743
28-11-2009 50 8 22 28 839783
10 41 E1 210019211 4010039499
27-05-2008 749
12-09-2008 5 1 3 101233
41 E1 210019211 4010049848
12-01-2010 794 Not Recd 2 1 1 2 101233
1141A1 215311090 4010028080
22-11-2006 421
18-01-2007 6 2 3 101233
41A1 215311090 401004473213-03-2009 554
17-07-2009 11 3 1 9 101233
1241D1 215308379 4010041723
02-10-2008 1,862
19-11-2008 204 240 105 99 101233
41D1 215308379 401004841023-10-2009 1,862
23-02-2010 196 237 105 91 839783
1341D1 210000017 4010041723
02-10-2008 2,414
19-11-2008 12 2 2 10 101233
41D1 210000017 401004841023-10-2009 2,414
23-02-2010 6 2 2 4 839783
1441A1 215308835 4010028080
22-11-2006 380
05-02-2007 50 24 25 25 101233
1541D1 215308835 4010040654
06-08-2008 457
04-09-2008 210 270 125 85 101233
41D1 215308835 401004838922-10-2009 457
28-11-2009 192 272 125 67 839783
1641A1 210079897 4010037830
28-02-2008 712
25-04-2008 10 4 6 101233
1741A1 210079897 4010049416
17-12-2009 681 Not Recd 4 5 2 2 101233
1841D1 215301843 4010040654
06-08-2008 318
04-09-2008 422 534 250 172 101233
41D1 215301843 401004838922-10-2009 318
28-11-2009 384 536 250 134 839783
1941D1 340408205 4010037106
29-01-2008 379
26-03-2008 8 3 3 8 101233
2041A1 220923405 4010037830
28-02-2008 643
24-06-2008 40 41 17 23 101233
2141D1 220923405 4010040654
06-08-2008 676
04-09-2008 210 270 125 85 101233
41D1 220923405 4010048389 22-10- 676 30-11- 192 260 125 67 839783
2009 200922
41D1 210000016 401004172302-10-2008 3,989
19-11-2008 8 11 4 4 101233
41D1 210000016 401004841023-10-2009 3,989
31-12-2009 19 8 4 15 839783
Selection of problem
Prioritization:
The 6 different cases of inefficiencies which were found in the study and the loss incurred due to this inefficiency are as follows:
1. Increase in lead time No of cases observed: 5 Loss incurred due to this: 2, 26,635.59 INR Because of late supply & urgency of the material, in 3 cases the material is bought from the OEM at much higher price and that extra price is calculated as loss, for which supplier is not liable as per the terms and conditions agreed in the contract.
2. Increase in price No of cases observed: 3 Loss incurred due to this: 66,669 INR The difference between the price before fixing the rate contract and price after fixing the rate contract is calculated as loss.
3. No stock of material in the store No of cases observed: 10 Loss incurred due to this: negligible
4. No consumption, but material was purchased No of cases observed: 22 Loss incurred due to this: 89, 08,166 INRBased on average consumption of previous years, the excess stock in the inventory is identified and cost incurred in buying the excess materials comes as 71,26,533 RS and 25% of the value is considered as the inventory carrying cost i.e. 17,81,633 RS. The sum of these two costs is treated as loss which comes to 89, 08,166 Rs.
5. Increase in stock levels as purchase is not based on the past consumption No of cases observed: 20
Loss incurred due to this: 16, 13,431.73 INRThe price of the material is calculated for the increased average stock of inventory and, inventory carrying cost is calculated for the extra stock in inventory.
6. Quantity purchased is more than average consumption No of cases observed: 22 Loss incurred due to this: 70, 94,892 INRThe cost for the extra materials is taken and their inventory carrying cost is added up and considered as total loss.
Graphical Representation of the losses incurred by these 6 problems:
Pareto analysis
• In order to find the relative importance of problems & the vital few problems in a simple, quickly interpreted, visual format. PARETO ANALYSIS is done for all the above cases in order to distinguish the critical problems from the less significant problems with respect to COST. It is based on the fact that 80 % of defects are caused by 20 % of causes.
