A Report on Internship at

Siemens Pak Engineering

Co.Ltd
BU-Transformers

Prepared By: Asim Mehboob Shani

(BCS-VI, IBA)

July 31, 2008

Acknowledgement
In the beginning I would like to thank Almighty Allah because it is
due to His grace only the completion of this report was possible. I
would like to thank Allah for giving me the strength and courage to
complete this report in the allotted time.

I would like to thank the staff of all the departments I had been
through. All the staff members were very cooperative and humble. It is
with their support and guidance that I was able to understand the
operations being carried out. It is without doubt that until I submit my
thanks to them, the report would remain incomplete.

Sincerely,
Asim Mehboob Shani

Executive Summary

In the duration of six weeks of our internship at Siemens, our main goal
was to get an exposure to the professional life and to have an idea of
how work flows in all the departments of Business Unit-Transformers.
In this duration, we observed that the working environment at Siemens
is thoroughly professional. In all the departments, there is a well
defined procedure which has to be followed to make work systematic.
There is a QMS procedure for each department which defines its scope
and shows how the work flows with the help of activity diagrams. It is
made sure that each department is running in accordance with the
procedure. There is an intranet for internal communication which
facilitates work between departments.

We were rotated in three departments of the Business Unit

transformers. Firstly, in the Sales and Marketing department we
observed the dealings with customers and the documentation
involved, from the inquiry stage to the execution and transportation of
orders. Siemens provides a large range of transformers with different
ratings and specifications to its customers. There are standard and
Non- standard products, and there are separate procedures for dealing
with each. Standard products are dealt by a routine procedure using
SAP ERP. For Non-standard products, generating of BOQ for costing,
planning for delivery time and material requisitions is done separately.
The SAP-ERP software implemented in Siemens has facilitated work
considerably. Secondly, in purchase department we observed the
dealings with suppliers and how materials are procured. Here also the
SAP plays an important role as material requisitions are generated and
the required material is procured. It compares the three parameters of
quality, price and delivery time in selection of vendors for the required
material.

Finally, the Costing and accounting department is in correspondence

with the stores department for inventory management, it deals with
payments to suppliers and corresponds with purchases for the market
prices to set the right cost of material. All the accounts are updated
and maintained on the system. Reporting is done to gather data which
will help management in making future decisions.
 TABLE OF CONTENTS

TOPIC
PAGE

Title Page……………………………………………………………………...............I
Acknowledgement………………………………………………..............................II
Executive Summary…………………………………………………………............III
Company Background………….……………………………………………...........1
Introduction …………..………..……………………………………………......1
Vision and Mission…..………………………………………………….............2
Divisions………..…………………….…………………………………………..3
Departmental Structure………..
………………………………………..............4
BU Transformers………………..………..……………………………………….......5
Introduction…………………..…………………………………………………..5
Internship Overview…………………………..…………………………..….....6
Sales and Marketing……………………………………………………………..7
Purchases………………………………………………………………………...11
Costing and Accounting………………………………………………………..15
Recommendations………..………………………………………………….............17
Conclusion………..…………………………………………………………..............18

Company Background
Introduction
Siemens Pakistan Engineering Company Limited is based in
Karachi, Sindh, Pakistan. It is subsidiary of Siemens. Siemens Pakistan
Engineering Company Ltd. was founded in 1953 as a private limited
company. In 1963 the company was converted into a public limited
and in 1978 it was listed in the Stock Exchange. Siemens
Aktiengesellschaft (Siemens AG) Germany holds 64% of the total
shareholding.

Siemens enjoys a leading position in Pakistan in the business areas of

power, automation and control, medical, transportation, information
technology and industrial solutions. Siemens is the country’s No.1
supplier of high-voltage grid stations, switchgear products and
systems, power distribution and power transformers, and network
consultancy. To date, the group has added over 2500MW to Pakistan’s
power generation capacity, which represents 15% of the country’s
installed output. The success story continues with the medical solution
group which is the leading supplier of state of the art equipment to
major hospitals.

