Material Descriptions
Enrichment & Standardization
Atif Sheikh
OMV Petrom S.A. (Romania)
Introduction by Dave Hopkins, IHS Inc.
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What We’ll Cover Today
Welcome and Introductions (Dave Hopkins, IHS Inc.)
Introduction to Petrom & Case for Good Specifications
IHS SMD, SAP and Material Classifications
MDEP and Value Creation
Key Points to Take Home
Questions
Dave Hopkins - IHS Inc.
IHS is a leading source of information and insight for energy, economics,
geopolitical risk, sustainability, design and supply chain management
• 55,000 customers in over 100 countries with 4,400+ employees
• NYSE Symbol: IHS $1.08B revenue (2010)
• IHS supports 80% of Fortune 1,000
Energy &
Power
Design &
Supply Chain
Defense, Risk
& Security
EHS &
Sustainability
Country & Industry
Forecasts
Commodities,
Pricing & Cost
IHS - Advancing Decisions that Advance the World
About IHS Intermat
IHS Intermat is the leading provider of optimization
solutions for MRO materials
• Since 1978, IHS has focused on cleansing, standardizing and enriching MRO
materials data for the Global 2000
• IHS’s MRO classification taxonomy (SMD™) is used daily in over 2,500
industrial plants and facilities in 34 countries
• IHS Intermat has enabled our customers to realize hard dollar savings and
value through:
• Procurement - Reducing inventory & procurement costs
• Maintenance & Operations - Increasing material & equipment
availability
• Plant Engineering - Enterprise wide MRO material visibility & sharing
IHS - Advancing Decisions that Advance the World
IHS Intermat cleanses, standardizes, and enriches item
descriptions using industry proven templates and tools
MRO Connection was developed and is sponsored by a group of
partner organizations dedicated to providing you solution services and
information to Analyze, Standardize, Optimize and Sustain your
MRO Supply Chain.
Visit: www.MROconnection.com
6
Atif Sheikh
OMV Petrom S.A. (Romania)
OMV Petrom S.A – a quick introduction
• Romania–beyond the land of misty mountains and romantic myths
• Petrom – 150 years of oil production
• In 2004, Petrom was acquired by OMV Austria, enhancing OMV Group’s overall
global reach to East Europe and up to central Asia. OMV is now operating in
about 18 countries worldwide.
• Today, OMV Petrom SA is largest Oil & Gas Producer in South East Europe with
three major operations in Romanian business:
 Exploration & Production (E&P)
 Gas and Power
 Refining and Marketing
OMV Petrom S.A – a quick introduction
In 2009, Petrom E&P operated 7 Warehouse Hubs further subdivided into 15 local
stores with about 67000 registered SKUs.