Thus the major problems which constitutes 80 % of all the problems are :
No consumption , but material was purchased Quantity purchased is more than average consumption
As the 2 major problems states that as there is no consumption, but still material was purchased, in some cases the consumption is very less compared to the procurement and the quantity purchased is more than average consumption per annum. By considering all these statements I arrived to the major problem needs to be addressed in order to eliminate the 80 % of defects in the system.
The vital problem that needs to be addressed is
“PROCUREMENT DESPARATE TO CONSUMPTION”
Defining the problem
Problem statement: procurement is disparate to consumption for the items which were fixed in the Rate contracts.
Impact: increase in inventory with excess purchases, thus the objective of introducing the Rate contract is not achieved
Objective: to develop a solution for procuring the materials which were there in Rate contract as per the consumption, thus reducing the inventory.
Goal: to reduce the loss incurred due to excess purchases for the items under Rate contract by around 75 %.
Now I focused my efforts in analyzing this vital problem in order to identify the probable causes whose elimination leads to improvement.
Identification of causes
Analysis of the problem (fishbone diagram)
In order to identify many possible causes for the above defined problem I selected the tool FISHBONE DIAGRAM also called as ISHIKAWA DIAGRAM. The probable causes which drives the effect “procurement disparate to consumption” are identified by the brainstorming session and numerous interviews conducted by the personnel’s of MATERIALS MANAGEMENT DEPARTMENT, FINANCE DEPARTMENT, INTERNAL AUDIT DEPARTMENT, ENGINEERING DEPARTMENT and sorted into the categories of POLICIES, PROCEDURES, PEOPLE & PLANT ( INFRASTRUCTURE ) .
Cause & effect diagram
Identification of sub causes
Now the various sub causes which are responsible for the above identified causes are figured out.
Causes due to inefficiencies in people
Causes due to inefficiencies in plant (sap/ erp)
Here in this case SAP/ ERP is considered as the infrastructure and the various causes due to the inefficiency in ERP system were identified.
Causes due to policies
Causes due to inefficiency in procedure
LIST OF ALL SUB CAUSES DUE TO PEOPLE, PLANT, POLICY & PROCEDURE leading to the problem “procurement disparate to consumption”
1. In sufficient knowledge in usage of ERP.2. Complex interface of ERP.3. Resistance to change ( employees )4. Network problems.5. Low level of confidence in the data provided by ERP.6. Process of L1 bidding.7. Deficiency in internal controls of ERP.8. High lead time.
9. Unknown life expectancy10. Commissioning problems11. Inadequate operational skills required for new equipment.12. Inadequate input controls of ERP.13. More checks & inspections.14. Equipment break down cannot be forecasted accurately.
Selecting the root causes (control- impact matrix)
Out of all the known possible root causes, it is not viable to attack all, so CONTROL- IMPACT MATRIX is applied in order to sort out the root causes on the basis of its controllability and its impact. Classification of all the causes in this matrix is arrived by discussions with personnel’s of various departments and supported with the data collected in some cases.
Control- impact matrix
The causes which fall under HIGH IMPACT & HIGH CONTROL are viable to address and they should be controlled first. All the causes whose impact is very high and controlling of these inefficiencies are in our hand have to be attacked.
Findings
The vital root causes which are leading to the negative impact of Rate contracts were identified.
In sufficient knowledge in usage of ERP. Complex interface of ERP. Network problems. Low level of confidence in the data provided by ERP. Deficiency in internal controls of ERP. Inadequate input controls of ERP
CONCLUSION & RECOMENDATIONS
Conclusion
IMPETUS GROUP achieved most of its objectives by introducing Rate contracts. Based on the study I found that there is a positive impact on the price of the material and the lead time where Rate Contracts have been entered by Impetus Group, there is a substantial decrease in the price and the lead time except in a few cases where there are delays in delivery of the Material. However there is no decrease in the stock levels of Material where Rate Contracts were entered, instead in many cases there is a considerable increase in the Stock Levels without any increase in the consumption of the Material.
