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“Supply Chain Management”

Submitted to:
Muhammad Hamza Farooqui
Company:
“Pakistan Oxygen Limited (formerly Linde Pakistan Limited)”

Group members:
 M.Ahmed Qureshi (12814)
 Babar Ali (10688)
 S.Muhammad Muneeb Hussain (13270)
 Muhammad Danish (11683)
 Waseem Haider (14161)
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Table of Contents
1 Objective ............................................................................................................................................... 3
2 Introduction .......................................................................................................................................... 3
3 Products ................................................................................................................................................ 3
4 Supply Chain Process ............................................................................................................................ 3
5 Cycle View ............................................................................................................................................. 3
5.1 Supplier (Procurement cycle)........................................................................................................ 3
5.2 Manufacturer (Manufacturing cycle)............................................................................................ 4
5.3 Distribution (Procurement cycle) .................................................................................................. 4
5.4 Customer (Customer cycle) ........................................................................................................... 4
6 Process View of Supply Chain ............................................................................................................... 5
6.1 Push View ...................................................................................................................................... 5
7 Strategic Fit ........................................................................................................................................... 5
7.1 Understanding the Customer ....................................................................................................... 5
7.2 Understanding Supply Chain Capabilities ..................................................................................... 5
7.3 Strategic Fit ................................................................................................................................... 5
8 Drivers of Supply Chain ......................................................................................................................... 6
8.1 Logistical Drivers ........................................................................................................................... 6
8.1.1 Facilities................................................................................................................................. 6
8.1.2 Inventory ............................................................................................................................... 6
8.1.3 Transportation ...................................................................................................................... 6
8.1.4 Information ........................................................................................................................... 7
8.1.5 Sourcing................................................................................................................................. 7
8.1.6 Pricing.................................................................................................................................... 7
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1 Objective
To research and study the supply chain of Pakistan oxygen limited, to get a better understanding
of the supply chain process of the company.

2 Introduction
The company that we visited Pakistan Oxygen limited, the company was present even before the
independence as “Indian Oxygen and Acetylene Company” after the independence in 1949 it
was registered in Pakistan under the name “Pakistan Oxygen and Acetylene Company (Pvt.)
Limited”. It became a part of The Linde Group after Linde and British Oxygen Company BOC
merged.
The company has Pakistan’s largest Air Separation Unit capable of producing up to 100 tons per
day of Oxygen, Nitrogen and Argon.

3 Products
They are a source of fuel for many automobile industries as they produce fuel gases for welding.
They produce gasses with different pressure purity and other customization that suits their
customers as their customers varies from sole traders to huge business enterprise. They make
small cylinder to large capacity tanks that are according to the demand of the customers.
They also make other products of health care, most notably medical gases that are used in
hospitals like oxygen and others. They also make carbon dioxide used mostly in soft drinks.

4 Supply Chain Process

The supply chain team is responsible from the procurement to the warehousing and all the
processes in between however form the warehouse to the customer it is done by the sales
department of the company this is because medical supply chain is very critical the sales
department of the company serves as the frontline of the company and are the major source of
interaction with the customers.

5 Cycle View
The company has four stages of supply chain which includes

5.1 Supplier (Procurement cycle)

The company does not have many suppliers in term of procurement because,
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There is no supplier for the preparation and production of gasses like Oxygen, argon and
nitrogen as they are extracted from the air which is free as it is naturally present.
For the manufacturing of hydrogen the company uses the water which is again a natural resource.
The company for the preparation of Carbon dioxide gets the raw material from the fertilizer
company basically the byproducts of the fertilizer industries become their raw material. These
byproducts are rich with Carbon dioxide and these byproducts are a very cheap raw material for
the company.

5.2 Manufacturer (Manufacturing cycle)

The manufacturing unit of Pakistan Oxygen Limited is at Port Qasim in Karachi where the
following process takes place. The company needs to liquefy the gas after it is extracted, because
gases take much more volume in the gaseous state. Therefore, it is easier for the company to turn
them into liquid for easy transportation.
The company is a producer of gasses and most of the gasses are present in the air, so the
company just extract the gasses like oxygen, argon and nitrogen from the air in their air
separation plants.
The process of extraction is very similar to the fraction distillation process where you heat up
chemical compounds and at different boiling point you obtain different chemical, a similar
process is done for the extraction of gasses but in reverse. Here the gasses are cooled down to
liquefy and all the gasses have different temperature of liquefying.
Hydrogen is obtained through the process of hydrolysis; hydrogen is separated from the water
molecules.
The extraction of carbon dioxide is done in the extraction plant, the by-product of the fertilizer
industry serves as a raw material for the production.

5.3 Distribution (Procurement cycle)

The manufactured gasses are transported from the manufacturing unit to warehouse, which is at
Port Qasim. There the gasses are stored in cylinder until a customer demands for the product, the
company has no retailer they provide directly to the customers. The distribution is done in both
bulk capacity containers as well as the single ones.

5.4 Customer (Customer cycle)

The company has a very diverse customer list, the main customers of the company are
The hospitals and other medical institutions most notably Aga Khan. They are contract-based
customers, they are provided with nitrous oxide that with other gasses serves the purpose of
Anesthesia gas and oxygen, which serves as a counter for Anesthesia.
Many of the automobile industries that have the process of metal cutting depend on the company
for supplying them with gasses that serves as a fuel for cutting and welding of metals.
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Big beverages companies like Pepsi or Coke depend on Pakistan Oxygen for providing them
with Carbon dioxide for the making of fizzy drink bottles.
Company like Shan food and many such companies also depend on Pakistan Oxygen for
nitrogen gas for the preservation during the packaging.