Hub
 Warehouse
 Darmanesti

Suplac


Pecica


Zadareni

Sandra
Berca


Targu Jiu

Ticleni


Stoina
Pietesti

Leordeni

 Ianca
Targoviste


Poiana
Lacului
Floresti
Otesti

Icoana

Independenta
 Platform 6

Constanta

CorbiiMari
Poeni
Videle
Stretches 514 km from North to South and 720 km from East to West, covering an area of 237,500 sq. km
Issues in the core – cost of poor specifications
Unsearchable
Database
Substandard
Specifications
No Business
Custodian
Disjointed
material
creation
Incorrect &
Inefficient
Replenishment
Inefficient
Procurement
Cycle
Duplicates
Wasted
Process Cycle
Times
50% work
awaiting
materials
False Stock
Outs
Asset
Cannibalization
Inflated
Inventory Costs
Wasted IM Cost
Missed
Opportunities
Increased
MTTR
Downgraded
Asset Reliability
Material Issues in 2009
Mat w/o Stock
with Records
13%
Mat with
Stock
46%
Slide 11
Mat w/o Stock
w/o Records
41%
Get the BASICS right – CLASSIFY your catalogue
• It is Colorization
(or) separation
of materials into
classes or
names & its
adjective
according to
their attributes in
a hierarchy
Material
Classification
Template
Noun
(SAP Class)
• Name of the
basic
commodity type
• Adjective (or)
qualifier for the
Noun.
Modifier
(SAP Sub Class)
• A brief
datasheet with
key attributes
that
• differentiate
materials within
a same
material family
Material Classes in SAP
NOUN: GLASS
MODIFIER: LEVEL GAUGE
TYPE
WATER
SHAPE
RECTANGULAR
SIZE
34MM WD X 220MM LG X 17MM THK
CONNECTION
GLASS, LEVEL,
220 X 34 X 17
RATING
40 BAR
MATERIAL
THERMORESISTANT GLASS
COLOR
CLEAR
ADDITIONAL DETAIL
STANDARDS
STAS 5772-90
INSPECTION DOC CODE
3.1
INSPECTION DOC CODE
URDATERM
MANUF PART NO.
GLASS LEVEL GAUGE;
TYPE WATER; SHAPE
RECTANGULAR; SIZE
34MM WD X 220MM LG X
17MM THK; RATING 40
BAR; MATERIAL
THERMORESISTANT
GLASS; COLOR CLEAR;
STANDARDS STAS 577290; INSPECTION DOC
CODE 3.1
Material Classes in SAP
NOUN: GASKET
Garnitura
spirometalica
DN150PN40
MODIFIER: SPIRAL WOUND
TYPE
OUTER + INNER RING
NOMINAL DIAMETER
150MM
PRESSURE
PN25/40
INSIDE DIAMETER
167MM
OUTSIDE DIAMETER
224MM
THICKNESS
4,5MM
TEMPERATURE RANGE
-200 DEG C LA +550 DEG C
WORKING FLUID
ABUR,GN,PROD PETR,APA ZACAM
INNER RING MATERIAL
321
WINDING MATERIAL
321
FILLER MATERIAL
FLEXIBLE GRAPHITE MIN 98%
OUTER RING MATERIAL
ZINC PLATED CARBON STEEL
STANDARDS
EN 1514-2
INSPECTION DOC CODE
DIN EN 10204 - 2.1
GASKET SPIRAL WOUND; TYPE
OUTER + INNER RING; NOMINAL
DIAMETER 150MM; PRESSURE
PN25/40; INSIDE DIAMETER
167MM; OUTSIDE DIAMETER
224MM; THICKNESS 4,5MM;
TEMPERATURE RANGE -200 DEG
C TO +550 DEG C; WORKING
FLUID
VAPOR,NG,PETROLEUM,DEP
WATER; INNER RING MATERIAL
321; WINDING MATERIAL 321;
FILLER MATERIAL FLEXIBLE
GRAPHITE MIN 98%; OUTER RING
MATERIAL ZINC PLATED CARBON
STEEL; SUGGESTED STANDARDS
EN 1514-2; INSPECTION DOC
CODE DIN EN 10204 - 2.1
SAP Class Taxonomy elements –
challenges & dilemmas
SAP
Support
Language
Template
Attributes
Attributes
’ Order
Value
Standardizat
ion
•How much is too much?
•Define the purpose – It is NOT a
datasheet !
•Target Attribute Population Rate
•Value Adding Attributes
SAP Class Taxonomy elements –
challenges & dilemmas
SAP
Support
Template
Attributes
Attribute
s’ Order
Language
Value
Standardizat
ion
•Why is it important?
•When to freeze?
•Consequences?
SAP Class Taxonomy elements –
challenges & dilemmas
SAP
Support
Template
Attributes
Attributes
’ Order
Language
Value
Standardiz
ation
•What’s the BIG deal?
•Abbreviations Vs Duplication