Based on the study work performed I found:
4. Purchase Orders are being placed even though sufficient quantity of Material was lying in the Stores. The total amount of Stock (as on 31st
March 2010) which was not utilised even once from the time it was bought is Rs. 88 Lakhs (as per sample study of 70 items out of a total of 330 Material).
5. There was an increase in the Stock Levels.
The following table gives the stock of the Material of 330 items where Rate Contracts were entered.
Stock as on Amount% increase
Year on Year
Consumption for the Year
31-Dec-07 58,59,8962007
6,395,964
31-Dec-08 1,65,14,549 181.822008
9,885,554
31-Dec-09 2,95,15,613 78.722009
17,299,079
28-Feb-10 3,48,10,873 17.94
Taking the amount of loss incurred due to theses inefficiencies into consideration the vital problem is detected as “procurement is disparate to consumption”. Week input and internal controls of SAP/ ERP and insufficient knowledge in usage of ERP have been identified as potential root causes which are responsible for this vital problem. So management or the IMPETUS GROUP should focus on these identified causes and necessary steps have to be taken in order to achieve the objectives of introducing rate contracts.
Some necessary steps that have to be implemented by the management for the above mentioned cause were recommended below.
Recommendations
Strengthening input controls and internal control procedures to ensure accurate and timely capture of data.
Reorder level, maximum level and minimum level have to be fixed in the ERP system.
Controls have to be placed in such a way that system should not allow to generate PR if it shows stock is greater than reorder level.
Temporary material codes have to be effectively matched with their mother equipment or with the permanent material codes in SAP ERP, as indenters don’t have sufficient knowledge in identifying the material with temporary material codes.
Have to update the list of integrated suppliers who were fixed in the Rate contracts in the SRM module
Numerous cases in almost all vendors were noticed where spares were purchased from RC vendor but the items concerned were not reflected in SRM module even after revised price lists became operational. This appears to suggest that there is inadequate system maintenance in SRM module which has to be improved.
One of the major objectives of Rate contracts is to reduce the time in tendering process so as to procure the spares just in time for its consumption. All vendors have specified the time lag between placement of order and its supply. This lead time period is not
loaded in the SRM module and to the extent one of the main objectives of RC would be defeated.
(Lead time data being vital to reduce carrying costs of spares I would suggest that this data be loaded in SAP also, besides loading on SRM Module so that any material code report taken from SAP would provide the user with data on when the order has to placed )
Accumulating information about RC purchases is difficult process presently, as there are multiple vendors. The problem gets aggravated due to mergers of the RC vendors and link in between the two vendors does not get reflected in system. The process of data accumulation could be simpler and more visible if a separate RC-PO series could be allotted in SAP for PO’s under RC.
Better coordination of PROJECT IMPETUS with PROJECT ICE to ensure uniformity for maintenance & procurement.
The operations of Rate Contracts and the effect on inventory build up may be monitored at an appropriate level.
Organising regular training programmes to raise the level of user awareness and minimise errors of data input and making available updated operational documentation to the end users.
FINAL VALUE ADDITION
The final value addition has been done by finding the potential root causes of operational inefficiencies in managing the spares which are under Rate contracts. And some of these causes can be addressed to minimize the inventory for the items which were not under rate contracts also.
NEXT STEPSThough lots of efforts have been made to analyze the factors causing for the operational inefficiencies in maintaining the purchases through Rate contracts, still there is lot of scope for improvement as a whole. Some of the following areas that have been identified for future study on the above subject:
1. Reduction of lead time in procurement to reduce stocking levels.2. Vendor/OEM rating document can be made for all the suppliers
with whom rate contracts were fixed from the data which I generated through SAP. The suppliers who were not up to the mark would be put on Holidays and would not be considered for future business in ONGC for new project.
3. Supply Chain Management concept can be introduced to ensure material receipt on time by user group without any discrepancy. It will include updating of physical facilities of stores and integration with SAP.
4. A study can be carried out to review the performance of Material Management (MM) module to ensure that input, processing and output controls were in place ensuring reliability and integrity of data.