With a work force of 1550 employees, siemens is one of the most

important employers in the country. Siemens is also the single largest
employer of engineering graduates in the country. It can also boast of
a substantial No. of women in important positions and religiously
following the policy of gender equality.Since 1980 Siemens Pakistan
continuously developing and achieving its targets very effectively and
efficiently. Siemens Pakistan has performed many important tasks in
Pakistan with the help of Pakistan’s Government. These tasks include
Tarbela dam, Kohat tunnel, Mega city project in Karachi, Ghazi Barotha
dam etc.

Vision
To remain market leader and technology pace setter in the
engineering and electronics industry by utilizing the high-tech
engineering expertise of the Siemens Group worldwide. To maintain
our strong and prominent local presence.
Mission

To realize our vision by:

- Providing quality to our customers at competitive prices, to their

complete
satisfaction.

- Generating earnings sufficient to ensure a secure future for the

company
and to protect and increase our shareholders/stakeholders'
investment.

- To enhance creativity and job satisfaction of our employees by

providing
opportunities for personal development, limited only by their own
ability and
drive.

- To contribute to the national economy, whilst realizing a strong sense

of
responsibility to society and the environment.

- To enhance the investment of our customers through Human

Excellence,
our Technology, our Processes, our High Standards of Quality and
Financial Strength.

- To support and strive for technology transfer to Pakistan through our

global
resources and local presence

Divisions

Divisions
 Power
Industrial Solution Finance and
Transmission Automation and
and Power MOTAC Business
and Drives
Generation Administration
Distribution

Business Units
Central Dept Corporate Dept

Corporate
HV Sub- Power Generating
Medical Solution Financial Human Resources
Stations Generation Sets
Solution

Engineering Process Mgmt/

and Motors and Business
Transformers OEM Onshore Industrial Relations
Constructio Alternators Continuity
n Planning

OnCall,
Logistics Standard Transportation Shared Corporate
Switchboards
and Products System Services Communication
Maintenance

Corporate
Information Siemens Home Corporate Quality
PTD Services Information
Technology Appliances Management System
Office

Export Control
Process
and
Energy Industries Carrier Telephone Regional Compliance
Customs/Procu
Automation and Water Industries Office
rement
Technologies
Governance

Strategic Business
Central Audit
Development/top

Departmental Structure
 Business Unit-Transformers

Introduction
Siemens Pakistan Engineering Co. Ltd. was established in 1953 in
Karachi. In 1963 a transformer manufacturing facility was established
to cater the local market with distribution transformers. The
manufacturing facilities were later expanded and the production of
power transformers (up to 60 MVA) was launched in 1986. The
business unit of transformers comes under the Power transmission and
distribution division. Each year the BU plays a major contribution in the
total turnover of Siemens Pak. Siemens not only caters to the local
industry with the state of the art technology but also to the foreign
market in the middle-east, Bangladesh, Brunei, Kuwait and Saudi-
Arabia.

With the passage of time, there have been major developments in

manufacturing of transformers. Using innovative ideas and with
constant efforts of its staff members, BU-Transformers has developed
the most advance engineering techniques. The designing of a
transformer is done with constant correspondence with the customer
so that it fulfills all requirements and is easy for installment. Siemens
Karachi is equipped with the most modern testing facilities. Power
transformers are scrutinized and passed under strict control and
special tests after undergoing complete production. The product range
is now much more comprehensive, providing its customers with
transformers of various ratings. The product range comprises of the
following:

• Power transformers (2501KVA to 40MVA) and

• Distribution transformers (19KVA to 1500KVA).

The existing facility has been up-graded up to 220kV/250MVA with the

production commencing from 2008.

