CHEMICAL
INDUSTRY
BRIEF
The Indian Chemical Industry, one of the oldest domestic industries in India, has been contributing significantly to both the industrial and economic growth of the country since the Indian independence. The industry, ranging from small scale units to large scale integrated plants (including MNCs), produces nearly 70,000 commercial products covering a large spectrum of categories including inorganic and organic chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, pesticides, agrochemicals and fertilizers, detergents, toiletries and cosmetics and fine and specialty chemicals. The agrochemical, petrochemical, and pharmaceutical sectors are amongst the fastest growing in the industry.
CURRENT VERTICAL ANALYSIS
In terms of volume, the Indian chemical industry is the 12th largest in the world and the 3rd largest in Asia (next to China and Japan) with a size worth US$35 Billion which is about 3% of India’s total Gross Domestic Product (GDP). Gujarat contributes the maximum to the country's chemicals production followed by Maharashtra and Uttar Pradesh. The total investment in the Indian chemical industry is approximately US$ 60 billion.
India exports chemicals worth US$28 billion which accounts for 16% of the total exports from the Indian manufacturing sector. The chemical industry contributes around 20% of national revenue by way of various taxes and levies.
High susceptibility to variations in crude oil prices::
Raw material costs are a major constituent and range from 30% to 60% of Sales. Crude oil or Natural gas being the raw material for basic chemical products, the industry is vulnerable to fluctuations in the oil and gas prices as well as supply disruptions. Also, the raw materials being voluminous, logistics cost also plays a major role in the prices of commodity chemicals.
Role of ERP in Chemical Industry:
Oracle Enterprise Resource Planning (ERP) software provides a companywide business visibility interlinking all functional areas such as sales and distribution, manufacturing, purchasing, inventory, finance & accounts, human resource development etc. and works on a unified Customer database and a single Supplier database for the entire company. It is designed to work based on the best business practices prevalent in the industry the world over.
Data security is addressed thru a comprehensive portfolio of security solutions deployed by Oracle and using privileged user access controls provided thru system administrator.
Details are available at: Oracle Database Security
All major business processes practiced in the industry can be mapped in Oracle ERP. The entire cement manufacturing process starting from raw material preparation, clinker production and finish grinding of clinker can be mapped in the Oracle Process Manufacturing (OPM) module of the Oracle ERP system. It works seamlessly integrated with the other modules such as OPM Product Development, OPM Process Planning, Oracle Purchasing, OPM Inventory, Oracle OPM Costing, OPM Order Management, and OPM Financials of the Oracle E-Business Suite.
In addition to providing a user-friendly environment, the software can be tailored to incorporate specific needs of companies both large and small, progressively expanded, in the ‘horizontal’ sense to embrace additional organizational functions, as well as ‘vertically’ to integrate other stages of the production process.
Design formulation: Simulations can be performed in Oracle ERP to create new Formulations and Recipes or to revise existing ones, in line with engineering changes. Accuracy is maintained since these can be created or edited by Formulator only.
Planning: Based on the Sales demand and existing recipes, ORACLE ERP plans purchases of ingredients and other input materials (material planning) and also performs scheduling of production orders thru resource capacity planning.
Purchasing & Inventory: Purchase Orders are approved as per predetermined hierarchy and history tracking is maintained. As and when material is received from Supplier in the ERP system against the relevant order, inventory stocks are updated for the respective item. Simultaneously, excise registers are updated and / or MODVAT claim process is completed in the system automatically.
Production: Batches are created against scheduled production orders. Inventory stocks of Purchased Items, Work-In-Process items and Finished Goods get updated automatically in the software based on Batch completion (production booking) done.
Maintenance: Assets are maintained thru a Manual work order or thru a Preventive Maintenance Schedule (PMS) which automatically generates Preventive Maintenance Work Orders as well as Material Requirements for the required spare parts. Based on completion status of such Work Orders, Maintenance Cost is calculated by the Oracle ERP software.
Quality: Data capture and traceability of Batch / Lot quality right from input material to finished goods is taken care of by the software.
Invoicing: Finished Goods are invoiced and dispatch documents generated using the software thus keeping a record of each dispatch against the related Sales Order.