ANNEXURE 1
Materials which are purchased under RC
Material Code Count Quantity Net Value per unit
210456139 2 7 5,029,348 718,478210456485 2 2 802,586 401,293210456471 2 2 674,825 337,413215303881 2 2 663,932 331,966210456144 2 2 611,792 305,896210618840 3 8 2,329,892 291,237210456478 2 4 906,829 226,707210456179 2 5 983,248 196,650210000093 2 4 508,502 127,126210001627 3 4 461,021 115,255210005747 2 2 165,557 82,779210456160 2 7 570,768 81,538210002209 2 2 156,583 78,291215310865 2 4 273,392 68,348215301109 2 3 189,329 63,110210000397 3 102 5,605,654 54,957210456498 2 60 3,170,195 52,837210000398 2 93 4,906,916 52,763210003673 2 6 284,285 47,381210003618 2 4 165,060 41,265210456403 2 6 236,930 39,488210618529 2 3 107,019 35,673211505271 2 2 66,741 33,370215308441 2 3 91,694 30,565210004415 3 5 151,315 30,263210456486 2 12 358,685 29,890215308417 3 8 217,889 27,236210456481 2 4 108,608 27,152280001485 2 3 75,216 25,072211501049 2 5 114,112 22,822210456480 2 6 133,164 22,194210081711 3 3 64,551 21,517215388127 2 13 273,899 21,069210000109 2 4 80,937 20,234211505270 2 2 38,350 19,175210456291 2 30 571,704 19,057210003588 3 4 63,777 15,944
210004840 2 7 108,171 15,453210077978 2 8 123,078 15,385210001137 3 12 179,492 14,958210004416 2 2 29,782 14,891210002285 4 4 59,423 14,856210003587 3 5 71,040 14,208215329096 2 7 94,151 13,450210004989 2 300 3,812,816 12,709215308293 2 6 74,964 12,494210003584 2 4 49,643 12,411210004988 2 190 2,341,141 12,322215308373 5 8 98,418 12,302210456489 2 190 2,223,776 11,704215308353 4 8 92,582 11,573210004752 3 5 56,539 11,308210003583 2 4 39,045 9,761210456141 2 27 240,000 8,889210000699 3 13 110,882 8,529220001122 2 12 101,387 8,449215308352 4 8 66,706 8,338215308375 2 64 515,631 8,057215301863 2 5 38,739 7,748210000099 2 4 27,544 6,886215301250 2 18 120,903 6,717220923118 2 3 19,859 6,620215308256 2 8 52,902 6,613215301206 3 5 32,995 6,599215308280 7 110 678,930 6,172210456446 2 12 73,415 6,118215378548 4 188 1,115,141 5,932215308287 2 6 33,648 5,608215303730 2 15 84,098 5,607210077808 2 12 65,450 5,454215317012 3 4 21,514 5,378210030846 2 4 21,355 5,339210001459 2 8 39,885 4,986220923409 5 11 52,561 4,778210073433 8 17 80,666 4,745215308338 5 16 73,844 4,615210002248 2 4 18,214 4,554210456362 2 28 127,149 4,541220000604 2 18 76,510 4,251220000966 2 5 21,169 4,234210019780 6 21 87,754 4,179210004990 2 6 25,023 4,171
210002197 3 4 16,463 4,116215320726 3 3 12,147 4,049215308701 3 9 35,532 3,948210456068 2 250 976,876 3,908220923411 4 17 65,744 3,867215308393 3 18 68,895 3,828215308600 2 24 85,178 3,549210005565 2 16 55,527 3,470210000016 13 74 256,356 3,464215308188 2 4 13,280 3,320215326493 2 2 6,623 3,312215321173 2 2 6,377 3,189210002702 2 3 9,459 3,153215378568 2 8 24,713 3,089215307480 4 8 23,753 2,969210456354 2 120 350,994 2,925215308442 2 96 278,511 2,901210004755 3 5 14,139 2,828210456466 2 20 55,618 2,781210456358 2 130 358,892 2,761215308348 4 79 213,290 2,700215308679 3 258 680,894 2,639210002132 2 8 20,069 2,509210003578 2 8 19,721 2,465215301718 4 13 31,400 2,415210002244 2 2 4,813 