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SDI MRO Connected

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PEAK Budget Presentation

Capabilities OverviewMarch 2015Capabilities Overview MRO Materials and Storeroom ManagementJohn Kronenwetter Vice President Presented by:1----- Meeting Notes (11/7/14 10:03) -----no title - no objective...Why are firms investigating a more connected, enterprise-wide solution?Equipment unplanned downtimeThousands of SKUsInaccurate Inventories and too muchPoor on-time deliveryWork order completion delaysTens of thousands of transactionsDecentralized spend /Highly fragmented vendor baseLack of visibility, technology enablers & information systems No central authority - stakeholders cross multiple departments with conflicting agendasAccounting lowest transaction costFinance minimum inventoryMaintenance parts availabilityOperations labor productivityUnder-resourced, neglected categoryMinimal investment due to difficulty in calculating ROI / unknown TCORisks and costs (direct & indirect) are not clearly visible or controllable 2

Copyright 2015 SDI, Inc. All rights reserved.Competing Agendas & Conflicting Interests Structurally, this approach has been fragmented between MRO stakeholders across multiple departments cant align MRO with other strategic initiatives (OEE, Lean, Six Sigma, sustainability, operations excellence) I.T. systems compatibility, data integrity, analytics & reporting F&A minimum inventory & PO transaction costs Storeroom fire fighting Reliability Overall Equipment Effectiveness (OEE) Maintenance parts availabilityOperations production optimizationSourcing & procurement lowest material price & total cost of ownership

This fragmentation makes it all but impossible to align MRO with other organizational strategies such as overall equipment effectiveness (OEE).

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Copyright 2015 SDI, Inc. All rights reserved.Make the equation more of a graphic.3Silos of PainA typical organization's MRO processes are usually fragmented into many sub-processes and tasks that are carried out in departmental silos. Often, no one is responsible for the overall performance of the end-to-end supply chain and the departments have conflicting interests.

These suboptimal practices result in silos of pain. These silos evolve as individual departments implement localized and isolated MRO-related management tactics that ripple through the organization, most often in terms of added costs and inefficiencies.

4Counterproductive behaviors wont change until individuals or departments see and understand the enterprise impact.

Maintenance & EngineeringITFinance & AccountingCopyright 2015 SDI, Inc. All rights reserved.To solve this problem, we sit side-by-side with our clients to lead them through an intensive change processto change their perspective from looking at just one component, reducing piece price on parts and supplies, to controlling costs overall and supporting efficient manufacturing capabilities.

By taking this holistic approach and striving to have MRO work in tandem with every part of the organization, we unify efforts and improve outcomes4Connected = Efficient and Productive5

The hidden costs can exceed MRO parts spend by 200%! ----- Meeting Notes (11/7/14 10:03) -----what is the quantifyable impact of being connected? lower cost of owner.

total cost of ownership can be reduced by up to 25%5SDI connects every link to reduce MRO TCO and improve operational uptimeLeading provider with 40+ years experience delivering services in North America$300 million in spend management with 6,000+ suppliersEnd-to-end service offering includes data management and analytics, strategic sourcing, procurement to payment, storeroom management, and engineering servicesServing customers in chemical, food & beverage, heavy industrials, pharmaceuticals, transportation, medical devices, and education6Copyright 2015 SDI, Inc. All rights reserved.6

Connecting MRO for leading companies:

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Copyright 2015 SDI, Inc. All rights reserved.----- Meeting Notes (11/7/14 10:03) -----remove BROOKS add MOLSONLeave MOM brands off...and talk about them

connecting MRO for leading companies:

MAP THEM ON NORTH AMERICA

8Data management & analytics

Source-to-pay procurement process

Receiving & storeroom operations

Engineering Services

8How to achieve maximum value from your MRO Supply ChainWhat is mro: Its stock, non-stock, consumables and OEM.

Why: Stock--Need parts in a certain time frame. (motors, bearings, pumps) OEM or non-OEMConsumables consumed in the manufacturing process to produce the product this is what your people need to maintain the equipment and be safe. (lubricants, PPE, Abrasives, facilities supplies) production & facilitiesNon-stockparts you dont know to carry ahead of timeplanned down time,

For what: Either for unplanned maintenancePlanned maintenanceOr to keep your people safe while they work on the machines.

