Ajman University of Science and Technology

Faculty of Business Administration

(Purchasing and Materials Management)

Inventory managment

Student name: Khdijah Sabah 200820009 Latifa Hussain 200920169

Abeer Ahmed 200810204

Definition of 'Inventory Management'

The overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale. A business's inventory is one of its major assets and represents an investment that is tied up until the item is sold or used in the production of an item that is sold. It also costs money to store, track and insure inventory. Inventories that are

mismanaged can create significant financial problems for a business, whether the mismanagement results in an inventory glut or an inventory shortage.

Investopedia explains 'Inventory Management

'Successful inventory management involves creating a purchasing plan that will ensure that

items are available when they are needed (but that neither too much nor too little is purchased)

and keeping track of existing inventory and its use. Two common inventory-management

strategies are the just-in-time method, where companies plan to receive items as they are needed

rather than maintaining high inventory levels, and materials requirement planning, which

schedules material deliveries based on sales forecasts

Inventory management is primarily about specifying the size and placement of stocked goods.

Inventory management is required at different locations within a facility or within multiple

locations of a supply network to protect the regular and planned course of production against the

random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset

management, inventory forecasting, inventory valuation, inventory visibility, future inventory

price forecasting, physical inventory, available physical space for inventory, quality management,

replenishment, returns and defective goods and demand forecasting

Other definitions of inventory management from across the web:

Involves a retailer seeking to acquire and maintain a proper merchandise assortment

while ordering, shipping, handling, and related costs are kept in check Systems and

processes that identify inventory requirements, set targets, provide replenishment

techniques and report actual and projected inventory status.

Handles all functions related to the tracking and management of material. This would

include the monitoring of material moved into and out of stockroom locations and the

reconciling of the inventory balances. Also may include ABC analysis, lot tracking,

cycle counting support etc.

Management of the inventories, with the primary objective of determining.controlling

stock levels within the physical distribution function to balance the need for product

availability against the need for minimizing stock holding and handling costs.

In business management, inventory consists of a list of goods and materials held available in stock.

Introduction for Inventory Management

"Inventory" to many small business owners is one of the more visible and tangible aspects of

doing business. Raw materials, goods in process and finished goods all represent various forms

of inventory. Each type represents money tied up until the inventory leaves the company as

purchased products.

Likewise, merchandise stocks in a retail store contribute to profits only when their sale puts

money into the cash register. In a literal sense, inventory refers to stocks of anything necessary to

do business. These stocks represent a large portion of the business investment and must be well

managed in order to maximize profits. In fact, many small businesses cannot absorb the types of

losses arising from poor inventory management. Unless inventories are controlled, they are

unreliable, inefficient and costly.

Abu Dhabi National Oil Company(ADNOC)

Abu Dhabi National Oil Company (ADNOC) was established in 1971 to operate in all areas of the oil and gas industry and since then has steadily broadened its activity in establishing companies and subsidiaries and creating an integrated oil and gas industry in the fields of exploration and production, support services, oil refining and gas processing, chemicals and petrochemicals, maritime transportation and refined products and distribution.

The Supreme Petroleum Council (SPC), chaired by His Highness Sheikh Khalifa Bin Zayed Al- Nahyan, President of the UAE and Ruler of Abu Dhabi, formulates and oversees the implementation of Abu Dhabi petroleum policies.

During the past four decades, ADNOC has expanded its business activities, enhanced its competitive position and so managed to become one of the world’s leading oil companies with substantial business interests in upstream and downstream activities, including transportation, shipping, marketing and distribution.

ADNOC’s efforts in the exploration and production field have concentrated on assessing undiscovered reserves and optimizing hydrocarbon recovery by improving the reservoir management.

Over the last few years significant achievements were made in the expansion and development of gas fields to meet increased demand from industry gas users and gas injection requirements in order to enhance the oil and condensate recovery from the producing fields. ADNOC is committed to sustainable development. In 2009, the company has launched the ‘ADNOC Sustainability Performance Initiative’ ensuring a harmonious balance between society’s needs and Earth’s resources, while its track record in HSE sets the standards for the rest of the Arabian Gulf.

Giving top priority to education, ADNOC established a number of institutions that train and develop a qualified UAE cadre for the energy sector. The Petroleum Institute, The Glenelg School of Abu Dhabi, the ADNOC Technical Institute, the Achievers’ Oasis and other scholarship programs are but a few examples of ADNOC’s educational projects.