•Consequences?
SAP Class Taxonomy elements –
challenges & dilemmas
SAP
Support
• Translations – a real
challenge
• Localization Vs
International
• Values Vs Context
• Updates and Maintenance
Language
Template
Attributes
Attributes
’ Order
Value
Standardizat
ion
SAP Class Taxonomy elements –
challenges & dilemmas
• SAP standard
Classification hierarchy
• Multi-language Support
• Multi Language in
attribute VALUES
• Multiple Classification
systems
SAP
Support
Language
Template
Attributes
Attributes
’ Order
Value
Standardizat
ion
Pre-Project Risks
Warehouse &
Procurement
Alignment
Additional
Workshops for
Translation Review
Pre field Visits
securing resources
and IT equipment
Professional
Translator Crew
Intensive Approval
Process
Over scoping with
minimal
incremental cost
Use of material
prioritization
Unstructured &
Conflicting SKU Data
Language
&
Geographical Spread
Organizational
Disconnect and
BU alignment
Forward Planning
for Unique Materials
per Store
Visa considerations
Specialists Continuity
QUALITY
SCHEDULE
IT Integration
Full alignment and
scope clarification
from beginig
Involve and Inform
OMV Global
Solutions – IRIS
Alignment
SCOPE
Data Security risks
HSE Risks
SAP Trainings
Ownership of
technical details
Contractual Clauses
re Delays and Subpar Quality
Weekly
Consolidation
Project
Communication
Plan
COST
Dual PMs –
Redundancy while
still adding value
Project Reporting
System and regular
feedback protocol
Regular
Management &
Stakeholder
Updates
Created a
hierarchy of
technical review
Redundancy in
BackUps
Intricate alignment
for timely uploads
Extended review
of SMD Templates
Created hierarchy of
technical resources
HSE Training of
contract employees
Inclusion in Petrom
HSE Audits
Project Methodology & Alignments
Core Team
Project
Core Team
and
Internal
SMEs
External
Specialists
Internal
Expertise
Technical
System ERP
SAP
IHS
Business
Lead
Data
Management
Technical Beneficiaries
Internal Petrom E&P
Departments
OMV Global BU
Alignments
IHS Step Methodology – Petrom tailoring
Catalogue
Management
Governance
Structured &
Standardized
Database
Desktop research
Vendor Catalogs
Tailored Oil & Gas
Specific SMD –
Classification
Templates
Unstructured
Database
Auto-Classify
& Extract
Structure &
Standardize
Descriptions to SMD
(Level II)
QA
SAP
Integration
Value
Standardization
Additional
Duplicate
Report
On-Site teams
Procurement
Technical Authorities
Petrom Tailoring
Translations
Field Data
Collection-on-Site
Inspection
Duplicate Report
No-Noun
Report
Short and Long text
review, adjustments
and approvals
Material Categorization
Post Project Categories for all Materials
VEHICLES
1%
SUB SURFACE
3%
TOOLS
10%
CHEMICALS
3%
VESSELS
4%
FITTINGS &
CONSUMABLES
31%
OTHERS
11%
Post Project Categories for Good Materials
MATERIALS
2%
MACHINERY
13%
VEHICLES
1%
HSEQ
3%
VESSELS
4%
E&I
19%
SUB SURFACE
4%
TOOLS
9%
CHEMICALS
2%
FITTINGS & CONSUMABLES
33%
OTHERS
8%
Attribute Population
Rate upto 65%
MATERIALS
2%
MACHINERY
14%
HSEQ
2%
E&I
21%
Post-Project Risks
SAP BASED
APPLICATIONS
IHS STRUXTURE
STANDARDIZATION
TOOLS
NEW MATERIAL
PROCESSES
ERP BASED
WORKFLOW
ENABLED
NEW GATEKEEPER
CONCEPT
HOME RULES
CONTROLLED
PROCESSES
STORE
MODIFICATIONS
NEW BIN IDs
CONTINUITY
GATEKEEPER
PEOPLE
PROCESSES
TECHNICAL
TRANSLATION
MASS UPLOADS
ALIGNMENT
Disconnected
organizational
persrpective
VENDOR ALIGNMENT
TECHNICAL
ALIGNMENT
NEW CONTRACTS
EPC PROJECT
MATERIALS
