To study the Supply Chain processes followed in Chemical Industry

in India and compare it with Global Supply Chain standards

Kandla Energy & Chemical Ltd

University of Petroleum & Energy Studies.

BySagar Relan MBA (Logistics & Supply Chain Management), University of Petroleum & Energy Studies, Dehradun-248007

Title: To study the Supply Chain processes followed in Chemical Industry in India and compare it with Global Supply Chain standards Objective of Study: To understand the Supply Chain processes followed in Kandla Energy & Chemical Ltd and compare it to the practices followed in Chemical Industry in Developing and developed countries. It also included: To review the Supply Chain process followed by KECL. To identify causes of delay in the entire Supply Chain Process. To suggest various strategic options for improvement in Inbound Logistics. To find out the issue faced by the customers and suggest ways to eradicate them. To identify necessary recommendations in the operations executed at Kandla Plant along with ways to strengthen the Distribution network of the company.

Research Methodology:

The study based project was completed understanding entire supply chain project and role logistics play in it. A complete analysis of finding is compiled and classified into appropriate submodules. This research is applied research, where this research was done solving specific practical questions which can be further used for policy formulation, administration and understanding of the supply chain process been currently followed. My research is descriptive in nature, as I attempted to describe systematically the current situation, point out the problem and issues related to service of KECL. Also various interesting finding were found after I compared supply chain process followed at KECL with two World Class companies i.e.; Pilot Chemicals (USA) & Puyang Tiancheng Chemicals ltd (China).

Finding & Conclusion:

KECL had outsourced their customs clearance and Primary Transportation activities In Developed countries, outsourcing of logistics activities is preferred so that the company can concentrate on their core competency In Developing economy, Logistics is seen as a cost saving activity rather than value adding, so in order to save on cost they compromise on logistics They export through 20ft ISO tankers only whose capacity is (18 tons) They have no storing facility outside Gujarat for their finished products. Karnataka & Tamil Nadu is a major barrel market rather than purchasing in bulk. No separate barrel filling station at the plant. Credit term given for collection of payment is dishonored by the customer.

Suggestions & Recommendations

Be your own clearing agent as their Raw Material is the same (Heavy Hydrocarbon), so no major changes in documentation part. Get into a long term contract with transporter to provide them three 20ft tankers as there is constant movement between Kandla Port and their plant, I did a cost analysis on the same and KECL will save Rs. 30,000/month if they implement my recommendation. I suggested them to use a different packing technique IBC (Intermediary Bulk Containers), each IBC can store up to 1 ton of their finished product and IBC are further loaded in 20ft or 40ft container. A 20ft container can carry 20 such IBC, so they can send more finished product at relatively lower cost.

 This suggestion will be helpful to those customers who dont want to buy in bulk. KECL shouldnt purchasing any land currently, rather they should hire a warehouse from any 3PL and store Barrels there, as it would help in reducing lead time and improve supply chains overall efficiency. They should phase out the payment collection period i.e; instead of giving 90 days head start they should divide the invoice into phase like collect 20% of the payment in the first 15 days, then the next 20 % in another 15 days and then the remaining 60 days, this way the rotation of fund in the company remains constant and hence working capital doesnt suffers