The Product Handling Section of Petrokemya maintains and controls the Solid Products Inventory of Polyethylene, Polystyrene and

PVC and ensures that the products are lifted to warehouses (Inbound Logistics) and delivered to customers on time (Outbound Logistics).

The current Safe Inventory Level set by SABIC is based on an equivalent of 26 days production (117,260MT). However, it presents various concerns to safety (Limited location), quality (Damage & Customer Complains) and High Working capital.

An equivalent inventory of 26 days makes the warehouse and storage areas congested and unsafe for workers, products that cannot be stored are kept outside exposed it to sunlight or rain which might lead to product damage and customer complaints and operation costs to maintain and control such high inventory level is expensive (USD $85,236,337).

An analysis was done to assess 26 days basis and proposed a less numbers of days as safer inventory level for Petrokemya to widen the margin of profit by reducing the cost of operations with no impact on Total Shipments, On-Time Delivery Performance, Lead Time and lowering working capital costs without sacrificing product quality and workers safety.

A reduced inventory is also found to be safer, more productive and efficient. Storage areas would be less congested eliminating traffic in lifting areas/roads, allowing faster transfer of materials to trucks and containers and decrease in overhead cost (lesser manpower). Lesser inventory leads to lesser maintenance and an improved safekeeping of products increasing product quality.

A more efficient inbound logistics schemes result to faster and on-time deliveries. Shorter lead times and meeting deadlines makes customers satisfied and loyal.

Though there is not much of an advantage in outbound logistics, since most of the consumers of Petrokemyas products in majority are coming from the local and adjacent (gulf countries) markets with some from international countries, it is good to note that when the sources of the supply and demand are located in close proximity to or in the same region, it often represents a significant opportunity to lower production and distributions costs to support profits.

The only downfall of this strategy is it is customer dependent. Given that customer demands are changing and becoming more complex, Planning should made for a more accurate forecast and continuously communicate with customers to identify required products (grades). Real time market status should be monitored frequently.

Another factor that should not be missed out is like most basic chemical manufacturers, Petrokemyas cost savings are dependent on economies of scale. Decreasing inventory levels would also mean shortening the run length or reducing plant production maintain safe inventory levels.

In the future, the proposed strategy will lead to more gain and additional profit can be utilized for further expansions and exploration of new markets. Partnerships and new joint ventures with industry leaders and local manufacturers of international customers to have more close coordination with them can be considered an option.

Finally, with proper and more strategic planning and excellent execution of strategies new proposals can be implemented flawlessly.