9 Keys to Maximizing Profits and Equipment Uptime through Inventory Management for Maintenance Parts


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9 Keys to Maximizing Profits and Equipment Uptime through Inventory Management for Maintenance Parts

  1. 1. PROCUREMENT 9 Keys to Maximizing Profits and Equipment Uptime through Inventory Management for Maintenance Parts MEMO 2011 Conference in Saskatoon Gallery C By Robert Lamarre, B.B.A., M.A.Sc. President of IMAFS inc. & GCRL inc. November 7th, 2011 Robert Lamarre - All rights reserved
  2. 2. 1. Parts classification 2. Managing service 3. Managing demand 4. Forecasting demand 5. Managing lead times 6. Optimizing inventory parameters 7. A good inventory optimization system 8. Clarifying roles and responsibilities 9. Policies, procedures and key performance indicatorsRobert Lamarre - All rights reserved 2
  3. 3.  True or false: all parts are created equal ?  Classify the parts in relation to both their relative importance on operations (criticality) and frequency of usage  Classify the parts taking into account inventory strategies  Pareto on hits and valueRobert Lamarre - All rights reserved 3
  4. 4. Identify product family and demand stream Obsolete Critical Reparable Stock New or or or or not not not non stock Classes Inactives ABCD (no usage for X Based on Hits or months) usage value Updated  Annually  Monthly  ManualRobert Lamarre - All rights reserved 4
  5. 5.  The reason we keep inventory  Analyzing our performance is important  Ability to supply the parts when needed  Estimate parts availability  Service goals to be determined for each product class, each product family and each warehouse  The system has to adjust Min-Max to service goals  80 – 20 Rule -> Focus on important itemsRobert Lamarre - All rights reserved 5
  6. 6. Measures existing levels Allows service goals on part’ criticality level Allows service goals by class, by family, by warehouse Safety stock set in line with service goals Simulations to measure impact of service goals variations Dashboard to track service results Tools to take corrective actionsRobert Lamarre - All rights reserved 6
  7. 7.  Historical Information  More data = more accurate you can be  Demand flows regular, project, planned maintenance  Demand patterns: planned or emergencies  Regular demand or intermittent demand  Manage on demand data; not shippingRobert Lamarre - All rights reserved 7
  8. 8. Better data for accurate forecastsRobert Lamarre - All rights reserved 8
  9. 9.  Forecasting: Prediction or science ?  Human, machine or both ?  Sales & Operations Planning (S&OP)Robert Lamarre - All rights reserved 9
  10. 10. Better forecasts = better service + less stock Good solid statistical forecasts Forecasting methods that Filters & account for alerts demand trends, seasonality and intermittence Possibility Best fit by of manual item adjustments Can integrate maintenance planning dataRobert Lamarre - All rights reserved 10
  11. 11.  What is a lead time ?  Lead times are often long and variable  Reality versus promises  Measure and manage the various elements of lead timesRobert Lamarre - All rights reserved 11
  12. 12. Bad lead time information result in stock outs or surplus stock Dynamic calculation Compare real By vendor and lead time with transport mode vendor promises Lead Possibility of time Cleansing of manual control extreme delays Internal lead time managed by components Can run simulations to analyse impact of changes Tools to take corrective actionsRobert Lamarre - All rights reserved 12
  13. 13.  What is a Min ?  What is a Max ?  Min-Max variations  Safety stock provide the service level goals  Demand variability and forecastsRobert Lamarre - All rights reserved 13
  14. 14. Service $ objectives Ordering Stocking per class / costs costs family/ warehouse Calculation Simulation Adjustments SS Lead time Min Max Forecasting Lot sizes DATA BASE ERP or CMMSRobert Lamarre - All rights reserved 14
  15. 15.  Look for inventory management system specially designed for spare parts. They should account for:  Parts criticality  Service goals per product class and product criticality  Erratic demand forecasting  Planned demand  Lead time management  Dynamic inventory parameters optimization  Allow simulations  Surplus stock identification, prevention and disposition  A complete set of KPIs and exception reports  Data miningRobert Lamarre - All rights reserved 15
  16. 16. Overall results that can be drilled down Inventory analysis reports gives full picture of inventory management results with pointers on necessary corrective actions with drill down possibilitiesRobert Lamarre - All rights reserved 16
  17. 17.  Clarifying roles and responsibilities  Who is responsible for inventory ?  What are the roles of Supply Chain Management ?  What are the roles of Maintenance ?  Change management is very importantRobert Lamarre - All rights reserved 17
  18. 18.  Service goals  Policies determine roles and responsibilities  Key performance indicators  BenchmarkRobert Lamarre - All rights reserved 18
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  21. 21. Inventory Management can be passionate and exciting  Yes eliminating 25% or 40% of equipment downtime due to lack of parts brings a smile to operations manager  Eliminating 80% of stock-outs at the store has a major impact on maintenance efficiency  When you can reduce total inventory by more than 25% while improving service, you are freeing up capital money and space that are always badly neededRobert Lamarre - All rights reserved 21
  22. 22. Thank you Questions?Robert Lamarre - All rights reserved 22