6 Process View of Supply Chain

6.1 Push View
The company work on a push view as the company production is initiated and performs
production in an anticipation of customer orders. The company has contract base customer and
the company has three processes through which it keep an eye on the customer’s requirement.
The company has past patterns of its customers order as the medical gasses are a very crucial
case and the shortage can cause unwanted situation to become reality for that the company has to
keep a check itself on the customer’s availability of the gases.
The company has scanners installed in the customers’ storage tanks; the sensor alarms the
company at the 50% availability of gases. As soon as the company receive the alarm it confirms
the order and the replenishment truck heads its way by the time it reaches the customer, the
customer is still left with 30% of the gas the company has never dried out any customer in its
history.

7 Strategic Fit
7.1 Understanding the Customer
First of all the company identifies the need of the customer, Pakistan Oxygen knows how crucial
medial gases are and the issues is the customer gets dry out (shortage) and the company knows
how much uncertainty of demand may arise as well as the situation the city of Karachi faces.

7.2 Understanding Supply Chain Capabilities

The company to do well and as the leading company of the industry know their supply chain
very well they know all the facilities capacities the uncertainty of the supply and environmental
situations.

7.3 Strategic Fit

The company has a good strategic fit as to cope up with the uncertainty of the external
environment the company releases its supply when the customer is at the half of full capacity of
their tanks so that the delivery is made when the customer tank are at 30% of gases still left, the
company always have a truck loaded with supply ready for replenishment if any shortage arises.
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8 Drivers of Supply Chain

The company utilizes all supply chain drivers including Facilities, Inventory, Transportation,
Information, Sourcing and Pricing in a following way

8.1 Logistical Drivers

8.1.1 Facilities
Pakistan Oxygen Limited has fixed manufacturing plant for each gas, and having flexible
manufacturing plants are not possible because of the complications involved. The three main
gasses being Oxygen, Nitrogen and Argon are obtained through liquefaction in plant called Air
Processing Unit. The separation of these gasses is very challenging because of extremely low
liquefactions point like -186 Celsius, and above.
The facilities are very specialized, using great amount of energy to hold these extremely low
temperatures so the gasses remain liquid. These gasses are called Cryogenic, being so dangerous
that if liquid nitrogen spills on our body part it will be separated from our body. So safety is
company’s first priority, with people working in these plants having special equipment to protect
themselves and special training as well. There are very few people working in these plants, as
most of the work is automated being done by machines. These plants are located at Port Qasim.
The company have their own warehouses, because of safety concerns, which can arise because of
out-sourcing. The products of company are very sensitive, so to have proper control and surety
of safety the company has their own warehouses.

8.1.2 Inventory
The company fills the gasses in cylinder at the pressure of 2000 psi, filling it roughly 6.8 to 7
Cubic meters and locking as well as sealing it afterwards. These cylinders are then sent to the
customer if required, or to the warehouse as inventory. The firm also keeps liquid gasses in
inventory, in their West Wharf Headquarters.

8.1.3 Transportation
The company’s transportation is a combination of both, in-house as well as out-sourced. The
trucks used does not belong to company, belonging to the contractor. Transportation is also in-
house because the contractor, to whom these trucks belong, has gone through very long and
rigorous list of compliance as well as fulfilling the other requirements of company.
There are so many changes the firm tells the contractor to do in their trucks, the trucks become
completely customized for the firms use. These trucks are so specialized that it becomes
impossible for the contractor to use it anywhere else, almost equal to making transportation in-
house.
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8.1.4 Information
Pakistan Oxygen uses real-time information, to improve their supply chain performance. Vehicle
tracking system is installed at Port Qasim, and all the trucks are fitted with GPS. This enables
company to check the live location truck, where it is going at what speed and whether it has
stopped somewhere. If the truck has stopped for little long, the company calls the driver to know
the situation properly.
Every tank of company in each hospital is fitted with an alarm system, which informs the
company when the tank reaches 50%. By the time tank reaches 30%, the company delivers the
gas to the hospital before drying out. There are many other protocols as well which company
follows to ensure efficient supply chain performance.
The second layer of protection is Telemetry, it is a remote system placed in all the tanks of
Pakistan Oxygen Limited, which gets charged on solar power. After charging all day, it works all
night taking tanks reading every 30 seconds and sending them to Port Qasim plant where a
person monitors it.

8.1.5 Sourcing
There are multiple sources of raw material, for company’s products. First raw material is air,
which is free for all as it is a natural resource. Hydrogen is made from water, which again is a
free resource. Company only gets raw material for making electrodes, which they buy from
international suppliers because of quality assurance. The company does not compromise on
quality, so they only have one to two suppliers. The company also keeps raw material in stock,
just to be safe if supplier is not able to deliver raw material for few days.

8.1.6 Pricing
Pakistan Oxygen Limited considers many factors when pricing their products. They consider all
factors including energy costs, electricity bills labor salaries for price of their products. They are
the leader in their industry and whatever the price they set for their product, their competitors set
there price little cheaper. Pakistan Oxygen is not the cheapest, but that is justified because of
their high quality products.