All to keep your plants running to produce whatever it is you produce, while keeping your people safe.

We add value by figuring out how many of each thing you need, clean it up, remove redundancy, simplify it, right size the skus, figuring out how many you need to keep in inventory, and then maximize the effectiveness of what you spend on those going forward by reverse engineering, warranty tracking and repair, predictive analytics and adaptive demand planning to keep your plants running and your people safe.

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Data Management & Analytics. - Reduce Consumption 10-15%

Inventory MRO SKUs and location. Cleanse data to standardize parts catalog and set proper data taxonomy.

Analyze SKU data for duplication and identify critical, existing and obsolete inventory

SDiExchange cloud-based portal provides all transactional detail, reporting, analytics and inventory control

Establish inventory forecasting methodology and set risk tolerances

9Data Management & Analytics

Source-to-Pay Process

Receiving & Storeroom Operations

Engineering Services

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Source-to-Pay Process. - Reduce Processing Costs by Over 50%

Six Sigma sourcing process in 40+ categories with 6000+ suppliers to achieve price savings.

Design workflow and approval hierarchy

Select strategic suppliers and establish PunchOut capabilities with each

Paperless processing eliminates manual intervention and reduces processing error rates

Shared Services model for greater controland leverage of our entire portfolio for more efficient, compliant buying operations.

Significant reduction in AP processing costs, SDI becomes the single supplier, billing 2x per month

10Data Management & Analytics

Source-to-Pay Process

Receiving & Storeroom Operations

Engineering Services

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11Data Management & Analytics

Source-to-Pay Process

Receiving & Storeroom Operations

Engineering Services

Receiving & Storeroom Operations - Increase Productivity by 30% - Reduce Inventory 15-25%

Deploy MRO expertise and storeroom SOPs.determine best method to secure the storeroom

Implement surrounding technologies to SDiExchange - bar coding, cycle counting, warranty and repair tracking, ERP interface, SDiMobile, vending and point of use.

Deconstruct the SDI Best-in-Class assessment and develop a 12-month project plan to achieve BIC status

Align storeroom functionality and the work order and planning process

Set agreed to metrics to measureperformance and service

Copyright 2015 SDI, Inc. All rights reserved.----- Meeting Notes (11/7/14 10:36) -----covers whether it is or is not in inventory, to whether it shows up on time...

third sentence move to first

for the criticality...

risk based management.right part. right time everytime.

what's the TCO impact?impacts their OEE and uptime...driving improvement. maybe pull from the GLaving pie chart.

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12Data Management & Analytics

Source-to-Pay Process

Receiving & Storeroom Operations

Engineering Services

Engineering Services Drive 8-10% Value Creation to the P&L

Largest team of certified and licensed reliability engineers focused solely on MRO.

Conduct data analytics, review process efficiencies, and identify cost improvement opportunities with your team.

Pinpoint issues with equipment repeat failures, unplanned downtime, costly or inefficient applications, longer life products, improved maintenance strategies

Standardization, OEM commercialization and reverse engineering to increase product availability and/or life as well as reduce cost

Initiate all savings and productivity improvement projects in SDiPowerSteering

Copyright 2015 SDI, Inc. All rights reserved.----- Meeting Notes (11/7/14 10:36) -----innovation. we need better content.more wow coming from Chuck. Bold the engineering services word to the right.12Parametric Google-like search engine Web-based, access from anywherePunchOut to key suppliersElectronic order approval hierarchy Catalog and non-catalog requests

WorkflowEasy part-add processRobust online reportingVirtual warehouseImproves spend visibility

SDI Exchange : Custom Catalog, Order Processing & Inventory

13Master Data Management Inventory ManagementInventory ForecastingBudget controlsOrder StatusCopyright 2015 SDI, Inc. All rights reserved.SDiExchange Technology Specifically for MRO 14SDiExchange

eCatalog and eProcurementSDiTrack

Warranty & Repair TrackingSDiMS

Demand ForecastingSDiConnect

Seamless SAP InterfaceSDiMobile

Barcode and Electronic Signature

SDiStoreroomSmartphone Application

SDiVendingStoreroom Automation and POU

SDiPower SteeringProject Management and Tracking

Copyright 2015 SDI, Inc. All rights reserved.14Vending Solutions

Every SDI vending solution is customized to the requirementsActual parts and usageVolume of daily transactionsLevel of inventory control requirementsSize and layout of the facilityNumber of employees

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Copyright 2015 SDI, Inc. All rights reserved.