Sales and Marketing

Overview:
 The Sales and marketing department deals with corresponding
with the customer from the stage where the customer gives his
requirements till the stage; the customer’s requirements are fulfilled.
Sales officers make sure that any changes in the requirements in later
stages are adjusted accordingly and all customer needs are fulfilled.
Siemens Pak has four main types of customers for its transformers
which are:

• Private
• Export
• Internal (Other BUs)
• Utilities (WAPDA and KESC)

The employees in this department have been divided their tasks

according to the customer types. Another categorization of employees,
as in all other departments, is of technical and commercial. The
technical staff deals with the acquiring of the technical requirements of
the customer. For this task Siemens seeks to hire employees with
technical knowledge and experience, mostly employees with
engineering (electrical) background. The commercial staff handles the
payments involved, insurance, bonds, etc. The currents tasks assigned
to the employees include Global Sales by Bilal Haqqi and Muhammed
Anwar, Private by Atif and Amber, Utilities(Wapda and KESC) by
Mohammad Iqbal, Shomail Akhtar and Zeeshan Hasnat.

Documentation:

The documentation required in the Sales department is very

thorough and comprehensive. For each customer, all the documents,
right from the stage when the inquiry starts, to the stage when the
goods are transported, are prepared and filed properly. The following
are some of the documents which I went through while studying a case
study of WAPDA:

• Tender/inquiry – Notice issued in newspaper or sent to the

different manufacturing companies which include the
specifications required and other technical details.
• Offer checklist – A list of technical requirements prepared by a
sales officer after discussion with the customer, a portion of it is
also filled by the E & D department personal.
• Indent – After the purchase order is received, Sales issues indent
to planning for production to start
 • Bid Bond – 2 % of the bid price which the customer (registered)
will secure in case the bidder changes its proposed price. For
unregistered bidder it is 5 %.
• Performance Bond – To ensure that the manufacturing company
completes the given order properly.
• Insurance (Transport and product)
• Inspection Certificate – The customer issues this document to
show its satisfaction with the inspection and testing of the order.

TR-order cycle

Inquiry Stage:

Customer Sales E&D

C&A Planning

Description:

The process kicks off with the customer either issuing a tender or
enquiring the Sales department about its requirements. The technical
staff gathers the information needed and enters it in the offer
checklist. This checklist is send to the E & D department, which
examines the requirements and prepares drawings and design so that
a physical appearance can be given to the required transformer and to
know which material is required and of what quantity. Thus a BOQ is
prepared which is sent to the cost and accounts department. The
Costing and accounting department have the list of current prices for
all materials and determine the cost of material required. The Planning
department determines the number of man hours required and the
lead time which is send to the Costing and accounting department to
determine the labor cost. Costing and accounting then adds overheads
and finally prepares a total cost of goods manufactured which is given
to the Sales Department via E & D. The Sales Department then applies
a divisor to the amount to keep its margin and then finally offers the
customer, the cost of the required order. After negotiations and
discussions on the offer with the management, the customers finally
decide whether to accept the offer and issue purchase order. This
completes the inquiry stage.

Order Execution:

Customer Sales E&D

Purchase

Planning

Productio
n

Description:

After the customer finally decides to purchase, it issues a purchase

order. On receiving this document the Sales Department prepares an
indent and sends it to the planning department. The planning
department then corresponds with the engineering department for the
design and drawing. It takes into account all the necessary
components and material required and forwards requisition to the
purchase department which according procure material from suppliers.
Besides arranging the material, it informs the production department
about the order which starts the production process accordingly. The
Planning department also calculates the number of man hours required
for this order, the delivery time and lead time. After the production is
done, the finished goods are sent for testing. Siemens conducts
rigorous methods of testing by first testing each transformer by its
quality management department. For the customers assurance testing
is carried out in the test field in presence of an inspection officer from
the customer. After testing with satisfaction, the customer issues an
inspection certificate and the order is loaded and transported to the
customer’s site. The final loading and transporting is also done by the
Sales department.

Purchase

Overview:

This department is responsible for the procurement of the material

required for production, as well as any other purchase of tools or
equipments concerning the BU-Transformers. This department is in
correspondence to the vendors of the various materials required. The
selection criteria for a vendor is based on three parameters; quality,
price and delivery time. For each purchase, at least three suppliers are
considered.

