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Analysis to Reduce Potential Dead Stock of Maintenance Repair & Operation (MRO) Inventory in PT Badak NGL

Mohamad Farouk Riza, Nur Budi Mulyono

Abstract


Abstract. PT Badak NGL is a non profit company to operate the Bontang LNG Plant in East Kalimantan, the main job is to liquify the natural feed gas to become the Liquified Natural Gas (LNG). As the operator with at cost scheme, the efficiency and effectiveness of budget utiliziation is one of PT Badak NGL’s performance KPI, including the efficiency of material Inventory stored in Warehouse. PT Badak NGL’s main inventory consist only the Maintenance Repair & Operation (MRO) material such as chemical and sparepart of equipment. According to the 2017 benchmarking result, Inventory performance of PT Badak NGL is below the average, especially on the Inventory Value aspect. Last 5 years data shows that total Inventory Value is around US$ 35 Million, but 73% of them is classified as the Potential Dead Stock (PDS); materials that more than 5 years stay in the warehouse. The Turnover Ratio is around 70% which means, only 70% come out (utilized) while the remaining 30% stays in warehouse, this happen every years and makes contribution to the PDS. According to this condition, the business problem in this paper is “Inefficient MRO Inventory due to large PDS Materials over the years in PT Badak NGL. Using the Ishikawa (fishbone) Diagram and Focus Group Discussion, the main contributor of the problem is the Inventory Method and Policies. Several alternative solutions have been developed and using Kepner-Tregoe Decision Analysis there are two solutions that should be conducted immediately to reduce the PDS; Apply Impairment Method and Recategorize Materials. Potential Problem Analysis is also conducted for those two solutions to anticipate any potential problem occurred and the choice of contingency plans. The implementation plan has also developed with the target can be finished by six months.

Keywords: inventory, Kepner-Tregoe, MRO, PT Badak NGL, LNG, Potential Dead Stock

 


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