Material & Supply Management
in Coal Handling Plants
PROCUREMENT & STRATEGIC SOURCING
Presented by Sarojkant Singh
Procurement
Procurement involves the process of selecting vendors,
establishing payment terms, strategic vetting, selection,
the negotiation of contracts and actual purchasing of goods.
Procurement is concerned with acquiring (procuring) all of the
goods, services, and work that is vital to an organization.
Procurement is, essentially, the overarching or umbrella term
within which purchasing can be found.
Procurement Objectives
Support operational Manage procurement
requirements Process and supply base
efficiently
Develop strong relationships
with other groups Support organizational
in the organization goals & objectives
Procurement Objectives
Enhance Reduce Increase
Competitive Supplier
Advantage Cycle Times
Loyalty
Eliminate Minimize
Workaround Rogue Spend
Processes
Changing Aspects of Business
Competition Basis
»Price »Commercial »Quality »Service »Delivery »Technology »Speed/Time »Value
Addition
What are the types of purchases in a Coal Handling Plant?- Cases we encountered
– Conveyor Parts : Pulley, Idler, Drive, Supports
– Systems: Fire Fighting System, Rapid Loading System
– Steel, Cement, Aggregate
How dependent should you be on a supplier?
Case : Pulley Supplier – Company X Case : We Ordered All on X
– After a competitive bidding between 3 – After 3 months steel prices increase.
suppliers, Lowest bidder (L1) is Company – Supplier is unable to execute in the
X. We have 5 parallel running projects. agreed Price
– Time of Delivery ( 6 Months ) – What Should we do?
– Should we order all pulley orders on X?- – What Are our options?
Advantages & Disadvantages
What did We Do?
RISK
Category of Item
Level of Risk
S Nomi/ MS
Suppliers: Fittings/Venus
MSEL/AUMUND/Metso/Elecon/
Vishwa/ McLanahan
Rollwell/
Kali/Bevcon/AMPS
Adak/
CAT? CAT?
Vendor Management Process
Search for Monitor Performance
Potential Suppliers Remediate
Evaluate Tenders and Select
Supplier
Define
Requirements
Exit, Terminate, Renew,
Conduct Procurement Tender Negotiation and Contract Renegotiate
Supply Chain Management KPI
Cost of Purchase Order
Cost Reduction Cost Savings & Cost Avoidance ₹ 12.14
Switches
Transitors - ₹10
₹10 Display
Switches - ₹10 5 Year Trend This Year
Transitors
Savings
₹10 Sensors -₹15
Other
Battery - ₹05
₹40 Sensors
Display - ₹20 Cost Reduction
Other -$40
Battery ₹ 12.14
₹15 0 5 10 15 20 25 30 35 40
Switches
₹5 Display 5 Year Trend This Year
Avoidance
₹20 Transitors
Other
Cost Savings
Sensors
₹ 12.14
Battery
Procurement ROI 0 10 20 30 40 50 60 70 80 90
(Cost of Procurement: ₹50,414) 5 Year Trend This Year
100
Top 5 Supplier by Cost Reduction
90
80 Supplier 01 ₹20,434 Cost Avoidance
70
₹ 12.14
60
Supplier 02 ₹32,665
50 This Year
Supplier 03 ₹24,676 5 Year Trend
40
30 Supplier 04 ₹12,525
20 Procurement ROI
10 Supplier 05 ₹23,676 ₹ 12.14
0
Battery Display Other Sensor Swiches Transitors Supplier 06 ₹20,575
ROI Benchmark 5 Year Trend This Year
Procurement vs. Strategic Sourcing
Strategic Sourcing focuses longer-term relationships with
Traditional procurement focuses on finding the suppliers that offer quality, value, a willingness to
lowest-cost suppliers. collaborate and the flexibility to meet changing supply
requirements.
Strategic Sourcing
• The overall Goals of strategic sourcing
–To achieve large and sustainable cost reductions,
–Long-term supply stability and
–Minimization of supply risk
–Improvequality
–Reducecost
•Benchmarking
Five Stages for Improvement
Fire Fighting –Crisis management
Push Effect –Supply driven, speculative
Pull Effect –Demand driven, reactiveJust
In Time –SCM, optimization
Zero Inventory –Triggers driven
Costs down, Value up, Lead time down Product
& Volume flexibility up
Stages of Strategic Sourcing
Procurement Develop
1 Plan
3 Strategy
This approach to procurement uses structured and
market-oriented processes to collect data, perform
quantitative analyses, and apply qualitative expert
opinions. The goal is to guarantee the best value
for money in purchasing.
Create
2 Profile
Stages of Strategic Sourcing (Cont.)
Supplier Selection Review &
5 & Negotiation
7 Improvement Measures
Requirements & Implementation
4 Evaluation Criteria
6
Strategic Sourcing Process
Collect and Analyze Data Evaluate & Select Suppliers Implement
Procurement Develop Requirements & Supplier selection Review & improvement
Create profile Implementation
plan strategy evaluation criteria & negotiation measures
The Need in the new age| Value Shift
System Thinking Product Shorter Lifecycle Fossil Fuel Competition and
Business Strategy Development V/s Green Energy the Learning Race
• Cost Advantage • The Product Development Lifecycles have been reduced • The Net Zero is placing a new dimension to
drastically, not only due to the services sector but the core
• Price Differentiation sector also. global affairs
• The mindset change and a holistic approach needed • No more is climate change a future issue, it
. .
has arrived
• Nature pro solutions will charter the way of
the future
• Designers will no more be specialists
3
Culture |Mindset | Digital Transformation
Why Do People Resist Change?
• The Digital Mindset Source : BCG
Desire: Inherent dislike of the new direction
• Look outside, not inside. Potential gains too small
Low trust in change agent
• Prize delegation over control.
• Encourage boldness over caution. Ability: Lack of key skills and
capabilities
• More action, less planning. Not sure of role/ expectations
Too little time or energy
• Value collaboration over individual effort.
Opportunity: Bureaucracy, red tape
Formal or informal constraints of a job or role.
Powerful others who act as obstacles
Change
Change Itself: Forces of habit
Apathy or self-interest Fear of the
unknown
MBE Experience Smart Welding Kemppi
MBE Experience- Risk Management with Random Forest
MBE Experience Oracle AI/ML Solution
Project Management– BIM | Alice
BIM reduces the risks encountered and rework in tremendous way. Culture and prohibitive cost
Thank You
McNally Bharat Engg Co. Ltd.
