"Inventory management. Decentralisation Vs Centralisation" Alexander Gelis, Director, Spares and Technical Services, MacGregor Service Part of Cargotec Corporation presentation at Spare Parts Business Platform 2013. More information http://www.sparepartseurope.com/

1. Inventory Management
Decentralisation Vs Centralisation
Alexander Gelis, Director, Spares and Technical Services, MacGregor Service Part of Cargotec Corporation

2. Services
MacGregor Products
Container lashing
RoRo
Cranes
Offshore load handling
Marine selfunloaders
Land and port systems
Hatch covers

3. MacGregor Service
MacGregor is the world’s leading brand of engineering solutions and services for handling marine cargoes and offshore loads. MacGregor products serve the maritime transportation, offshore and naval logistics markets, in ports and terminals as well as on board ships.
Our customers compare to traditional manufacturing customers are moving targets.
MacGregor has a network of service stations in almost every major port or hub.
MacGregor has tripled the amount of equipment delivered between 2008- 2012 compare to the 20 year period prior to 2008.
The increased installed based combined with the different equipment types put pressure on the central services organisation, in order to ”optimize” the inventory to match the customers needs.
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4. MacGregor Logistics
 The key to any succesful logistics and warehouse set up is focus and targeted key performance indicators. Trends, installed base, life cycle calculations, forecasts are important elements, however focus in the right KPIs is the key.
Inventory Management needs to be a separated from accounting (inventive), from sales (push effect), from sourcing and focus on using all the above elements to define a stocking policy that matches the companies accepted service rate to the customer
Should material X always be on stock or can the material delivered in 3 days and still be acceptable by the customer.
Availability problems combined with high write offs are a good indication for companies, that need to focus in inventory management.
Many companies focus mainly on the current sales, rather than the installed base, life cycle of the equipment

5. Centralization vs. decentralization of warehouses for MacGregor
The key benefits that we have identified with centralisation:
Less inventory costs
Less warehouse costs
Less obsoloscence costs
Optimized inventory management >> Bundling of skills
High degree of automation/standardization leds to higher efficiency
Less inbound transport costs
Key benefits Decentralization
 Increased local availability
 Customer desire for self-pick can be fulfilled
 Less outbound transport costs

6. Why centralized warehouses in MacGregor?
Number of SKU’s and transactions do not justify various smaller, inefficient local warehouses
Centralized warehouses are located at logistic hot spots and meet customers requirement of lead time
Inventory expertise is missing for local warehouses and due to small operation too cost intensive to build up.
Increased availability of high frequent materials can absorb sporadic high demands in different ports in range of centralized warehouse
Close to main airports

7. 5. Europe + Asia Distribution Centre
Infrastructure Past Logistics Network

8. ADC
LCE Hamburg
USDC
Infrastructure Today's Logistics Network

9. Servigisitcs spare parts planning tool supports to classify parts
in accordance to Marine Stocking Policy
CF CM CR
BF BM BR
AF AM AR
F M R
A
B
C
A = High Consumption Value > 80%
B = Medium Consumption Value >15%
C = Low Consumption Value > 5%
F = High Frequent material > 80%
M = Medium Frequent material > 15%
R = Low Frequent material > 5%
An example of
ABC/FMR Analysis

10. Classification Overview
CR
CM
CF
BR
BM
BF
AR
AM
AF
F
M
R
A
B
C
Standard Materials
Low Cost Materials
High Cost Materials
Other
–
Dying, New, etc

11. Classification as Purchase criteria
AFAMARBRCRBMBFCFCMBig obsolete riskAvoid to stock or reduce safety stockOn stock withcareful follow upOn stock withhigher safety stockCan be stockedbut contains obsolete riskFrequency Volume HighLow HighLow

12. Benchmarks to improve Inventory management and increase efficiency
Main Benchmarks
 Stock Turn
 Stock out measurement >> Material availability “Risk of lost Sales” Derived Benchmarks
 Average stock value
 Inventory consumption
 Interest Charge for inventory
 Storage Fee

13. Illustrative graphs

14. 98,0
98,2
98,4
98,6
98,8
99,0
99,2
99,4
99,6
99,8
100,0
January
February
March
April
May
June
July
August
September
October
November
December
Material Availability Risk of Lost Sales [%] - illustrative
Risk of Lost Sales 11 [%]
Risk of Lost Sales 12 [%]
Risk of Lost Sales 13 [%]

15. Facts, 2009 compare to 2012
Average stock value reduced by 25% from 2009 to 2012
Total Stock Consumption increased by 20,5% from 2009 to 2012
Average stock turn increased by 35%
Storage fee decreased by 14%
Interest charged (internal) decreased by 60% of the total interest.
Number of picked orders increased from 23%
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