Procurement Strategy

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  • Topic: Supply and demand, Procurement, Microeconomics
  • Pages : 30 (7146 words )
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  • Published : February 21, 2011
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Philippine Polypropylene Inc (PPI) An Affiliate Company of Petron Corporation

PROCUREMENT STRATEGY
Key to Supply Reliability

Group 1 OPEMAN
November 2010

Procurement Strategy: Key to Supply Reliability

OPEMAN

Philippine Polypropylene Inc

TABLE of CONTENTS 1. Overview of the Company ……………………………………………………… 3 Company Background ……………………………………………….……….. 3 The Production Process ……………………………………………………… 3 Product Applications ………………………………………………………….. 4 Vision, Mission and General Business Strategy …………………………… 5 Reliable Material Supply: Procurement Responsibility ……………………. 8 2. Problem Statement ………………………………………………………………. 9 3. Developing the Procurement Strategy ……………………………………….. 9 The Sourcing Matrix Framework …………………………………………….. 9 4. Justification of Strategic Options …………………………………………….. 11 Alternative Procurement Strategies ...…………………………………………11 Identifying Applicable Strategy in the Sourcing Matrix …………………….. 13 Determining PPI’s Buying Position Perspective and the Appropriate Procurement Strategy ………………………………………….. 15 5. Recommendation ………………………………………………………………… 17 6. Proposed Implementation Plan ……………………………………………….. 18 Implementation Tactics and Timeline ..........……………………………….. 18 Other Considerations during Implementation ………………………………. 21 7. Risks and Assumptions …………………………………………………………. 25 Risks …………………………………………………………………………….. 25 Assumptions ……………………………………………………………………. 26 8. Summary …………………………………………………………………………….27 9. Sources and References ………………………………………………………….28

Page 2 of 28

Procurement Strategy: Key to Supply Reliability

OPEMAN

Philippine Polypropylene Inc

1. OVERVIEW OF THE COMPANY • Company Background Philippine Polypropylene Inc (PPI) started operation in 1995 originally under the name of PetroCorp (Petrochemical Corporation of Asia Pacific). The company is engaged in the petrochemical business particularly in the production of polypropylene resin until 2004 when the company

encountered financial difficulties forcing its commercial operation to stop. The 160,000 MT/yr capacity polypropylene plant is situated at Mariveles, Bataan on a 22 hectare site within the 530 hectare Petrochemical

Industrial Estate. In June 2010, Petron acquired majority shares of Petrochemical Asia Hong Kong Ltd. (PAHL), the parent company of PPI. With the infusion of financial funding and technical

supervision from Petron, the organization and the plant structures of PPI immediately underwent comprehensive rehabilitation after several years of being mothballed with the goal to re-start commercial operation by January 2011. • The Production Process

Page 3 of 28

Procurement Strategy: Key to Supply Reliability

OPEMAN

Philippine Polypropylene Inc

The company’s product is polypropylene (PP), a thermoplastic crystalline and amorphous polymer formed when propylene, also called C3, a combustible gas component of Liquefied Petroleum Gas (LPG) is reacted with catalysts in a gas-phase reaction process called polymerization. The resulting polymer which will be blended with specialized additive compounds will then be extruded to form the PP pellet resin. The PPI plant in Bataan uses the world renowned Novolen Gas-Phase technology, a German-licensed polymerization process very popular in the industry worldwide. The plant has a production capacity of 160,000 metric ton (MT) of PP per year but it can reach as high as 225,000 MT/year if installed with the appropriate Novolen process upgrades and machinery improvements that will result to more stable and faster reaction cycle. (See Figure 1)

• Product Applications Polypropylene resin produced using the Novolen technology is very suitable for a wide range of application because of its superior characteristics such as good balance of toughness, rigidity, hardness, low taste and odor levels. Polypropylene resin is used for a wide range of industrial, commercial and residential product applications. It is the building block for the production of yarn,...
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