. ADNOC has 15 subsidiary companies working in the various fields of the oil, gas, and petrochemical industry as well as crude oil and gas transport and services. They include ADCO, ADMA-OPCO, GASCO, ADGAS, ZADCO, TAKREER, NDC, ESNAAD, IRSHAD, FERTIL, BOROUGE, ADNATCO-NGSCO, ADNOC Distribution, Elixier and Al Hosn GasAbu Dhabi National Oil Company (ADNOC) is a major diversified group of energy and petrochemical companies. Our business is about finding, producing and marketing the natural resources on which the modern world depends. The Group's activities include exploration and production of crude oil and natural gas; refining, marketing, supply and transportation, and the manufacture of petrochemicals. Our integrated upstream and downstream activities are conducted by 15 specialist subsidiary and joint venture companies

. *ADNOC Group of Companies:

Inventory management in adnoc

The company's core ADNOC Distribution is a UAE government-owned petroleum company. It is engaged in the marketing and distribution of petroleum products in the UAE and international markets. It also offers other services including Rahal card and vehicle inspection services. It operates a lubricant testing, blending and packaging plant and provides aviation refueling services. The company operates a vast network of service stations and convenience stores in the Arab Gulf Region. It was founded in 1973 by the U AE government. It is headquartered in Abu Dhabi, the UAE.

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*Exploration and Production Of Oil & Gas:

ADCO operates onshore and in the shallow coastal waters of the Emirate of Abu Dhabi. The original concession agreement was made with Petroleum Development (Trucial Coast) Ltd. on January 11, 1939, but geological work did not begin until after the Second World War. Exploratory drilling began in Abu Dhabi in February 1950

Carries out the activities of oil and gas exploration, development and production from the offshore concession areas of the Emirates of Abu Dhabi on behalf of its shareholders 

Oil development and production from Upper Zakum, Umm Al-Dalkah and Satah offshore fields on behalf of the shareholders   

*Exploration and Production Services:

Operating Ruwais, Jebel Dhanna and other oil ports. 

Production and marketing of mud chemicals, material handling services, waste management, specialty chemicals blending; operating, chartering or leasing specialized vessels.

National Drilling Company (NDC)

Onshore and offshore drilling.  

*Refined Products Distribution:

ADNOC Distribution

Distribution, storage and transportation of refined products

*Oil and Gas Processing:

Operating and production of liquefied gas products

Liquefaction and marketing of natural and petroleum gas.

Refining of crude oil and condensate, supply of petroleum products and sulphur granulation. 

*Chemicals and Petrochemicals:

Ruwais Fertilizer Industries (FERTIL)

Operation of Ammonia and Urea plant at Ruwais and marketing its products.  

Abu Dhabi Polymers Company Limited (BOROUGE)

Processing and production of ethylene and polyethylene. 

Supply of industrial gases for oil, gas and petrochemical companies in Ruwais and other oil areas.  

*Maritime Transportation:

Abu Dhabi National Tanker Company (ADNATCO)

Transportation crude oil and refined products.

National Gas Shipping Company (NGSCO)

Shipping liquefied gas products from Das Island 

Materials*:

As an oil and gas producer, the majorityof ADNOC’s products are hydrocarbonproducts extracted from the ground andrefined for consumers. A relatively smallamount of input materials are required.Our primary material consumptioncomes from necessary support

activities. Material consumption is notas significant as other environmentalindicators. We started examining thisin 2009 and Group Companies are inthe process of developing more reliablematerial data tracking systems.In 2010, approximately 44.1 million tonnes of inputmaterials were consumed across the ADNOC GroupCompanies, of which nearly 7% (approximately threemillion tonnes) came from renewable sources andover 2.3% (1.02 million tonnes) from recycled inputmaterials. The total amount of direct materials is 33.1million tonnes.Approximately 36,600 tonnes of materials werereported to have been recycled, reused or reclaimedacross the ADNOC Companies in 2010. Thesematerials predominantly include scrap metal, plastic,glass, paper and drums. ADCO saved 11,700 barrelsof mud in 2010 by reusing water base drilling mud.Material Saving Initiatives in 2010• ADCO used environmentally friendly equipmenton the ASAB development including space-saving,low-voltage switchgear, which uses aluminiumand zinc coated materials in the frames andsubdivisions to reduce chemicals used in thecoating process• ADMA-OPCO conducted an awareness campaign,to coincide with World Environment Day 2010, toraise awareness about the environmental issuesassociated with plastic bags. ADMA OPCO took theinitiative to phase out its use of plastic bags in 2010and replace them with bio-degradable alternatives• ADOC had a paper recycling campaign throughout2010 which resulted in the recycling of seventonnes of paper• ESNAAD re-utilized 12,422 tonnes of steel forinternal projects• NDC achieved a 6% reduction in materialconsumption compared with the previous year• PI implemented a project to recycle spent tonercartridges• TAKREER installed a wireless vibrationmonitoring system on selected pumps in isolatedtank farms at the Ruwais Refinery, with the aim ofmeasuring the integrity of the pumps. The wirelesstransmitter continuously sends the informationdirectly to the control room removing the need forcables and trenching across existing assets.

