Aim of this report is to study a business process of a company and what change has it brought to the company as part of an academic assignment and the information is strictly to be used for academic purposes only.

1. The Value Chain Transformation
Gypsa Vinod

2. The oil industry is basically divided into three major segments:
 Upstream: Oil Drilling & Exploration
 Mid-stream: Pipelines and Transportation
 Downstream: Refineries (Refining)

3.  It is a B2B industry
 The oil & gas and refinery industry
business and transactions consists of:
 The End user Companies like IOCL, BPCL,
HPCL, ONGC & RIL, in India
 Which are engineered and constructed by
Engineering, Procurement & Construction (EPC)
companies
 The Lump-Sum Turn Key (LSTK) contractors
construct these facilities with EPCs
 EPCs are supported by various pumps, turbines,
boilers, cooling systems, heating units, and
complex distillation units manufacturers
 ‘Process Licensors’ have the patents and rights
for the various processes used by the EPCs to
engineer the facilities
End
User
Engineering,
Procurement &
Construction
Company
(EPC)
Process
Licensors
Vendors to
EPCs
Lump-Sum
Turn Key
(LSTK)
contractors

4.  This study is about Kirloskar Pumps which
changed its business process and
organisational structure to attain
competitive edge over growing Indian
competition, and attaining increased
market share in International Market
 The company manufactures Special
Purpose Pumps for Critical applications for
Oil & Gas, Refineries, Fertilizer industries
 These are engineered custom made
pumps for specific critical applications in
these rigs, oil pipelines and refineries

5.  EPCs send requirement enquires to pump OEM companies
 The company makes offers and supports with its services to the
EPCs
 The EPCs place the order to the pump OEMs
 After order, the company manufactures these custom made
pumps and delivery is made at the End User Refineries
 Thus, pumps are sold to End User Refineries thorough EPCs
 There are different departments viz Application Engineering,
Design, Engineering Support, Procurement, Planning, Quality
and Order Execution in this entire process

6.  Each enquiry is different and needs attention
from all departments to study the specifications
and help make the offer correctly.
 Their feedbacks and support is consolidated by
the application engineering team which makes
the offer for the EPCs
 Since so many department were involved in
offer making, and thereafter, the order execution
(or manufacturing), the overall process becomes
lengthy and errors are more likely to happen,
which can lead to incorrect offer making or even
order execution!
Application
Engineering
Design &
Engineering
Product
Development
Procurement
Planning
Quality
Enquiry &
Specifications
Offer to EPC
EPC

7.  The enquiries were required to be
looked at by each of these departments
 This was:
 Time Consuming & Lengthy
 Probability of miscommunication
 Comments and feedbacks were difficult to
incorporate, specially where more than one
departments are involved
 The knowledge sharing and coordination
between departments was difficult

8.  The company improvised many processes at the backend to support the proposals
and order execution
 The departments were dissolved and new concept of VCT (VCT stands for Value
Chain Transformation) was introduced
 The organisational structure was completely changed where three VCT teams were
now created
 These teams now consist for people from all the departments

9. Team
Captain
Application
Engineer
Engineering Procurement Planning
Costing &
Estimation
Quality
Order
Execution
 The team sits together and works together
 Headed by a ‘team captain’ it is responsible for complete enquiry-offer-order cycle
 Each team is informally like a smaller company in itself, capable of handling the
complete process much faster with high efficiency

10.  When the enquiry is received, all of the
team members sit together and study
the specifications in detail
 The feedbacks and comments are
incorporated faster for better
effectiveness of the offer
 The offer is compiled by all the team
members together
 The final output : Offer and Order
Execution: Just Before Time (JBT)

11. 0
2
4
6
8
10
12
14
2012 2013 2014 2015
No. of days for Offer Preparation
No. of days for Offer Preparation

12. 0
10
20
30
40
50
60
70
80
90
100
2012 2013 2014 2015
Percentage of Contractual Delivery Date (CDD) Adherence
Percentage of Contractual Delivery Date Adherance

13. Increased Efficiency & Effectiveness
Correctness of Offer
Improved Order Execution & On time Delivery
Better Feedback and Support of other
functions
Faster support to the customer
Reduced Time Taken for offer preparation
Reduced errors in offers and at order
execution stage

14. Gypsa Vinod