INCREASING PROCUREMENT EFFICIENCY IN OIL AND GAS COMPANY USING LEAN SIX SIGMA CONCEPT AND E-PROCUREMENT IMPLEMENTATION

• Main Author: HAMDANI BATUBARA (NIM 29115500), ARIF
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/25764
• Institution: Institut Teknologi Bandung

The oil and gas industry in Indonesia is going through a difficult period due to the drastic decline in global oil prices since the year 2014. One way to stay competitive when the low selling price is to work more efficiently and reduce operating costs. The efficiency discussed in this report is the streamlining and improvement of the procurement process and ultimately supported by better electronic system implementation. <br /> <br /> <br /> The procurement process has to be done in order to support the operation and production of oil and gas. All procurement needs for both the project as well as for routine maintenance and field operations are carried out by the Procurement department within the Supply Chain Management (SCM) department. In the scheme of Cooperation Contracts applied in Indonesia for investment in the oil and gas sector, the procurement process is regulated by the Government of the Republic of Indonesia represented by SKKMIGAS in the Working Procedure Guidelines no. 007 or simply PTK-007 including its latest applicable revision. As the process refers to a regulation, the process efficiency shall be in adherence with this requirement. <br /> <br /> <br /> The process efficiency is carried out after receiving input of problems in the timeliness and compliance level of the procurement tender process. This is evident from the KPI (Key Performance Indicator) report conducted on the procurement bidding process throughout 2016. From this indication, then conducted research for improvement with the concept of Lean Six Sigma and referring to the DMAIC framework. <br /> <br /> <br /> Through this process of analysis, the report begins by first determining the problems that occur and then measure the level of problems supported by data procurement process data in 2016. From the existing data then conducted further research process to find the root of the problem by applying the method of fishbone analysis diagram. The root cause of problems in the tender process is analyzed through Focus Group Discussion (FGD) with the internal team of procurement. <br /> <br /> <br /> After determining the root of the problem, the analysis is continued to make improvements to the process applied at the time. Process improvement is done by applying Lean's basic principle of prioritizing value to end users, reducing waste, flowing processes, and user-driven demand systems rather than driven by process capacity. The value required by the end user is formulated by conducting FGDs on the technical teams that are the users of the procurement contracts. These improvements and Lean concepts result in a new process that is believed to be more efficient to be implemented consistently. <br /> <br /> <br /> The analysis process reviewed each of the current business process and identified value adding components as well as the potential waste. This is driven by the values important to the business. The improvement process consisted of creating a single flow of value adding activities, instead of the current segmented business process as well as efficiency created from each of the process phase. <br /> <br /> <br /> The implementation process is a very important step and a good control element is needed to ensure that improvements have been made consistently. In this case, the report analysis recommends the application of electronic procurement system (e-procurement) to control the implementation of procurement process so that there is no variation of process which can cause inefficiency. This standard and orderly process can also keep the level of compliance with existing regulations with reduced potential human error in running a very large number of process repeatedly. <br />