ADNOC Key Projects: *

ADNOC Products and Markets*

Crude Oil and Condensate

ADNOC’s equity of crude oil and condensate is soldin both international and local markets. The mainonshore grade is Murban, and the other offshoregrades include Umm Shaif, Lower Zakum and

Upper Zakum.In addition, ADNOC produces two grades ofcondensate: Uweinat and Thamama.The bulk of ADNOC’s crude exports are mainlytargeted to the Far East, although ADNOC also has abusiness relationship with the Indian subcontinentand East Africa. ADNOC’s main aim is to maintaingood business relationships with existing andpotential end-users and to ensure reliable supply.

Crude Oil and Condensate Exportedin 2010 (‘000 bbl)

total*Destination175,180Far East165,673Japan87,592Indian subcontinent

601Africa1,707Oceania

430,753Total

Gas and Sulphur

Although oil will continue to provide themajority proceeds to sustain economicgrowth and social services in the coming years,gas will play an increasingly important rolein the UAE’s development.

Gas and Sulphur Exported in 2010 (‘000 tonnes).

SulphurLPGDestination6955Africa8684,404Asia

-72Europe192-N&S America

-47Australia1,7564,527Total

Plastics and Resins

In 2010, Borouge facilities produced 966,113tonnes of plastics (polyethylene and polypropylene),ethylene and resins.

ProductionFacility960.5Ruwais

Polyethylene, Polypropyleneand Ethylene

5.5ShanghaiResins

966Total

Petroleum Products

ADNOC also markets refined products, suchas naphtha, jet kerosene, gas oil and fuel oil.

These refined products are produced byAbu Dhabi Refining Company (TAKREER).

In addition, ADNOC markets its 68% equity shareof Paraffinic Naphtha produced by GASCO.

Ammonia and Urea

In 2010, FERTIL produced 472,000 tonnes ofammonia and 688,000 tonnes of urea.

Lubricants and Grease

ADNOC’s lubricants include a comprehensiverange of specialty and conventional engine oils,

industrial and hydraulic oils, and greases. Allour products are formulated to meet the highestinternational specifications.

In 2010, ADNOC sold approximately 37 millionlitres of lubricant and grease to the domesticmarket. A further six million litres was exportedto our consumers worldwide.

Refined Products Exported in 2010 (‘000 tonnes)

Naphtha*Jet A-1Gas OilFuel Oil 380 CSTDestination-158313-Africa

5,534--90Far East-3,061--Europe--327-Middle East

290-3931Indian subcontinent

5,8243,219679121Total

*ADNOC Governanceand Strategy

The Supreme Petroleum Council (SPC)is the regulatory body for Health,Safety and the Environment (HSE) forthe oil and gas industry in Abu Dhabiand provides oversight of ADNOC’soverall operations.

ADNOC aims to have a sustainability performanceof which it can be proud. We aim to be a goodneighbour, contributing to sustainable developmentboth internally and throughout our surroundingcommunities, and to earn the confidence of customers,joint venture partners and the society at large. To do so,ADNOC has established the following HSE Policy andStatement of Commitment.

*HSE Policy

ADNOC Group Companies shall:• Have a systematic approach to HSE managementdesigned to ensure compliance with ADNOCCodes of Practice, Abu Dhabi and UAE Laws andRegulations, and applicable international standards• Conduct activities in a manner designed to minimiseHSE risks to a level which is As Low As ReasonablyPossible (ALARP)• Set targets for continuous HSE performanceimprovements• Measure, appraise and report on HSE performance• Hold appropriately empowered line management staffaccountable for HSE performance• Include HSE competencies and performance in theappraisal and reward of all staff• Develop and maintain business continuity plans• Empower employees to refrain from actions that areconsidered a threat to HSE values• Require contractors to manage HSE in line with policy.

*Statement of Commitment and relationships:

ADNOC and its Group Companies are committed to:• Pursue the goal of no harm to people and community• Reduce greenhouse gas emissions in order tomitigate climate change.

• Promote the use of renewable energy in business• Protect the environment and biodiversity• Promote Corporate Social Responsibility and report onsustainability performance• Develop and use energy and water resources efficiently• Manage HSE matters with the diligence accorded toany of its other critical business activities• Play a leading role in promoting best practices in ourindustries• Promote a culture in which all Group employeesshare this commitment• Be transparent in the public reporting of the Group’sHSE performance.