2,407280001306 3 21 50,278 2,394210456408 2 2 4,672 2,336210001017 3 20 45,877 2,294215301012 7 197 440,753 2,237211504096 2 6 13,348 2,225210017716 5 14 30,939 2,210215301985 4 49 104,004 2,123210000017 8 43 87,722 2,040215308292 4 30 59,910 1,997215378565 3 12 23,410 1,951215301970 6 24 44,738 1,864215308272 3 26 47,109 1,812210003604 2 2 3,582 1,791210001016 4 26 45,968 1,768210002184 2 9 15,814 1,757215310558 2 4 6,988 1,747215307330 6 15 26,154 1,744215308379 8 670 1,167,647 1,743210001490 2 10 17,321 1,732
210002782 2 10 17,270 1,727215301864 3 12 20,676 1,723210001563 3 23 39,604 1,722220923399 2 6 10,328 1,721220923235 4 17 29,030 1,708215330888 3 640 1,067,435 1,668210456067 2 250 416,283 1,665210005746 2 4 6,509 1,627215304238 3 5 7,526 1,505215308444 4 28 42,118 1,504210004475 4 31 46,524 1,501210456157 2 8 11,954 1,494210456070 2 60 88,793 1,480215308688 2 12 17,655 1,471215308683 4 16 23,375 1,461215308015 2 8 11,565 1,446210618330 3 262 365,890 1,397215301110 2 6 8,178 1,363210004987 2 36 47,253 1,313210002200 3 19 24,669 1,298210000097 2 6 7,628 1,271210004991 2 6 7,628 1,271220000606 2 21 26,391 1,257210017326 5 21 26,214 1,248215308623 2 6 7,181 1,197210002201 4 21 24,828 1,182215308072 2 14 16,432 1,174210000098 2 4 4,661 1,165215378477 2 16 18,423 1,151210002185 2 9 10,313 1,146210001478 2 4 4,575 1,144215301879 3 15 17,026 1,135210004832 4 6 6,705 1,117210456066 2 980 1,092,645 1,115210456150 2 12 13,348 1,112210002207 2 16 17,257 1,079210000158 3 33 35,541 1,077215378512 2 8 8,475 1,059210750828 2 79 82,250 1,041215304294 5 16 15,715 982215301201 3 6 5,861 977215323140 7 585 562,080 961215308605 3 6 5,751 958210001474 3 8 7,604 951210000095 2 4 3,602 900
215320735 3 3 2,683 894210003829 2 10 8,757 876215301958 2 2 1,741 870215301906 4 18 15,364 854215378442 2 14 11,922 852210618133 2 17 14,417 848215308090 2 5 4,225 845215301141 5 101 84,666 838215308110 2 19 15,234 802215308013 3 13 10,387 799215308308 2 12 9,309 776215337155 4 123 95,159 774215378499 2 8 6,138 767210003601 2 12 8,837 736215308014 3 14 10,286 735215308271 3 26 18,864 726210004829 3 8 5,765 721220923324 5 11 7,830 712215336318 3 21 14,771 703210019211 7 57 39,786 698215301990 3 18 12,451 692210000096 2 4 2,754 689215308012 2 10 6,681 668215378623 2 10 6,504 650210456159 2 8 5,085 636215301011 6 732 461,871 631210007008 2 14 8,816 630210003606 2 4 2,486 621220923405 10 886 544,253 614210003607 2 4 2,428 607215308316 3 18 10,607 589210017422 13 80 45,931 574210004665 4 210 120,086 572215307718 3 37 21,126 571210018513 2 18 10,149 564215308764 7 42 23,643 563220000969 2 30 16,842 561215321485 2 4 2,233 558210005560 2 4 2,222 555210000855 3 6 3,297 550210000698 4 16 8,547 534210007164 2 23 12,264 533220923111 4 60 31,928 532215301755 3 28 14,869 531210018526 3 15 7,752 517
