Professionalizing Spare Parts Management

Transcription

1 Professionalizing Spare Parts Management A journey full of roadblocks and surprises Jan Willem Rustenburg & Tycho Lejeune

2 MRO Spares have a great impact on today s society Despite all maintenance management optimizations, sudden unexpected failures Machine defect may still occur Just in Case spares inventories are required to anticipate 1

3 Spares management: a field with great potential but Billions invested in spares, hardly moving, spend often difficult to validate Machine defect NO spare part available Low spares availability hampering maintenance, creating standstills and production losses Lots of supply chain activities, lots of rework and hidden costs Warehouse full with the wrong parts Many material planners/buyers = High Operational costs many companies struggle with finding an adequate roadmap to improve rapidly 2

4 Purchasing costs Low High FOCUS AREA LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low Purchasing costs Low High LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low Agenda The Journey towards effective spares management: passing the roadblocks with care I. The Journey II. Roadblocks Involve OEM & Multi Echelon Anticipate III. Recommendations Suppliers 7. End-to-End Supply Chain Optimation Solutions 8. Mathematical optimisation BECOME BEST IN CLASS differently 9. Eliminate need for spares Classify & Differentiat e 6. Plan for Spares Demand 5. Plan for Spares Supply 4. Start stock optimisation OPTIMISE AND SUSTAIN Maintenance Create stability Simple start Need Buy Use & Fix Stores function 1. Once upon a time 2. Physical Structures CREATE THE BASICS 3. Create a Stock Function 3

5 Purchasing costs Low High FOCUS AREA LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low Purchasing costs Low High LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low I. The Journey A phased approach from creating the basics to best in class Inspired by Pragma s asset management road map Involve OEM & Suppliers 7. End-to-End Supply Chain Optimation Multi Echelon Solutions 8. Mathematical optimisation Anticipate differently 9. Eliminate need for spares BECOME BEST IN CLASS Classify & Differentiate 6. Plan for spares Supply 5. Plan for spares Demand 4. Start spares optimisation OPTIMISE AND SUSTAIN Maintenance Simple start Need Buy Use & Fix Stores function Create stability 1. Once upon a time 2. Physical structures 3. Categorize and sanitize CREATE THE BASICS 4

6 Purchasing costs Low High FOCUS AREA LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low Purchasing costs Low High LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low I. The Journey A phased approach from creating the basics to best in class Inspired by Pragma s asset management road map Involve OEM & Suppliers 7. End-to-End Supply Chain Optimation Multi Echelon Solutions 8. Mathematical optimisation Anticipate differently 9. Eliminate need for spares 17:45 17:15 BECOME BEST IN CLASS Classify & Differentiate 16:15 16:30 6. Plan for spares Supply 5. Plan for spares Demand 4. Start spares optimisation OPTIMISE AND SUSTAIN 16:00 Maintenance Create stability Simple start Stores function Need Buy Use & Fix 15:00 1. Once upon a time 2. Physical structures 3. Categorize and sanitize CREATE THE BASICS 5 15:20

7 Create the basics Step 1: Once upon a time there was a supply chain driven by maintenance Need for spare parts Maintenance buys Spares (if not in own stock) No proper inventory control Amount of SKU s is still limited but growing Receive and use spares No proper stores function Admin processes become a hassle 6 Keep spares at various places (grey stock/ squirrel stocks) Double inventories Hence, a need arises to create some structure... Stock keeping becomes messy and inefficient

8 Create the basics Step 2: From physical mess to physical structures Challenge Without structure the store becomes messy. Much time of artisans is spend in physical logistics Solution Set up of a proper store! However the maintenance function is still in charge of the procurement process 7

9 non-critical critical Create the basics Step 3: Categorize parts and create a stock function Challenge Missing essential master data No clear segmentation based on spares characteristics Many direct PO s Spend difficult to validate Solution Make a proper stock categorization and introduce master data management Create a stock function and reserve cash for it. Also rudimentary min-max levels in place (by intuition) moving rarely moving non-moving Spares Strategy A1 PO TEXT Many direct PO s Rotables Strategy A2 Strategy B Consumables Strategy C 8

10 Workshop Part 1: How to define proper supply chain strategies? Assortment Subassortment Inventory strategy Replenishment strategy Procurement strategy Physical stocking strategy Spares - regular Fast/medium Delivery from Stock. Use statistical models, medium service level Economical order quantity Updated price lists Minimize walking distance, or mechanize Slow/non Spares - critical Fast/medium Slow/non Chemicals - Rotables -