Vendor Selection

For producing good quality transformers, Siemens requires to procure

quality material. Thus it is very essential to select the right vendors for
each material required in order to maintain quality. For this purpose,
there is a proper procedure for the selection of vendor which involves
the management of other departments as well. Prequalification of
suppliers is done on the basis of on site assessment by group of
planning, QA/RI and purchase personals. Usually, there are three
parameters kept under consideration which are quality, delivery time
and price. The management looks into the history of each vendor and
thorough analysis is done to select the vendor which can provide the
right quality material, within a reasonable delivery time and the right
price.

Material

Standard
Non-Standard
(coded)

Direct Indirect
Material Material

Material
GK Items
Raw

Work flow
 Material Requisition

Planning Dept. (non- MRP (for standard)

standard)

Inquiry to Purchase

Offer (to 3
suppliers min)

Order Placement

Follow up Reject

RI
Delivery Stores

Pass
Stock

Description:

The work flow of purchase department starts with the type of material
required. If the material required is standard then the amount required
is entered in MRP software by Planning and received by the purchase
department. MRP is generated on weekly basis, usually on Wednesday
of every week. If the material is non-standard then planning sends a
requisition separately and the inquiry is placed. After this, offer is
made to the suppliers who in return provide quotations including the
price and delivery time. The purchase officer then, prepares a
comparative statement, makes a decision of which supplier to chose
(stating the reason) and places the purchase order. The purchase order
is prepared using the Spridion system. The system has made work
easy for the purchase officers as they just have to enter the code of
the desired material and rest of the details are generated by the
software.

After placing the purchase order, follow up is done to ensure

smooth delivery of goods. The material once delivered is kept in the
stores. The receiving inspection department thoroughly inspects the
quality of material. If it is passed, then the material is stocked and
inventory updated. Otherwise the material is sent back to the supplier
and the cycle repeated until the desired quality material is acquired by
the company.

Import Administration

The import section in the purchase department deals with the

procurement of material from outside Pakistan and the terms and
conditions involved in it. Mr. Syed Asif Ullah is the manager of imports.
For the import of any material, Siemens has to abide by certain
international commercial terms(INCO terms), payment terms and
Foreign exchange management.
INCO terms

These indicate fixation of price with exporter:

• Free on board(FOB) – Exporter delivers goods on board and all
transportation charges there from will be borne by the importer
• Ex-works – Importer will bear all transportation cost from
exporter site to his site
• Cost and freight (CRF) – Exporter will bear transportation cost up
to importer port

Payment Terms

• Sight L/C – Payment made on receiving of cleaned documents by

bank
• Users L/C – Payment made within credit term and when
document are cleaned
• Bank contract

Costing and Accounting

Overview:

The Costing and Accounting department plays a major role in the

BU-Transformers. The employees in this department are divided their
tasks on three basis; Costing, Payables and Reporting. The entire
account keeping is maintained on the SAP system with the accounting
standards set by the FC department. C & A is in correspondence with
the E & D and Sales for the preparation of cost against offer. It
contacts purchase department for acquiring the latest prices of
material concurrent in the market. The department is responsible for
payment to suppliers and finally reporting is done to provide the
management with statistical and analytical data for better decision
making. The description of the main areas of C & A is as follows:

Three Main Areas of C&A

1. Costing

The overall costing is divided in two phases, cost against the offer &
the actual cost during production. First of all the customer sends the
inquiry to sales with the relevant requirement, the sales officer
prepares the offer checklist to note down all the details this checklist is
sent to E&D. E&D prepares the drawings, quantity and design
parameters. It calculates the required quantity of each material to
estimate the appropriate Bill of Quantity (BOQ). This Bill of Quantity is
sent to C& A to generate direct material cost. To generate this cost the
prices of materials are taken from the purchase department.
The amount of man-hours required in the production is calculated
by planning and forwarded to C&A. using this information and per hour
labor cost C&A generates total labor cost. Apart from these costs,
overheads are calculated on predetermined rates. Finally the overall
cost is forwarded to sales department to give the offer pertaining to
the inquiry

Preparation of production cost report includes:

• Material Cost
• Labor Cost @ Rs.75 per hour
• Material Overhead: 7.5% for Power transformers and 8.5% for
Distribution transformers.
• Labor Overhead @ Rs.660 per hour for PT and Rs.850 per hour
for DT respectively.