Sales & Marketing: Besides booking Sales Orders and getting real time updates on dispatch status of orders booked earlier, the sales team can take informed decisions on prospective sales orders or formulation of sales strategies sitting in their respective sales office / regional office / corporate office, based on the real time stock status of finished goods and estimated date of dispatch of goods planned for manufacturing.
Excise & Taxation: Excise registers are automatically maintained and available for on-line review. Sales Tax claims / returns can be filed based on the system records.
Finance & Accounts: Apart from routine financial transactions such as receipts from customers, payments to suppliers and cash flow management, financial books can be maintained and financial reporting can be done efficiently. Product cost sheets are maintained on-line. Period closing activity in Oracle ERP enforces system discipline thru periodic inventory and account reconciliations, thus minimizing major gaps at a later stage. Statutory audits, Tax audits and Cost audits can be done on-line.
In addition to providing a user-friendly environment, the Oracle ERP software can be tailored to incorporate specific needs of companies both large and small, progressively expanded, in the ‘horizontal’ sense to embrace additional organizational functions, as well as ‘vertically’ to integrate other stages of the production process.
On account of its modular structure, the ORACLE ERP software can cater to cement industries of all kinds, from vertically integrated companies to those specializing in single stage of the production process.
On the whole, ORACLE ERP helps to drive the entire organization on a single platform, provides an improved supply-demand linkage with remote locations, enables informed management decisions based on real time access to accurate data, and enables cutting down of material and resource wastages thru effective utilization as well as thru reduction of communication gaps and paperwork.
CHOICE OF ORACLE ERP PRODUCTS
Filix recommends for its clients in the Chemical industry, the relevant Oracle E-Business Suite (Release 12) modules namely, Oracle Purchasing, Oracle Inventory, Oracle Process Manufacturing, Oracle Order Management & Shipping Execution, Oracle Enterprise Asset Management and Oracle OPM Financials.
Additionally, on need basis, clients can also opt for Oracle Discrete Manufacturing, Oracle Sourcing, Oracle i-Supplier portal, Oracle HRMS and Oracle Business Intelligence products.
FILIX
EXPERIENCE
Filix has wide ranging experience from end-to-end implementation to post-implementation support in the Indian Cement industry. Clients utilizing Filix services benefit from our knowledge base and rich experience in implementing all the above mentioned modules, mapping of the client business processes with the standard Oracle product functionality as well as from Filix expertise in development of Customized forms and reports.
Users of Oracle Financials at these clients benefit from this core strength of Filix team. This includes, to name a few, handling of complex India localization and taxation scenarios of Service Tax and TDS, Budgeting, Fixed Asset depreciation scenarios and making the users comfortable in using the Oracle Financial Statement Generator to analyze the financial data such as expense, income, taxes, inventory and project wise expenses.
Customized Reports like Item Cost Report, Material Flow report for OPM Inventory, Material Consumption report for OPM Inventory, Certificate of Analysis, AP to GL Reconciliation Report, AR vs COGS Reconciliation Report, Receipt/Purchase Register, Sales Register, are only a few out of the list of reports developed to suit specific needs of our clients from the Cement process industry.
With its custom-built products which integrate seamlessly with the Oracle E-Business Suite application, Filix has deployed its technical expertise to map typical business processes being practiced at clients.
With its custom-built products which integrate seamlessly with the Oracle E-Business Suite application, Filix has deployed its technical expertise to map typical business processes being practiced at clients. Some of these bolt-on applications are used to capture and track daily currency exchange rates and sensex figures, Bank wise Export Packing Credit (EPC) limit and stock value & Negotiated Invoices against Forward Purchase Contract (FPC). Bolt-on applications have also been developed for the EPC availment process as well as for capturing of Customer specified Product specifications which is entered in the system by Design department and utilized by Production Department.
Implementation approach:
Filix services are available for the ‘big-bang approach’ as well as for the ‘staged approach’ for ORACLE ERP implementation, based on client’s business needs. However, Filix recommends the 'staged approach' for its prospective clients in the Cement sector in India. This approach helps to get the basic business processes (Purchasing, Inventory Management, Manufacturing and Finance) mapped and working in ORACLE ERP before moving on to utilize the larger benefits such as Business intelligence etc.