11 Purchasing costs Optimise and sustain Step 4a: Initialize stock optimization Challenge How to balance costs vs. availability? How get a grip on your inventories and your spend? Solution Classify assortment / differentiate in strategies Use optimisation tools (applicability of ERP systems is limited) Don t forget to train your people! 10 Low High Enhance demand predictability Reduce variation in supply lead times LEAN Management by exception Fully automated process WHOLESALE High Rationalize decisions Demand frequency Involve all supply chain stakeholders JUST IN CASE Accept high safety stock Speed up phase outs WHOLESALE (CLEAN) Low

12 Optimise and sustain Step 4b: Create a closed improvement loop Challenge So now you have a proper spares parts planning function in place. Good job! Determine Inventory Parameters Replenish inventory ERP Buyers daily e.g. Misperformance analysis The sad news is: in this dynamic world planning is good, but learning from deviations to the plan is equally important Inventory controller(s) DO Inventory controller(s) PLAN CHECK KPI Dashboard Solution Implement a closed spares improvement cycle, using an actionable dashboard ERP ACT Adjustments/Improvements ERP 1x/month ERP 1x/month 11 continuously

13 Optimise and sustain using a wider horizon From managing the process towards managing the inputs step 5 Supplier step 6 Stock control/ warehousing Maintenance Operations Stock control/ warehousing 12

14 Period periode demand vraag Optimise and sustain Step 5: Plan for spares demand Challenge Maintenance (planning) is still somewhat of a black box Solution Distinguish between planned and unplanned demand Apply Just In Time (JIT) planning for planned demand Gerealiseerde vraag Do not stock, order Just in Time = planned = unplanned No segmentation of demand Higher variability Higher Stock Can you anticipate demand for spares? Period periode Only stock for the unplanned (break down) demand 13

15 Optimise and sustain Step 6: Plan for spares supply Challenge Although big steps are made in spares optimization, long and variable lead times can still mess up saving potential. So how to reduce lead times and make them more reliable? Solution Develop forecasting and delivery schedules with key suppliers Include the topic of obsolescence and end of life information Recruit a tactical buyer Unknown Purchasing costs Low High FOCUS AREA LEAN JUST IN CASE WHOLESALE WHOLESALE (CLEAN) High Low Demand frequency 14

16 Purchasing costs Workshop Part 2: How to enhance critical spares availability by collaboration in the supply chain? Assignment 1: Use the SPM Studio to classify the spares assortment Take demand and supply data as a given Set service levels such that the overall spares availability is 95% but with minimal working capital Discover the quantifiable benefits of basis spares optimization Tip: Use free assistance of a consultant Low High Enhance demand predictability Reduce variation in supply lead times LEAN Management by exception Fully automated process Rationalize decisions Involve all supply chain stakeholders JUST IN CASE Accept high safety stock Speed up phase outs WHOLESALE WHOLESALE (CLEAN) High Low Demand frequency

17 Workshop Part 2: How to enhance critical spares availability by collaboration in the supply chain? Purchasing costs Low High FOCUS AREA LEAN JUST IN CASE Assignment 2: Focus on A3 parts (fast moving and expensive) article and article 9391 Use the planned demand information Discover the quantifiable benefits Which other non-tangible benefits can be obtained? Stock control/ warehousing WHOLESALE High Low Demand frequency Maintenance Operations WHOLESALE (CLEAN) Assignment 3: Focus again on A3 parts (fast moving and expensive) article and article 9391 Assume that lead times are reduced with 50% by sharing forecast information Discover the quantifiable benefits Which other non-tangible benefits can be obtained? Supplier Stock control/ warehousing

18 Become best-in-class Step 7: End-to-end spares supply chain optimization Challenge As a fully optimized company the question remains: Are you the most logical supply chain entity to hold the stock? Solution Optimal allocation of stock holding functions in the supply chain based on scale and technical authority Company 2 stock stock stock stock stock stock stock stock Suppliers OEMs Asset owners Suppliers OEMs Asset owners 17 Total stock

19 Become best-in-class Step 8: Apply cutting edge mathematical algorithms Challenge Conditions are now in place to implement advanced scientific methods on spares. But which and how? Solutions For network optimization: Virtual warehousing in combination with multi-echelon optimization. For rotable optimization: Apply multi-indenture techniques RDC Total stock RDC Installation Needed: BoM GDC RDC Opt. GDC RDC Assembly 1 Assembly 2 Assembly i Opt. RDC Opt. Opt. Network optimization RDC Comp 1.1 Comp 2.1 Comp 2.2 Comp 2.J Consider: stocking more components than assemblies Less stock value, the same availability