After negotiations with the customer and settlement of price, purchase

order is received and production starts. The above mentioned costs are
calculated to determine the actual cost of goods manufactured. The
actual cost is compared with the budgeted or estimated cost against
inquiry. With the prices changing each day it is inevitable that by the
time production takes place the actual cost incurred would be more
then the budgeted. This difference is later charged to the customer.

2. Accounts Management (Payables)

 The account portion of this department is carried out here whereby
the suppliers submit their invoices and wait for their bills to be
processed in the spiridon system. Once this is done, suppliers are
given periodical payments based on the accounts type and terms and
conditions of the contract. Generally the suppliers have to wait for their
payments because of complexity of procedures to keep the system
fair.

Operations:
• Preparing incoming stickers
• Attaching required attachments with bills
• Preparing list of due payments
• Checking sales tax invoices and forward to ECCGPL
• Making deductions for rework and material issued to
suppliers
• Processing services related bills and post required
deductions

3. Control and Reporting

The controlling and reporting is an important phase of the C&A

department whereby all the necessary information is taken from
spiridon system transformed into a report form to analyze the data and
provide the management with opportunity to make decisions based on
these reports.
One of the important functions of the C&A department is to make
budgeted balance and profit statements. The perpetual inventory
auditing is also the prime responsibility of the C&A department to
check for whether there exists any inconsistency between the system
generated stocks and the actual physical stocks.
Recommendation

During my stay at Siemens Pak, I observed that the established

organization provides a lucrative platform for learning and
experiencing how work is done professionally. But there are a few
suggestions which I would like to make for instance the amount of
intake each year as far as the internees are concerned is quite large
due to which each internee does not get due attention and some sort
of project to do which could benefit them a great deal. Instead
students roam around looking for knowledge themselves. Some sort of
task should be assigned to help internees perform practical task which
would lead to students sharing some work load of the company.
 One important step in this direction could be that each internee
goes to one department of each business unit spending a decent
amount of time with employees there so the students may have some
chance to learn and do some physical task for the company. We talked
to some employees in this regard and their point of view on this
subject was that the duration of each internee was so short that they
cannot be used effectively practically they are crippled to extract some
work out of them.

There should be HR people for proper orientation of the internees

helping them get familiar with the learning environment of Siemens.
Each business unit should be visited by internees to give them a fair
idea of the major operations in different business units of the
company.

Conclusion

Our stay at siemens has been Exceptional having to know

different aspects and functions of an organization. The work flow and
the interdependence of each department in a business unit clearly
depict the importance of working in coordination with each other. The
team work can be easily seen at siemens as each employee has a
distinct task to perform and the work of other employee cannot be
completed without preceding task has been performed so each person
does his job effectively because of the system at siemens. There is a
quality management system (QMS) procedure which defines how work
flows in each department. There are regular audits to keep a check on
whether the procedures stated in the QMS are being actually followed
in each department. In this way quality is ensured and tasks are
performed in a systematic way.
 It is without doubt that the SAP system implemented here at
Siemens has facilitated work for the employees considerably. The
Spiridion system has helped the departments integrate and perform
tasks with the information flowing in a consistent and ordered way. The
work which was done manually before is now done easily by using this
software and it is fairly accessible to each employee. Another
impressive aspect of Siemens is the matter of compliance. In the last
few months the management has created awareness among the
employees for the need of compliance. All employees are required to
abide by these codes of compliance or else strict action is taken
against them. This ensures Siemens values to be practiced across the
company irrespective of designation or post, etc.
Thus I conclude that it was a memorable stay at Siemens and the
knowledge which I have acquired in this duration would help me in my
future endeavours.