210456284 2 60 30,777 513215308006 4 27 13,480 499215308172 2 8 3,982 498210030855 7 47 23,377 497210001454 2 8 3,964 496215308601 3 22 10,831 492210001475 2 8 3,933 492210000723 3 11 5,390 490210618270 2 4 1,925 481210001494 3 8 3,806 476210001481 2 17 7,952 468215378211 4 23 10,732 467210003582 2 8 3,726 466215321212 3 50 23,219 464210030656 3 23 10,667 464210004753 2 18 8,160 453210000228 7 48 21,735 453215308176 2 5 2,256 451210017625 2 24 10,816 451210077580 2 48 21,596 450215308835 8 772 337,607 437215308753 2 2 866 433210002326 2 24 10,324 430215378583 3 82 34,906 426210002198 2 3 1,246 415215331114 3 6 2,478 413215311090 7 39 15,970 409210618807 5 31 12,609 407215308457 3 18 7,312 406210077840 3 10 3,984 398210077586 2 8 3,182 398215301212 2 4 1,591 398210001511 2 2 794 397215342279 6 46 18,014 392210079897 8 49 19,063 389215308347 3 36 13,788 383215308319 3 6 2,265 377210030199 6 31 11,112 358210019657 4 12 4,256 355210017187 4 60 21,151 353210001469 2 25 8,749 350210081189 2 4 1,379 345210074792 4 18 6,187 344215374299 4 20 6,699 335210018503 3 30 10,014 334
215308005 4 99 32,789 331220923398 3 8 2,622 328210001464 2 128 41,187 322220012001 8 28 8,881 317215378409 2 18 5,639 313215301843 8 1578 483,165 306210060306 4 27 8,136 301215378603 2 8 2,395 299210073703 4 16 4,744 297210001492 3 16 4,650 291215301200 3 6 1,743 291210019742 3 3 869 290210001449 2 128 36,977 289210001453 2 11 3,146 286210001484 2 9 2,536 282210073344 2 9 2,535 282340021065 2 12 3,373 281210030827 3 10 2,808 281215301956 2 2 559 280215303492 3 8 2,205 276215307250 2 4 1,088 272210073345 3 15 4,064 271215308420 3 20 5,380 269223301572 2 8 2,147 268210004986 2 24 6,375 266210013801 3 18 4,752 264340408205 8 58 14,393 248210019704 7 41 10,133 247210456243 2 180 44,049 245210618836 3 40 9,689 242210017154 3 144 33,683 234210001473 2 9 2,078 231210004750 4 16 3,518 220900002584 2 2 439 220210018482 5 62 13,573 219210019849 7 49 10,596 216210456468 2 251 53,180 212210017628 3 14 2,929 209220923090 8 26 5,283 203210018185 6 202 40,260 199215314062 3 18 3,582 199215328737 2 10 1,980 198215301955 3 162 31,946 197210456440 2 209 41,042 196210001450 2 19 3,731 196
210018522 2 7 1,371 196215308279 3 250 48,859 195210017077 3 160 31,212 195210001491 3 8 1,554 194215309634 5 31 5,668 183215301789 2 16 2,923 183210030196 4 20 3,635 182210456461 2 36 6,112 170210456140 2 57 9,656 169210618131 6 604 101,575 168215308652 7 40 6,634 166210030828 5 264 43,646 165210019672 4 27 4,391 163210001495 2 64 10,202 159215317049 4 21 3,197 152215301854 2 2 293 147210030897 2 12 1,746 145215308363 3 496 71,877 145210456443 2 260 37,575 145210016041 2 8 1,155 144215339417 2 8 1,138 142210002263 2 4 560 140210001488 3 9 1,242 138210081187 2 6 823 137210018011 4 13 1,780 137210000435 2 4 545 136210074784 4 28 3,794 135210456442 2 1300 173,473 133210056129 5 41 5,451 133210060431 3 22 2,904 132210081126 2 352 46,441 132210005562 2 12 1,508 126210030030 4 33 3,971 120210073644 3 5 598 120210018686 7 81 9,484 117210077078 2 14 1,631 117210018081 3 92 10,561 115210618046 3 44 5,017 114210456487 2 24 2,670 111210005561 2 31 3,351 108210001465 2 128 13,734 107215308004 3 144 15,435 107210017361 3 12 1,278 106210019820 8 30 3,183 106210017406 4 16 1,686 105
212301590 5 24 2,511 105215303844 4 40 4,138 103215328740 3 3 307 102215301632 6 127 12,940 102215378573 5 23 2,322 101210018071 4 55 5,539 101210456069 2 222 22,239 100
