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Steve Lyndon
Oniqua
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intensive business
Implementation of a solution
Slide 4
Slide 5
Slide 6
Our Business
We produce commodities
o
o
o
Slide 7
Mobile Fleet
o
o
Fixed Plant
Concentrator
o Smelter / Refinery
o Power Plant
o Material Upgrading
o
Slide 8
Mobile Fleet
High volume of spares
Preventive Maintenance
o
o
Kits
Standard Jobs
Break Fix
o
Slide 9
Haul Trucks
Shovels
Dozers / Loaders
Fixed Plant
Volume of usage of spares is lower, but more complex
Preventive maintenance
Planned / Unplanned maintenance
o
o
o
Slide 10
Long lead-times
High variability
Asset intensive
o
o
Slide 11
Criticality of equipment
o
o
Single systems
Environmental concerns
Slide 12
usage
Personnel monitoring inventory have varied skills in
understanding the statistical calculations
items
Large proportion of items slow
moving or intermittent demand
Small number of items used
frequently and consistently
Wide range of criticality / impact
Wide range of availability
1%
15%
19%
65%
1%
< 1 week
8%
1 to 2 weeks
35%
up to 4 weeks
up to 2 months
25%
up to 4 months
up to 6 months
14%
Slide 13
14%
MODERATE
SLOW
NON MOVING
Availability
3%
FAST
Future demand is not known with any certainty, either quantity or timing
Slide 14
SAP-MM
SAP-MM is excellent for managing inventory for manufacturing and
retail
MRP & time-phased planning
Forecasting & consumption-based planning
Slide 15
Service Level
Managing to a Service Level target is not optimal
o
Target levels are arbitrarily set Why do you want 95%? Why not 90% or
98.5%?
Slide 16
98%
96%
94%
Service Level
100%
92%
Item A
Item B
90%
88%
86%
84%
$0
$200
$400
$600
$800
$1,000
Safety Stock
Slide 17
$1,200
$1,400
$1,600
$1,800
$2,000
Holding Costs
Keeping MRO inventory costs
money
15 20% p.a. is typical
Is this the best use of our
capital?
If end-users had to pay for the
cost of keeping inventory,
would their demands be
different?
Slide 18
Stockout Cost
Slide 19
Variance Matters
Slide 20
How Much is
Enough?
Cost of Holding
Inventory
Slide 21
Cost of Not
Holding Enough
Inventory
good enough
Things change over time
Initial estimates of usage or lead time
were not accurate
o Usage changes with production levels
and fleet size
o Market prices change the stock-out
penalty
o
Slide 22
Slide 23
SAP-MM
Limited forecasting algorithms, focused on fast moving inventory
Only uses Normal distribution
o
Most items that have low usage have statistical distributions like Binomial,
Negative Binomial or Poisson
Lead time uses the manually assigned lead time, not the actual lead
time
Does not consider variance of lead time
Assumes Issue Size = 1; Many MRO items are used in multiples,
which can overshoot the ROP
Does not factor in Criticality or Stock-out Penalty Cost
Slide 24
Our Requirements
Slide 25
Slide 26
Business Impact
Slide 27
Considering Workarounds
What else could we do if the
material is not available when
requested?
o
o
o
o
Expedite delivery
Temporary repair
Substitute
Or, no other option.
Slide 28
OAS Workbench
Worldwide inventory consolidated in
OAS, and partitioned by Business Unit
Control Segments
Control Segments are defined to
group together items with similar
inventory management policies
A group of records
extracted for review
Benefits Delivered
An objective basis for review of inventory
Removes
Benefits Delivered
Areas of value delivery, continued:
Standardization
Slide 46
Processes
Metrics
Master Data
Objectivity
Consistency
Financial Performance Improvement
Visibility of Inventory Management in the Organization
Improve the Skill Set of Inventory Controllers
Ability to Make Mass ERP Changes
Segmentation of Inventory for Analysis
Retention of Historical Data
Lessons Learned
Slide 47
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Slide 48
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