Priming for New International Energy Contracts

Feature Article | January 30, 2008 by Christine Macfarlane

KEM-Tron Technologies is an ISO 9001-certified manufacturer of solids removal and recovery equipment and chemicals fort he oil and gas drilling industry. It also sells to companies that do water well drilling, mining, and to the aggregate industry, which deals with materials used in construction, including sand, gravel. Crushed stone, slag and recycled crushed concrete.

Much of heavy equipment it develops is custom designed and produced. It is particularly well known for its high-end “clear water” closed loop systems and products for horizontal directional drilling (HDD). Its closed loop systems include linear motion shakers, dewatering units, mud recycling and mixing units, hydrofoil agitators, and jet shearing systems. It also supplies fluid performance polymers to coagulate and flocculate suspended solids from water effluent streams. These polymers increase the efficiency of settling, clarification, filtration, and centrifugation operations.

A nuclear power plant in Ukraine with sprinkler-type cooling ponds that circulate 10,000 cubic meters of water per day operates with an ongoing bottom dredging program that keeps bottom silt/dirt out of the mainstream suction inlet. Project engineers provided a custom-designed remote-controlled, electrically operated floating dredge, a complete mobile dewatering plant, and a specially developed flocculent for ongoing cooling pond dredging and dewatering.

The production capacity of a high quality anthracite mine in the Commonwealth of Independent States is limited only by the capacity of its coal washery. Engineers adapted its linear motion technology to create its new Linear Motion Double Deck Coal Dewatering Screen to separate water from fine and ultra-fine coal and meet the requirements in its highly populated city location that no liquid waste be discharged.

A large oilfield in Southern California that produces 80,000 barrels of oil and 700,000 barrels of water per day uses a special polymer treatment that improves water quality and reduces treatment costs by over 25 percent over the previous supplier.

What do all these projects have in common? Customizing is at the heart of KEM-TRON’s business. The company’s specialized technology is hard at work in oil and gas, mining, civil construction, wastewater, and horizontal directional drilling industries.

Waltzing across Texas – and the world

In addition to its Houston headquarters and facilities, KEM-TRON has operations in Russia, India, Europe, and the Middle East to better serve world requirements for its products and services. The company is poised to focus on growth – and the timing is right. This is a growing market. In fact, the U.S. Government’s International Energy Outlook 2007 report projects that total world consumption of marketed energy will increase by 57 percent from 2004 to 2030.

Its top three competitors, National Oilwell Varco Brandt, MI-Swaco and Derrick Equipment, are several orders of magnitude larger than KEM-TRON. “We have an advantage in the industry because we have always been willing to do custom design and manufacture for our customers, says Jai Mehta, KEM-TRON CEO. “We started getting attention because we can deliver products faster and more custom-tailored to what customers need. And we seem to be able to sell everything we can produce for the Oil & Gas and HDD industries.”

It’s a roughneck life

KEM-TRON experienced more than 40 percent growth in 2005 and 2006. This growth rate was faster than actual market growth due to KEM-TRON’s ability to take market share from competitors. Mehta and his team saw that the company’s rapid growth was stressing its physical facilities and its personnel. It was also testing the limits ability to plan, manage production, and do necessary accounting and cost accounting on their current business management software.

In retrospect, Mehta says, “The company’s operating platform wasn’t going to grow without serious investment, and that led us to step back to consider bringing in a new, best-in-class solution.” He also knew that there were probably only three vendors that could provide what they needed.

Take it to the limit

Dan Sechrist at TBC International Consulting in nearby Salado, TX, presented the FourthShift Edition for SAP Business One application from SoftBrands to KEM-TRON early in 2007, and Mehta knew quickly that this was a solution to look at seriously. “We skipped the customized demo. They just did a four-hour standard demo for us with the help of SoftBrands and we asked a lot of questions,” says Mehta. “We said, ‘this is what we want SAP to do for us, so let’s do it.’”

After just thirty days of conversations, including discussion of requirements, proposed implementation schedule, and cost estimates, the deal was made. Blueprinting began at the end of May 2007.

Many people were going on vacation at this point, but it didn’t deter Mehta and his team. “Small companies can’t afford to get mired in the details,” says Mehta. “We’re entrepreneurial and we just can’t know everything ahead of time. It’s really a matter of holding the vision and getting the right support to achieve our goals.”

In June the accounting team tackled the business processes, defining the company’s accounts and their hierarchical relationships. They also began creating financial reporting templates with the financial reports designer. By August the engineering staff was working on business processes between engineering and manufacturing, loading BOMs and defining item masters. In September, the implementation team worked with TBC consultants to make some adjustments and focus on getting data in order.

The first week of November was go-live week. There were just two days of downtime in the cut-over from the old system, followed by a short period of intense support to rectify some details, and KEM-TRON was up and running, able to meet customer commitments.

Mehta acknowledges that it was challenging to dedicate enough internal support, but with a little bit of overtime and one weekend dedicated to the cut over, they were in business.

Everything’s coming up (yellow) roses

Experience to date with the FourthShift Edition for SAP Business One application gives Mehta confidence in future growth capabilities. “This very well modeled solution will allow the company to continue to grow organically, and we will be able to go into acquisition mode, absorbing other entities and rolling up the numbers with relative ease,” he says.

A welcome early benefit is that the number of emergency meetings to accommodate special customer requests is decreasing. “Even though a large portion of our business is customized solutions, FourthShift edition enables us to maintain an optimum manufacturing plan based on our master production schedule, capacity planning, sales forecasts, inventory status, open orders and bills of materials,” Mehta says.

Within the framework of the new solution the team can manage inventory location with location codes and reduce duplication. They also can set inventory levels and triggers with stock status alerts.

“We’re tracking everything, with detailed information we just didn’t have before” he says. “And our release of orders to manufacturing is much more structured and orderly, giving us more insight into our purchasing and hence tremendous control over our inventory.”

Management has a nearly real-time view of financials now, and can develop accurate product costs and variances by product lines, simulating the cost impact of material and labor cost changes, and projecting future costs for planning and budgeting.

Reflecting on the new system’s match to the company’s entrepreneurial spirit, Mehta says, “Our decision making is based on taking all the information we have at that time, making our best assessment and plan, and going for it. The system is supporting us – and the project came in under budget, which is very important for a small company.”

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