MATERIAL
TEMPLATES FOR
NEW PROJECTS
EXTERNAL
SUPPORT
Resistance to
standards & industry
alignment
LEVERAGE FOR
NEW INITIATIVES
CONTRACT
CHANGES
NEW PRINTED
CATALOGUES
ENRICHMENT
MUST CONTINUE
CONTINUITY OF
CAMPAIGN
FOCUSED
APPROACH
MASS TRAINING
Sustainability options
Custom Processes &
ERP Applications
•Large volume SKUs IHS
Struxure – a viable candidate
•Inbuilt Value added features
•Interface (connector) to major
EAM systems (SAP)
•Recommended for low volume SKUs
•Internal ERP Control and Development
•Dual language and interface preferences
•Robust process & workflow control
•ZMDM – the Petrom way
•Very Large volume SKUs
•A viable consideration for mass creations
•Frequent Creations
•Risk Sharing
3rd Party Catalogue
Management
System
Outsourced
Catalogue
Management
Material Quality sustenance – the Petrom way
Based on SAP’s NetWeaver technology
Reusable components – low development
effort
Core system:
SAP WEB App server 6.20, Support pckg 54 +
BSP Rendering Engine:
SAP WEB App server 6.20, Support pckg 54 +
WebDynpro Rendering Engine:
SAP NetWeaver 7.01 and higher
ZMDM material creation application
Slide 27
ZMDM Features
Comprehensiveness
•
•
•
•
General Administrative information
Status based Workflow enabled platform
Attachments
Version management and transparency
Integration
•
•
•
•
Slide 28
Integrated wit back-end SAP MM module
Full integration with MM Classification system and other master data fields
SAP validations
Secure data update for material creation
Value Creation
•Obsolete / Duplicate
Identification: Investment
Breakeven within months.
•Inventory value reduction of
upto 2% immediately after
project.
•In next 2 years, obsolete
treatment promises savings
equivalent to 6 percent of
project investment
Financial
Value
Future
•An “enabling” platform for future
value-added initiatives, system addons and cost savings
•Service Catalogues,
•Warehouse Profiling
•VMI
•Standardization of materials and
equipment
Enabler
Business
Value
•Improved store service level
•Procurement process cycle
times reduced by approximately
10%
•Reduced maintenance costs
due to better spare identification
and availability
•Enhanced spare quality and
decreased spare usage
Other
Added
Values
Current initiatives (resulted
directly from better specs)
include:
• Material B.O.Ms,
•Vendor Material e-Cataloging,
•Material Profiling
•Market alignment & Supplier
selection
Inventory Reduction evolution (approx)
80000
70000
60000
50000
40000
30000
20000
More
Duplicates
Bad Materials
10000
0
Pre 2009
Slide 30
2010
2011
Key Learnings
Invest on SUSTAINABILTY
Align with Local
needs – do not
underestimate
language factor
Open Standards, Not Proprietary
Leverage good platforms - SAP
Aim Fit for Purpose and create a Winning
Combination:
Solution, Team, Methodology
Key
Learnings
Project
Methodology & Alignments
MATERIAL CLASSIFICATION DOES
NOT SOLVE ALL YOUR SUPPLY
CHAIN ISSUES
DO NOT EXPECT THAT
MATERIAL CLASSIFICATION,
HOWEVER, PROVIDES YOU WITH
A ROBUST PLATFORM TO BUILD
UPON
TO CONTINUE ENRICHMENT AND
ENABLE VALUE ADDED
OPTIMIZATION INITIATIVES
Thank You! Questions?
Atif Sheikh
OMV Petrom S.A (Romania)
Sheikh.Atif@Petrom.com
Dave Hopkins
IHS Intermat Solutions
Dave.Hopkins@ihs.com
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March 27 – 30, 2011
Hyatt Regency Huntington Beach Resort and Spa
Huntington Beach, California
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