Centralized Material Management by L&T TS Helps Identify Potential Savings for a Chemical Manufacturer

As part of the asset management services, L&T TS offers material and inventory management (MIM) solutions that help in simplifying the supply chain.  They provide solutions that give users consistent visibility and access to data, better traceability of material inventory, and opportunity to monitor and control costs in the entire material supply chain.

With a central master data repository for spares/materials in place, the MIM value chain including material planning and optimization; procurement; inventory management; vendor management, and so forth becomes easier.  This also helps to track material availability for production, which in turn has a domino effect on the operations and maintenance downstream. L&T TS prepared a unique model for material management and implemented a “central material master” containing standard inventory data for a major chemical company.

Background and Challenge: To begin with, the data available in site material master at the user plant was disorganized and fragmented.  Moreover, L&T TS had to identify duplicates within the standalone system and the central SAP master.  In the absence of a master database, the communication between the stakeholders is unclear and disjointed.  Also, without appropriate classifications (to aid user specific views such as production and procurement) and data characteristics, the access to ready to use data is difficult.  It was also critical to strictly adhere to project timelines as the process involved migration and transition of data, and any delay could have a substantial impact on the end user operations.

The Solution: L&T TS built a unique model for material management using SAP, which involved the following developments:

• All data was standardized, cleansed, enriched and classified into a reference system
• As many as 16,878 decentralized data sets were converted and migrated to a “central material type”
• The data in the central material were then classified into a reference system that had more characteristics than the decentralized counterparts
• This followed the data enrichment process to achieve the required level of data quality

   

Quantifiable Benefits: The client now had a standard master data, and furthermore could identify potential cost savings of about 10 percent from both the decentralized and central material master database.  The same process for material management was replicated at other manufacturing sites of the client. 

Tracking and analyzing the inventory data reveals opportunities to control costs and improve processes to deal with customers in real time.  Some end users also integrate their enterprise asset management systems with ERP systems for the purchasing, inventory management, and related accounting activities.

Keywords: Asset Management, Document Management, ERP, Inventory and Material Management, L&T Technology Services, Chemicals, ARC Advisory Group.