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Capabilities Overview
March 2015
Capabilities Overview
MRO MATERIALS AND STOREROOM MANAGEMENT
John Kronenwetter
Vice President
Copyright 2015 SDI, Inc. All rights reserved.
Why are firms investigating a more connected, enterprise-wide solution?
Equipment unplanned downtime
Thousands of SKUs
Inaccurate Inventories and too much
Poor on-time delivery
Work order completion delays
Tens of thousands of transactions
Decentralized spend /Highly fragmented vendor base
Lack of visibility, technology enablers & information systems
No central authority -stakeholders cross multiple departments with conflicting agendas
• Accounting – lowest transaction cost
• Finance –minimum inventory
• Maintenance –parts availability
• Operations – labor productivity
Under-resourced, neglected category
Minimal investment due to difficulty in calculating ROI / unknown TCO
Risks 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 – can’t 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 availability
• Operations – production optimization
• Sourcing & 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.
Silos 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.
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Counterproductive behaviors won’t change until individuals or
departments see and understand the enterprise impact.
Maintenance & Engineering IT
Finance & Accounting
Copyright 2015 SDI, Inc. All rights reserved.
SDI connects every link to reduce MRO TCO
and improve operational uptime
Leading provider with 40+ years experience
delivering services in North America
$300 million in spend management with 6,000+ suppliers
End-to-end service offering includes data management and
analytics, strategic sourcing, procurement to payment,
storeroom management, and engineering services
Serving customers in chemical, food & beverage, heavy
industrials, pharmaceuticals, transportation, medical devices,
and education
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Copyright 2015 SDI, Inc. All rights reserved.
Connecting MRO for leading companies:
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Data management
& analytics
Source-to-pay
procurement process
Receiving &
storeroom operations
Engineering Services
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How to achieve maximum value
from your MRO Supply Chain
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
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Data Management
& Analytics
Source-to-Pay
Process
Receiving &
Storeroom Operations
Engineering Services
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 control
and 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
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Data Management
& Analytics
Source-to-Pay
Process
Receiving &
Storeroom Operations
Engineering Services
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Data 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 SOP’s.
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 measure
performance and service
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Data 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.
Parametric Google-like search engine
Web-based, access from anywhere
PunchOut to key suppliers
Electronic order approval hierarchy
Catalog and non-catalog requests
Workflow
Easy part-add process
Robust online reporting
Virtual warehouse
Improves spend visibility
SDI Exchange : Custom Catalog, Order Processing & Inventory
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Master Data Management
Inventory Management
Inventory Forecasting
Budget controls
Order Status
Copyright 2015 SDI, Inc. All rights reserved.
SDiExchange – Technology Specifically for MRO
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SDiExchange
eCatalog and eProcurement
SDiTrack
Warranty & Repair Tracking
SDiMS
$-
$100
$200
$300
$400
$500
$600
$700
$800
1 3 5 7 9 11 13 15 17 19 21 23
Thou
sand
s
Projected Inventory On-Hand
Months
Demand Forecasting
SDiConnect
Seamless SAP Interface
SDiMobile
Barcode and Electronic Signature
SDiStoreroom
Smartphone Application
SDiVending
Storeroom Automation and POU
SDiPower Steering
Project Management and Tracking
Copyright 2015 SDI, Inc. All rights reserved.
Vending Solutions
Every SDI vending solution is customized to the requirements
Actual parts and usage
Volume of daily transactions
Level of inventory control requirements
Size and layout of the facility
Number of employees
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Your MRO Connected Enterprise
SDI connects, coordinates, optimizes & aligns
every link in the chain, typically delivering up to
350% ROI to our clients.
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Data Management
& Analytics
Source-to-Pay
Process
Receiving &
Storeroom Operations
Engineering Services
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Copyright 2015 SDI, Inc. All rights reserved.
Savings Opportunities & Productivity Improvements
Master data management and new parts registration
Spend visibility and analytics
Leveraged and consistent pricing
Compliance to contracts and increased incentives
Freight expense reduction
AP processing reduction
Product standardization
OEM conversion and reverse engineering
Inventory management and forecasting
Inventory reduction
Warranty and repair tracking
Labor cost reduction
Maintenance productivity improvements leading to increased OEE rates 17
Achieving Best in Class MRO and Storeroom Management Status
The results:
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Next Steps
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The path forward for MRO success.
The process:
Understand the challenges to be overcome
Size and scale the project
Data share
Identify the team involved and the internal process ahead
Select plant(s) for supply Chain Assessment
Establish a timeline for completion
Tour SDI’s Shared Services Center
Report out of assessment
Agree upon the savings metrics to be reported
SDI presents final solution to the MRO team
Scope implementation and timeline
Copyright 2015 SDI, Inc. All rights reserved.
Next Steps
MRO Data & Spend
Sourcing & Procurement
Systems & Technology
Storeroom & Inventory
Engineering & Maintenance
Production & Operations
Finance & Accounting
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Align 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.
MRO Total Cost of Ownership - Example
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CATEGORY COST COMMENTS SDI IMPACTMRO MATERIAL SPEND $5,600,000 MRO & OEM, Stock & non-Stock 5-12%
FREIGHT COST $448,000 Estimated at 8% 50-60%
STOREROOM LABOR COST $156,000 Single shift, 2 FTE's, fully loaded 0-100%
INVENTORY MANAGEMENT $952,000.00 Carrying cost 12%, 5% slippage 10-20%
TECHNOLOGY $35,000 Inventory management system, not tied to CMMS 100%
MRO SOURCING $132,000 OEM / Commercial, 2 FTE's 0-100%
MRO PURCHASING $66,000 OEM / Commercial, 1 FTE 0-100%
AP PROCESSING COSTS $241,758 Average voucher size $275, 20,350 processed, $11.88ea 80-100%
MASTER DATA MANAGEMENT $0 No dedicated resources or formal process to manage N/A
MAINTENANCE PRODUCTIVITY $333,432 Includes wait time, parts search, ordering 20-30%
$7,964,190 11-23%
Nearly 150% of Material Cost