Manufacturing efficiency is integral to overall competitiveness – making a company’s maintenance and asset management strategy key. Brynn Woods, purchasing & distribution director, Brammer UK looks at the role of supply chain in effective maintenance and asset management
Central to achieving manufacturing efficiency is the effective sourcing and management of maintenance, repair and overhaul (MRO) spares. How the supply chain is managed – has a direct relationship with a company’s ability to optimise manufacturing operations.
Having access to the right spares, when and where needed, is critical to maintaining continuity of production and avoiding downtime. A successful strategy, therefore, will make the availability of production-critical spares a key performance measure.
However, this must be balanced against considerations like the need to minimise inventory and therefore reduce working capital. Stock purchased ‘just in case’ often becomes non-moving stock, tying up cash and often becoming obsolete and requiring a balance sheet write-off. The right mantra should be ‘low inventory – high availability’. But how is this achievable?
Overcoming the complexities
The complexity of the stockholding required is often cited as a problem in optimising this function. Spares are often of low value and required infrequently, while their sheer range can be daunting, meaning dealing with multiple suppliers and a consequent lack of purchasing leverage. The technical complexity of the spares and erratic demand patterns – only around a third of consumption repeats in consecutive years – can also be problematic.
Once again, simplification can deliver tangible commercial benefits. Standardisation – identifying which machines require the same spares and then sourcing these from a single supplier – can radically reduce stockholding and working capital.
This is especially so where spares are being sourced from an OEM which itself sources them from the manufacturer. Frequently there is no need to buy from the OEM as the spare can be readily obtained – often cheaper – via a specialist distributor. This also reduces lead times as the distributor will hold many common items in stock, while the OEM may be overseas and import the spares in question. Meanwhile, a review of what components are being sourced and from where, will highlight areas of duplication, allowing radical trimming.
Reducing overall vendor numbers will also negate practices such as ‘shopping around for the best deal on the day’ – which builds in additional transactional costs and overhead inefficiencies – and acquiring greater quantities of an item than are needed.
Best practice is geared around optimising on-site inventory, which should be routinely profiled to ensure accuracy and alignment with key component consumption, and a focus on standardisation of key products and technologies. Leading-edge manufacturing companies harness independent advice from professional MRO distributors in both these areas. Companies which want to free up in-house procurement and engineering teams to focus on other value-adding areas are increasingly outsourcing the MRO spares inventory management function. This effectively means dealing with a single supplier for all requirements, who can identify which spares are needed and how frequently, ensuring on-site availability of plant-critical items and the depth of supply chain availability for next day delivery requirements to support ongoing maintenance schedules. The approach also enables the provision of value-added services such as component kitting and review of scenarios where a particular component may be failing more frequently than it should be – with testing and analysis to identify any technical issues and suggest alternative ways forward. It even allows management of stockholding and usage data across multiple sites to ensure, for example, that numbers of a particular spare are not accumulating in one location while the same product is being purchased at another.
For many companies, the most effective means of enjoying the benefits of outsourced MRO spares management is to allow the MRO supplier to provide an Insite, effectively a branch, on the customer’s site, geared solely to meeting that company’s needs in terms of available products, opening times and technical support. This system allows the MRO supplier to function as a seamless part of the company’s operations, but with independent expertise and the flexibility to cope with peaks of demand.
Through outsourcing the MRO requirements, administration is reduced as only one invoice is received each month for MRO requirements, while achieving significant cost reduction and operational benefits from removing duplicated sources of supply and their associated complexities.
The MRO spares management function, directors, maintenance and procurement staff can be sure production will not be interrupted because of the unavailability of a crucial spare part and that capital is not being unnecessarily tied up in spares which may never be used. With uptime and cashflow optimised in this way, they can focus on other opportunities to improve their manufacturing operations and company profitability.