Strategic HSE ObjectivesNo harm to people and surrounding

communitiesHealth and

SafetyStrive towards ultimate elimination

of hydrocarbon flaringFlaring

Reduce emissions, improve energyefficiency and promote renewable energy

Green HouseGas

Promote sustainable developmentand corporate social responsibility

SustainableDevelopment

Elimination of continuous venting ofhydrocarbons and other toxic gases

Venting

Protect and restore natural biodiversityBiodiversityZero losses of Halons and CFCs by

gradual elimination and replacementHalons and

CFCsSustainable use of resources land,

energy and raw materialsResources

Minimize the use of oil-based mud,recycle and dispose of drilling

mud and contaminated cuttings inways that do not cause release of

contaminants

Oil-basedDrilling Mudand Cuttings

Minimize water consumption andpromote water conservation

Water

Prevent oil and chemical spills. If theydo occur, control and mitigate the

impac

Oil andChemical

SpillsMinimize and control all domestic,

industrial, medical, hazardous andspecial waste. Treat and dispose as

per ADNOC Codes of Practice

Solid Wastes

  Marketing and Refining *

ADNOC markets Abu Dhabi Hydrocarbons such as crude, refined products, LPG and sulphur. It also coordinates short-term and medium-term business activities; and plans long-term strategies that enable ADNOC to maintain its privileged position in the oil and gas business.

ADNOC’s equity of Crude oil and condensate is sold to international markets as well as the local market. The main onshore grade is Murban and the other offshore grades include Umm Shaif, Lower Zakum and Upper Zakum. In addition, ADNOC produces two grades of condensate: Uweinat and Thamama. The bulk of ADNOC’s crude exports are mainly targeted to the Far East, though ADNOC also has a business relationship with the Indian Sub-Continent and East Africa. ADNOC’s main aim is to maintain good business relationship with existing and potential end-users and to ensure a reliable supply.

In addition, ADNOC also markets refined petroleum products, such as naphtha. jet kerosene, gas oil and fuel oil. These refined products, along with three grades of Unleaded Gasoline’s (ULG 98, ULG 95 and ULG 91), are produced by Abu Dhabi Refining Company (TAKREER), which overlooks the operations of Abu Dhabi Refinery and Ruwais Refinery with 500,000 barrels per day of refining capacity (including both Condensate Splitters). In addition, ADNOC’s markets its 68% equity share of Paraffinic Naphta produced by GASCO.

Although Oil will continue to provide the majority of the income tax for both economic growth and social services in the coming years, Gas, the Energy of the Future, will play an increasing important role in the UAE’s development. Gas development projects are being constructed and new ones are being considered in order to meet the increasing demand for production of water and electricity within the country, and to provide power for the new industries emerging, as well as to secure feedstock for new petrochemical projects.

ADNOC is soon expected to be one of the largest LPG exporters in the world and a leading company for supplying Natural Gas within the UAE using their comprehensive pipeline network. On the other hand, new challenges have been added to ADNOC list, which is the development of Sour Gas Project. Such a project is considered as one of the most challenging gas projects with huge production of Sulphur which will put ADNOC on top of the Sulphur exporters in the world.

* Corporate Social Responsibility :

In line with the integral role ADNOC plays in the UAE economy, it is deeply committed to the growth of the UAE community in all social, economic and educational sectors.  Each year ADNOC sponsors a wide variety of events benefiting all of the different UAE community groups.

ADNOC greatly contributes to the advancement of UAE Nationals by preparing to become highly qualified individuals through its multiple educational programs and institutions such as the Petroleum Institute and the Achiever Oasis Program.

Furthermore, ADNOC, on a yearly basis, makes general contributions and sponsorships to a number of events, such as the ones listed below:

- Camel Race

- Ministry of Labor and Social Affairs Children with Special Needs Center

- Educational Organizations such as Zayed University, Higher Colleges of                  Technology, and Abu Dhabi Educational Zone.

- Athletic and Cultural Clubs

Educational Programs and Institutions: *

Realizing that the future of any successful company relies on the value it places on the development of its human Resources, ADNOC and its Group of Companies established a number of educational institutions.

The Petroleum Institute provides academic programs leading to BS degrees in several

engineering disciplines, while the ADNOC Technical Institute prepares young national

for entry level positions as plant technicians and operators.

The ADNOC Scholarship Program sends high school graduates to pursue their post-secondary education in reputable academic institutions around the world to specialize in the various engineering and applied science disciplines.

The company ensures the flow of talented youth to the industry through the Achievers' Oasis Program which target school age children to pursue a career as engineers in the oil industry.