20 Become best-in-class Step 9: Eliminate need for spares Challenge How to fundamentally reduce the need for spares? Plan 100% of the spares using predictive techniques Radically shorten lead times using 3D printing. This of course is still farfetched, but breakthrough thinking should be stimulated! Solution Make the supply chain not only collaborative but also creative with think of out of the box sessions, the good old idea box, etc. 19

21 Purchasing costs Low High FOCUS AREA LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low Purchasing costs Low High LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low I. The Journey A phased approach from creating the basics to best in class Inspired by Pragma s asset management road map Involve OEM & Suppliers 7. End-to-End Supply Chain Optimation Multi Echelon Solutions 8. Mathematical optimisation Anticipate differently 9. Eliminate need for spares BECOME BEST IN CLASS Classify & Differentiate 6. Plan for spares Supply 5. Plan for spares Demand 4. Start spares optimisation OPTIMISE AND SUSTAIN Maintenance Simple start Need Buy Use & Fix Stores function Create stability 1. Once upon a time 2. Physical Structures 3. Categorize and sanitize CREATE THE BASICS 20

22 Stock performance (Availability vs costs) I. The Journey Taking a revenu point of view how to speed up Phase 1? Phase 1 Create the basics Phase 2 Optimize and sustain Phase 3 Become best-in-class Time and effort 21

23 Purchasing costs Low High FOCUS AREA LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low Purchasing costs Low High LEAN W HOLESALE High Demand frequency JUST IN CASE WHOLESALE (CLEAN) Low II. Passing the often encountered roadblocks Involve OEM & Suppliers Multi Echelon Solutions Anticipate differently 7. End-to-End Supply Chain Optimation 8. Mathematical optimisation 9. Eliminate need for spares BECOME BEST IN CLASS Classify & Differentiate 6. Plan for Spares Demand 5. Plan for Spares Supply 4. Start stock optimisation Maintenance Simple start Need Buy Use & Fix OPTIMISE AND SUSTAIN Stores function Create stability 1. Once upon a time 2. Physical Structures 3. Create a Stock Function CREATE THE BASICS 22

24 Roadblock 1: Going around the first bend Use a concurrent approach instead of a royal approach The problem Companies take a Royal approach to structuring spares processes/segments. Takes a lot of time without tangible value in terms of stock availability or working capital reduction. Hence, the organization loses interest Solution Use a concurrent approach Start with a relatively easy segment (parts that are known, often requested) Optimize it and in parallel structure the next segment Structure Segment 1 Optimise Segment 1 Structure Segment 2 Optimise Segment 2 Structure Segment 3 Optimise Segment 3 23

25 Roadblock 2: Spares optimization is a silo function Introduce an Inventory manager for spares The problem Great to have a spares optimisation in place as a process But still: maintenance and supply is still a black box How to seamlessly connect the spares management function with maintenance and procurement? Solution Create a total picture of spares related processes Logically group these processes into job profiles see next slide 24

26 Roadblock 2: Spares optimization is a silo function Introduce an Inventory manager of spares Supplier Accountmanager Strategic Purchasing Supply chain Strategizing Engineering & maintenance optimisation Sales Manager Tactical Purchasing Inventory manager Supply Chain Planning Mid-term maintenance planning Inbound Sales Operational Purchasing Operational planning Detailed maintenance planning Buyer Stores Maintenance Execution 25

27 Roadblock 3: Relationships with suppliers are traumatic Allow mutual win-win and create trust The problem Until now, you do spares management yourselves as a company But are you best capable to own and manage the stock? Solution Create an open atmosphere with your key suppliers Share your business models, strengths and weaknesses Decide upon a long term relationship and allocate supply chain responsibilities accordingly Advantage OEM Scale Product knowledge OEM Company 1 Company 2 Advantage companies User knowledge 26 Company n Stock holding Exchanging info

28 III. Recommendations So are we dreaming? Abolutely not! Recall radical organization change is not needed. Neither a change of the ICT landscape nor rocket science. What is needed: A willingness to connect this disciplines with other disciplines A pressure on availability and costs A willingness to define spare parts management as a professional supply chain discipline An open mind to partnerships with your key suppliers 27 A smart and pragmatic attitude

29 SMARTER approaches in Asset Management

30 Thank you Jan Willem Rustenburg Tycho Lejeune 29