INVENTORY MANAGEMENT AND MATERIAL REQUIREMENT PLANNING TO REDUCE LOGISTIC COST AND LEADTIME FOR SHUTDOWN AND TURNAROUND ACTIVITIES AT PT MULTI STEAM POWER

• Main Author: Satria Nugraha, Baruna
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/75047
• Institution: Institut Teknologi Bandung

PT Multi Steam Power (MSP) operates the South Davis Cogeneration Plant in Sumatra. This company supplies electricity and steam to PT California Petroleum Energy (CPE) which operates Raja Block. The plant has a total of 300 MW capacity from three combustion turbines operated along with three heat recovery steam generators with a combined steam generating capacity of over 360,000 barrels of coldwater equivalent per day to support Enhanced Oil Recovery (EOR) activities at the Davis Heavy Oil Field. In 2018, PT MSP had to re-evaluate the major parts planning as impacted of PT CPE’s concession contract that would end by 2021. Engineering assessment was then conducted to identify and promote alternative uses of the major parts that resulted OEM lifetime extension recommendation and to optimize to utilize the used major parts stored in the PT MSP’s Warehouse. There are 3 alternatives, including major part planning according to the BP 2018, scenario of used major parts will be repaired partially after 2021 and scenario of used major parts will be repaired in 20182020. The costs associated with electricity and steam generation can be classified into three broad groups: materials (including major parts), labor and overheads. In this case study, the assumption that labor, overheads cost, and service revenue is the same value for each alternative. Inventory Management and Material Requirement Planning help management to choose the best scenario and prepare its budgets. The scenario of used major parts will be repaired partially after 2021 has been selected as the most attractive option to keep the business continue with high reliability, as the lowest cost of material expenditure, secure the SDTA optimum material requirement before contract expiration and beyond. Effective inventory management is crucial for PT MSP to optimize costs and improve overall efficiency. The company has successfully reduced capital expenditure on major parts by $12.4 million from 2018 to 2021, surpassing the projected Business Plan and outperforming Scenario 1 by $1 million. These cost reductions are expected to continue, with PT MSP anticipating a cumulative cost reduction of $24.3 million by 2024. By implementing appropriate inventory control strategies, PT MSP can optimize capital utilization and minimize unnecessary expenses. This will not only improve operational efficiency but also strengthen the company's financial position, providing a solid foundation for future growth and sustainability.