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Presented by: Pat Thoms, Platte River Power Authority
& Jim Calvert, I.M.A. Ltd.
Renaissance Hotel – Seattle
May 3, 2007
APPAAmerican Public Power Association
Identifying Savings
Within
Maintenance Stores Inventory
APPAAmerican Public Power AssociationAgenda
Maintenance Inventory Facts
Benefits Realized from Clean Data
Return on Investment (ROI)
NorskeCanada Case Study
Platte River Case Study Open Discussion
Maintenance Inventory Facts
APPAAmerican Public Power Association
Maintenance Inventory Facts
• 10%-20% Excess-Active Inventories exist -- “A” items overstocked
• Active Inventory Value
is typically a 1:1 ratio Annual Spend
:
• Inactive/Obsolete (Emotional Inventory) represents at least 38%-40% of Inventory Value
APPAAmerican Public Power Association
Maintenance Inventory Facts
• Duplicate Items exist:@ 10%-20% per Single plant@ 20%+ across Multi-plant corporations
• Industry Standards suggest that Spot Buy/Direct Purchases represent up to 30% of Annual Spend
• Spot Buys/Direct Purchases usually incorporate a 10% premium over unit cost
Inventory Segmentation
Electrical 26%
Required Active 27%
Inactive 53%
Excess Active 20%
Critical Spares 15%
Slow Moving Stock 22%
Obsolete Materials
16%
Bearings 21%
Fluid Power 15%
Instrumentation 12% P.V.F.
12%
Electrical 26%
Ind. Supplies 14%
OEM 40% MRO
60%
APPAAmerican Public Power Association
Benefits Realized from Clean Data
APPAAmerican Public Power Association
Benefits Realized from Clean Data
• User-friendly data for everyone (Maintenance, Stores, Procurement)
• Opportunity to Standardize on Manufacturers/Products
• Potential to Consolidate the Vendor base/Leverage Unit Cost
• Opportunity to Reduce Inventory Investment and Free up Cash
APPAAmerican Public Power Association
Opportunity to Identify and eliminate duplicate items
Complete, generic item descriptions (McMaster-Carr, Grainger)
Consistent structure & nomenclature throughout the database
Benefits Realized from Clean Data
“Virtual” warehouse of inventory across the corporation (Corporate Catalog)
Opportunity to Share Critical parts, Spares, etc.
Return on Investment (ROI)
APPAAmerican Public Power Association
• Virtually Every Project Requires ROI Support
• Companies Require 6-12 Month ROI to Justify Spend
• Companies are Required to Invest Time & Resources to the Recovery Process
― I.M.A. can Work with Suppliers re Disbursement of Overstock
― Internal Experienced Resources are also Necessary― Address items lacking proper information― Adjust min/max stocking levels― Identify obsolete parts
Return on Investment (ROI)
APPAAmerican Public Power Association
Return on Investment (ROI)
Sample Client Data:
15,000-40,000 sku’s per plantNo Single Corporate MRO CatalogCorporate Supply Agreements
• Multi-site client (7 plants)• > 240,000 total sku’s
APPAAmerican Public Power Association
Return on Investment (ROI)
Single Site Data:
• 17,671 sku’s• $11,623,737 Total Inventory Value
68% of inventory is inactive32% is active
(valued at $3,719,596)
Annual spend value $3,599,887 (1:1 ratio)
APPAAmerican Public Power Association
Return on Investment (ROI)
Single Site Data:
13% of inventory has excessive on-hand quantities
Value of the Excess is $911,113(24% of active inventory)
Eliminate duplicates
Return parts to vendor for credit
APPAAmerican Public Power Association
Return on Investment (ROI)
Single Site Data:
299 MRO vendors• Bearings & PT = 28• Electrical = 97• PVF = 30• Air, Hydraulics, Fluid Power = 111• Industrial Supplies = 61• Mobil Equipment = 5• Instrumentation = 75
3,762 annual purchase orders generatedSpot Buy purchases @ 12% = $431,986
Leverage purchase volumes within/across sites
Consolidate product lines
Reduce Supplier base
Reduce Spot Buy purchases
APPAAmerican Public Power Association
Return on Investment (ROI)
Single Site Data:
• Project cost: ~$90,000
• Savings: >$911,113
minimum ROI is 10:1
• Similar savings are found at each site across the company
APPAAmerican Public Power Association
I.M.A. Value Proposition:
• We help companies seize control over their MRO inventory. Our services consistently generate a greater than 10:1 return on investment and improve maintenance efficiency.
