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Presentation of Robert Lamarre
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PROCUREMENT 9 Keys to Maximizing Profits and Equipment
Uptime through Inventory Management for
Maintenance Parts
MEMO 2011 Conference in Saskatoon Gallery C
November 7th, 2011
By Robert Lamarre, B.B.A., M.A.Sc.
President of IMAFS inc. & GCRL inc.
Robert Lamarre - All rights reserved
1. Parts classification
2. Managing service
3. Managing demand
4. Forecasting demand
5. Managing lead times
6. Optimizing inventory parameters
7. A good inventory optimization system
8. Clarifying roles and responsibilities
9. Policies, procedures and key performance indicators
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True or false: all parts are created equal ?
Classify the parts in relation to both their relative
importance on operations (criticality) and
frequency of usage
Classify the parts taking into account inventory
strategies
Pareto on hits and value
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4
Identify product family and demand stream
Critical or
not
Stock or
non stock
New
Inactives (no usage for X
months)
A B C D Based on Hits or
usage value
Updated Annually Monthly Manual
Reparable or
not
Obsolete or
not
Cla
sse
s
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The reason we keep inventory
Analyzing our performance is important
Ability to supply the parts when needed
Estimate parts availability
Service goals to be determined for each product class,
each product family and each warehouse
The system has to adjust Min-Max to service goals
80 – 20 Rule -> Focus on important items
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Measures existing levels
Allows service goals on part’ criticality level
Allows service goals by class, by family, by warehouse
Safety stock set in line with service goals
Simulations to measure impact of service goals variations
Dashboard to track service results
Tools to take corrective actions
Historical Information
More data = more accurate you can be
Demand flows regular, project, planned maintenance
Demand patterns: planned or emergencies
Regular demand or intermittent demand
Manage on demand data; not shipping
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Better data for accurate forecasts
Forecasting: Prediction or science ?
Human, machine or both ?
Sales & Operations Planning (S&OP)
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Good solid statistical forecasts
Forecasting methods that account for
demand trends, seasonality and
intermittence
Best fit by item
Possibility of manual
adjustments
Filters & alerts
Can integrate maintenance planning data
Better forecasts = better service + less stock
What is a lead time ?
Lead times are often long and variable
Reality versus promises
Measure and manage the various elements of lead
times
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Bad lead time information result in stock outs or surplus stock
Can run simulations to analyse impact of changes
Tools to take corrective actions
Lead time
Dynamic calculation
By vendor and transport mode
Cleansing of extreme delays
Internal lead time managed by components
Possibility of manual control
Compare real lead time with
vendor promises
What is a Min ?
What is a Max ?
Min-Max variations
Safety stock provide the service level goals
Demand variability and forecasts
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$
Ordering Stocking
costs costs
DATA BASE ERP or CMMS
Calculation
SS Lead time Min Max Forecasting
Lot sizes
Service objectives per class /
family/ warehouse
Adjustments Simulation
Look for inventory management system specially designed for
spare parts. They should account for:
Parts criticality
Service goals per product class and product criticality
Erratic demand forecasting
Planned demand
Lead time management
Dynamic inventory parameters optimization
Allow simulations
Surplus stock identification, prevention and disposition
A complete set of KPIs and exception reports
Data mining
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Inventory analysis reports gives full picture of inventory
management results with pointers on necessary corrective
actions with drill down possibilities
Overall results that can be drilled down
Clarifying roles and responsibilities
Who is responsible for inventory ?
What are the roles of Supply Chain Management ?
What are the roles of Maintenance ?
Change management is very important
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Service goals
Policies determine roles and responsibilities
Key performance indicators
Benchmark
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Inventory Management can be passionate and exciting
Yes eliminating 25% or 40% of equipment downtime due
to lack of parts brings a smile to operations manager
Eliminating 80% of stock-outs at the store has a major
impact on maintenance efficiency
When you can reduce total inventory by more than 25%
while improving service, you are freeing up capital
money and space that are always badly needed
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Thank you
Questions?