Your MRO Connected Enterprise

SDI connects, coordinates, optimizes & aligns every link in the chain, typically delivering up to 350% ROI to our clients. 16Data Management & Analytics

Source-to-Pay Process

Receiving & Storeroom Operations

Engineering Services

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We add value by figuring out how many of each thing you need, clean it up, remove redundancy, simplify it, right size the skus, figuring out how many you need to keep in inventory, and then maximize the effectiveness of what you spend on those going forward by reverse engineering, warranty tracking and repair, predictive analytics and adaptive demand planning to keep your plants running and your people safe.

----- Meeting Notes (11/7/14 10:36) -----SDI = connecting MRO16Savings Opportunities & Productivity ImprovementsMaster data management and new parts registrationSpend visibility and analyticsLeveraged and consistent pricingCompliance to contracts and increased incentivesFreight expense reductionAP processing reductionProduct standardizationOEM conversion and reverse engineeringInventory management and forecastingInventory reductionWarranty and repair trackingLabor cost reductionMaintenance productivity improvements leading to increased OEE rates

17Achieving Best in Class MRO and Storeroom Management Status The results:

Copyright 2015 SDI, Inc. All rights reserved.Tie back to 350% ROI.Benchmark in these areas to understand opportunity for improvement.

17Next Steps18The path forward for MRO success. The process:Understand the challenges to be overcomeSize and scale the projectData shareIdentify the team involved and the internal process aheadSelect plant(s) for supply Chain AssessmentEstablish a timeline for completionTour SDIs Shared Services Center Report out of assessmentAgree upon the savings metrics to be reportedSDI presents final solution to the MRO teamScope implementation and timeline

Copyright 2015 SDI, Inc. All rights reserved.Tie back to 350% ROI.Benchmark in these areas to understand opportunity for improvement.

18Next StepsMRO Data & SpendSourcing & Procurement Systems & Technology Storeroom & Inventory Engineering & Maintenance Production & Operations Finance & Accounting

19Align stakeholders to move forward with a comprehensive assessment.SDI diagnostic of your:

The strength of this approach lies in its ability to reveal pain points and inefficiencies in the process, identify savings opportunities, drive departmental synergies and ensure sustainable performance improvement connecting the MRO supply chain to the needs of the business.

Copyright 2015 SDI, Inc. All rights reserved.Tie back to 350% ROI.Benchmark in these areas to understand opportunity for improvement.

19MRO Total Cost of Ownership - Example20CATEGORYCOSTCOMMENTSSDI IMPACTMRO MATERIAL SPEND$5,600,000 MRO & OEM, Stock & non-Stock5-12%FREIGHT COST$448,000 Estimated at 8%50-60%STOREROOM LABOR COST$156,000 Single shift, 2 FTE's, fully loaded0-100%INVENTORY MANAGEMENT$952,000.00 Carrying cost 12%, 5% slippage10-20%TECHNOLOGY$35,000 Inventory management system, not tied to CMMS100%MRO SOURCING$132,000 OEM / Commercial, 2 FTE's0-100%MRO PURCHASING$66,000 OEM / Commercial, 1 FTE0-100%AP PROCESSING COSTS$241,758 Average voucher size $275, 20,350 processed, $11.88ea80-100%MASTER DATA MANAGEMENT$0 No dedicated resources or formal process to manageN/AMAINTENANCE PRODUCTIVITY$333,432 Includes wait time, parts search, ordering20-30%$7,964,190 11-23%Nearly 150% of Material CostCopyright 2015 SDI, Inc. All rights reserved.Tie back to 350% ROI.Benchmark in these areas to understand opportunity for improvement.

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Presented by: Capabilities Overview March 2015 Capabilities Overview MRO MATERIALS AND STOREROOM MANAGEMENT John Kronenwetter Vice President
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