ANNEXURE 2
List of materials selected for Final Sample
Material Code Count Quantity Net Value per unit
210456139 2 7 5,029,348 718,478210456485 2 2 802,586 401,293210456471 2 2 674,825 337,413215303881 2 2 663,932 331,966210456144 2 2 611,792 305,896210618840 3 8 2,329,892 291,237210456478 2 4 906,829 226,707210456179 2 5 983,248 196,650210000093 2 4 508,502 127,126210001627 3 4 461,021 115,255210005747 2 2 165,557 82,779210456160 2 7 570,768 81,538210002209 2 2 156,583 78,291215310865 2 4 273,392 68,348215301109 2 3 189,329 63,110210000397 3 102 5,605,654 54,957210456498 2 60 3,170,195 52,837210000398 2 93 4,906,916 52,763210004989 2 300 3,812,816 12,709210004988 2 190 2,341,141 12,322210456489 2 190 2,223,776 11,704215308280 7 110 678,930 6,172215378548 4 188 1,115,141 5,932210456068 2 250 976,876 3,908210456354 2 120 350,994 2,925210456358 2 130 358,892 2,761215308679 3 258 680,894 2,639215301012 7 197 440,753 2,237215308379 8 670 1,167,647 1,743215330888 3 640 1,067,435 1,668210456067 2 250 416,283 1,665210618330 3 262 365,890 1,397210456066 2 980 1,092,645 1,115215323140 7 585 562,080 961215301141 5 101 84,666 838215337155 4 123 95,159 774215301011 6 732 461,871 631220923405 10 886 544,253 614210004665 4 210 120,086 572210073433 8 17 80,666 4,745210000016 13 74 256,356 3,464210000017 8 43 87,722 2,040210019211 7 57 39,786 698210017422 13 80 45,931 574
215308764 7 42 23,643 563210030855 7 47 23,377 497210000228 7 48 21,735 453215308835 8 772 337,607 437215311090 7 39 15,970 409210079897 8 49 19,063 389220012001 8 28 8,881 317215301843 8 1578 483,165 306340408205 8 58 14,393 248210019704 7 41 10,133 247210019849 7 49 10,596 216220923090 8 26 5,283 203215308652 7 40 6,634 166210018686 7 81 9,484 117210019820 8 30 3,183 106215308373 5 8 98,418 12,302220923409 5 11 52,561 4,778215308338 5 16 73,844 4,615210019780 6 21 87,754 4,179210017716 5 14 30,939 2,210215301970 6 24 44,738 1,864215307330 6 15 26,154 1,744210017326 5 21 26,214 1,248
BIBILOGRAPHY
1. report on project impetus 2. ongc annual report 2008-20093. www.ongcreports.net 4. www.etenders.ongc.co.in 5. materials management manual ( updated on 28th may 2008 )6. report on project ice
GLOSSARY
IMPTUS Implementing Maintenance & Procurement Efforts through Upgraded Systems
ONGC Oil & Natural Gas Corporation
ERP Enterprise Resource Planning
ICE Information Consolidation for Efficiency
OEM original equipment manufacturers
EPC executive purchase committee
MM materials management
RC Rate contract
PR Purchase Requisition
PO Purchase Order
LOI Letter of Indent
EMD Earnest Money Deposit
BEC Bid Evaluation Criteria
NIT Notice Inviting Tender
TC Tender Committee
K-G Krishna – Godavari
E&P Exploration and Production
MTOE Million Metric Tonnes of Oil Equivalent
PSU Public Sector Unit
SCADA Supervisory Control and Data Acquisition
RFQ Request for Quotation
DGS&D Director General of Supplies and Disposals
T code Transaction code
GR Goods Receipt
L1 Low 1
SRM Supplier Relationship Management
SAP Systems, Applications and Products