APPAAmerican Public Power AssociationI.M.A. Services
Catalog Management
Cleansing Analysis
ROI Facilitation
The Total
Solution
Platte River Power Authority (PRPA)Case Study
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
Why the Need? PRPA was in search of new Maintenance
Management System ― Old system had 26 characters for part
description (+ long description field)
― Descriptions were inconsistent (20 years of different employees entering items)
― Maintenance was having a hard time finding parts they needed for a job
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
What We Did
Core team considered 6 systems
― Soon short listed to 3 --- presentations
Purchasing/Inventory/AP modules not included in initial plans
― But, why buy the puzzle when 3 key pieces were missing?
scope changed
APPAAmerican Public Power Association
Platte River Case Study
What We Did
Avantis system selected― Avantis offered the option for cleansing
inventory parts (I.M.A. Ltd.)
― System had >200 character description, ability to attach drawings, pictures, etc. to items
APPAAmerican Public Power Association
Platte River Case Study
What We Did
Up-front cleaning on our own― Populated missing manufacturer names
― Corrected spelling mistakes, dashes, hyphens, etc.
― Cleaned up vendor names
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
What We Did
For Data Cleansing, we worked with I.M.A. Ltd.
― 9,232 sku’s
― Submitted 2 reports:
― on-hand inventory
― vendor purchase history (4 years)
APPAAmerican Public Power Association
Platte River Case Study
Results Cleansed data was loaded into our system
― Awesome new descriptions
― Now parts can easily be found
― Low duplicate part ratio (<1%)
New Avantis system allows drawings and pictures to be attached to item, which really helps planners
APPAAmerican Public Power Association
Platte River Case Study
Before & After Samples:
BEARING, TAPER ROLLDescription
Mfg P/N
TIMKENMfg Name
203957Item #
1000005Control #
BEARING, CONE/CUP, TAPERED ROLLER, CONE P/N HM807049, CUP P/N HM807010
Description
Mfg P/N
TIMKENMfg Name
203957Item #
Before After
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
Before & After Samples:
BEARING, TAIL PULLEYDescription
Mfg P/N
FAFNIRMfg Name
209784Item #
1000005Control #
BEARING, BALL, 1.7717” ID X 3.3465” OD X 1.0629” WD SINGLE ROW, CONRAD, 2 SEALS, WIDE RACE, TAIL PULLEY
Description
209KRR3Mfg P/N
FAFNIRMfg Name
209784Item #
Before After
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
Before & After Samples:
SWITCH LIMIT OIL TIGHT NEMA 4/13
Description
Mfg P/N
ALLEN BRADLEYMfg Name
208859Item #
1010092Control #
SWITCH, LIMIT, LEVER SPRING RETURN 600V 550/600VDC 10A AC 0.1A DC 2NO 2NC NEMA 4/13 SERIES F
Description
1747-L531Mfg P/N
ALLEN BRADLEYMfg Name
208859Item #
Before After
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
Before & After Samples:
ALLEN BRADLEY PROCESSOR
Description
Mfg P/N
ALLEN BRADLEYMfg Name
300292Item #
1000148Control #
PROCESSOR, SLC 5/03 4096 INPUT 4096 OUTPUT 500MA @ 5VDC 175MA @ 24VDC 8K MEMORY
Description
802T-ATPMfg P/N
ALLEN-BRADLEYMfg Name
300292Item #
Before After
APPAAmerican Public Power Association
Platte River Case Study
APPAAmerican Public Power Association
Platte River Case Study
Before & After Samples: Duplicates
GASKET 2 X 2 1/2 X 1/32Description
1E5629X0072Mfg P/N
FISHERMfg Name
203700Item #
1008561Control #
GASKET, 2” ID X 2-1/2” OD X 1/32” THK
Description
IE569X0072Mfg P/N
FISHER CONTROLSMfg Name
203700Item #
Control #
GASKET, 2 X 2 1/2 X 1/32Description
IE569X0072Mfg P/N
Mfg Name
207015Item #
1008561Control #
GASKET, 2” ID X 2-1/2” OD X 1/32” THK
Description
IE569X0072Mfg P/N
FISHER CONTROLSMfg Name
207015Item #
Open Discussion
APPAAmerican Public Power Association
Thank-you for this opportunity
& for your time!