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Understanding Petrochemical Business-UPES-1-J13

Understanding Petrochemical Business-UPES-1-J13

Section A (20 Marks)

Write short notes on any four of the following

  1. Concept of Polystyrene
  2. Olefins Plants
  3. Concept of Synthetic Fibres
  4. Pharmaceutical and Aromatics Industry
  5. Environmental friendly Petrochemical technology


Section B (30 marks)

(Attempt any three)

  1. Explain the potential hazards in Food Contact Applications.
  2. What are the applications of Polyvinyl Chloride?
  3. Discuss the challenges faced by Indian Petrochemical Industry.
  4. “Polyester fibres contain crystalline and non-crystalline regions and X-ray diffraction studies show that the unit cell is made of one repeating unit.” Elaborate this statement.


Section C (50 marks)

(Attempt all questions. Every question carries 10 marks)

Read the case “A World-Class Supply Chain for a Petrochemicals Company” and answer the following questions.

A World-Class Supply Chain for a Petrochemicals Company

In the petrochemicals industry, access to low-cost raw materials (or feedstock) is an important competitive advantage. Since the mid-2000s most low-cost feedstock has been located in the Middle East. For companies that set up production there, the most significant challenge is physically moving product to end-users across the globe in a seamless manner.


A large Middle East producer of chemicals and related materials was embarking on the largest investment in its history:  construction of several assets within the region and the acquisition of assets in several new regions around the world. The company aimed to triple its capacity within 12 years. But it was already experiencing some problems. It had grown to the point where it was becoming difficult to support new production capacity, which affected its ability to meet customer demands. Most troubling, lead times and the reliability of delivery commitments were well below customer expectations—and below competitors'.

Developing a world-class supply chain was the linchpin in the company's strategy to connect assets in the Middle East to end markets around the world. Seeking a partner that had supply chain expertise, an understanding of end markets, and the ability to drive substantial change, the management team engaged A.T. Kearney. Our task was to redesign the company's multiple sourcing and delivery mechanisms into a single, integrated supply chain that would reduce costs, improve customer service, and meet the unique requirements of each of its five business units.


Our mission extended beyond making recommendations for incremental changes. Together with the company's leadership, we were building a system designed to be flexible enough to adapt as global markets evolved. To do that we needed a vision of what the future of the petrochemicals industry might look like. That meant taking a holistic look at the entire ecosystem through an in-depth analysis of demand characteristics, customers, market preferences, and the regional competitive landscape.

Our team began by conducting a detailed assessment of the supply chain within each strategic business unit. The goal was to create a step change in how the company operated across six areas:

Customer service

•           Planning and operating processes

•           Supply chain network and logistics

•           Organizational structure

•           IT enablement

•           Performance measurement

As part of the assessment, we benchmarked the company's performance in each area against current competitors and future customer requirements, discovering that major improvements were needed in all areas.

One of the first insights for company executives was the degree to which a tightly integrated planning discipline can drive reliability and customer value. For example, we recommended shifting the planning objective from asset utilization to global profit optimization, extending the three-month planning horizon to a full 18 months. We also recommended dynamic scheduling rather than the current monthly recalibration, which was preventing the company from quickly addressing changing customer requirements.

A detailed logistics network and inventory model allowed the company to evaluate different scenarios that would minimize intra-unit freight costs and optimize inventory levels at each stocking point. The model also supported our redesign of the company's port facilities to improve efficiency and accommodate its growth plans. After assessing the value of routes and hubs, we recommended that the company selectively expand existing terminals into hubs and add additional hubs in high-value areas.

Impact and Advantage

At the time of implementation, the company was poised to realize billions of dollars in additional value and was well-positioned to meet its goal of tripling capacity over 12 years. Halfway through this 12-year journey, the company has successfully integrated several new assets globally, and has already doubled its sales and increased profitability by nearly 50 percent.


  1. Discuss the aims and objectives of Petrochemical Company.
  2. Focus on the situation of the company.
  3. Explain the process of conducting a detailed assessment of the supply chain within each strategic business unit.
  4. What was the impact of implementation of the approach in the case study?

Pen down few important points of the case study.

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