PTT embraces SCM system

       PTT Plc plans to improve its cost controls to be more efficient by implementing a supply chain management system (SCM),which will be used for linking all related company parties under one roof, said president and chief executive Prasert Bunsumpun.
       Mr Prasert said this was part of its strategic plan that focuses on integration in production, inventories, logistics, procurement and trading activities among its businesses, and it aims to complete system installation in the next three years.
       The group's businesses include oil refining, exploration and production,and distribution for natural gas as well as petrochemicals.
       "As these businesses are all related to energy, it is crucial to create synergy among the group in many aspects. A supply chain can help the company reduce costs and waste," said Mr Prasert.
       "For example, with the new system you will see our quarterly results reports within a week instead of wasting time and personnel for three weeks to complete them as currently happens."
       Its olefins arm, PTT Chemicals (PTTCH), was the first to invest in the system in 2007 with a commitment of 100 million baht. Mr Prasert declined to give the exact amount it saved, but said the amount for logistics was immense,that it may break even on its investment in one year, and that it is one of the most efficient companies in Asia.
       Last year PTTCH traded 500,000 tonnes of polymers through its new system and that should increase to 1.5 million next year and 2.2 million a year later.
       "We can monitor our product from oil or gas well to platform, until the final product is handed over to either corporate clients or motorists who fill their tanks in PTT service stations.
       This gives the company a quicker read on what products clients actually use,data that can be used for its production plan.
       "If we know real demand before hand,we can serve demand as if custom-made,making this the most effective way to cut inventory cost," said Mr Prasert.
       The system also allows the company to monitor waste and loss throughout the supply chain, so that it can solve the problem at the root.
       Mr Prasert predicts that within a few years, the PTT group will surpass other players in cost management in Asia.
       "In the second half of this year new olefins crackers in the Middle East will start production, and while production costs are low, applying the SCM system means we can compete with other newcomers," he said.
       He said there were other chemical producers in the PTT group that had yet to use SCM, and it would seek ways to link systems between similar businesses such as the petrochemical unit of Thai Oil, IRPC and PTT Aromatics and Refinery Plc connecting with PTTCH.
       Prajya Phinyawat, the senior executive vice-president for petrochemicals and refining, said the oil and refinery businesses would install the system first as the group now operates more than 50 oil and refinery sites.
       "The oil and refinery business alone should save around 300-400 million baht per year after SCM is complete," said Mr Prajya.
       Shares of PTT closed yesterday on the Stock Exchange of Thailand at 247 baht, up 3 baht, in trade worth 1.45 billion baht.