Inventory

Management

Decentralisation Vs Centralisation

Alexander Gelis, Director, Spares and Technical Services, MacGregor Service

Part of Cargotec Corporation

Services

MacGregor Products

Container lashing RoRo Cranes

Offshore load

handling

Marine

selfunloaders Land and port

systems

Hatch covers

MacGregor Service

MacGregor is the world’s leading brand of engineering solutions and services for handling marine cargoes and offshore loads. MacGregor products serve the maritime transportation, offshore and naval logistics markets, in ports and terminals as well as on board ships.

Our customers compare to traditional manufacturing customers are moving targets.

MacGregor has a network of service stations in almost every major port or hub.

MacGregor has tripled the amount of equipment delivered between 2008-2012 compare to the 20 year period prior to 2008.

The increased installed based combined with the different equipment types put pressure on the central services organisation, in order to ”optimize” the inventory to match the customers needs.

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MacGregor Logistics

The key to any succesful logistics and warehouse set up is focus and

targeted key performance indicators. Trends, installed base, life cycle

calculations, forecasts are important elements, however focus in the right

KPIs is the key.

Inventory Management needs to be a separated from accounting

(inventive), from sales (push effect), from sourcing and focus on using all

the above elements to define a stocking policy that matches the companies

accepted service rate to the customer

Should material X always be on stock or can the material delivered in 3

days and still be acceptable by the customer.

Availability problems combined with high write offs are a good indication for

companies, that need to focus in inventory management.

Many companies focus mainly on the current sales, rather than the installed

base, life cycle of the equipment

Centralization vs. decentralization of warehouses

for MacGregor

The key benefits that we have identified with centralisation:

Less inventory costs

Less warehouse costs

Less obsoloscence costs

Optimized inventory management >> Bundling of skills

High degree of automation/standardization leds to higher efficiency

Less inbound transport costs

Key benefits Decentralization

Increased local availability

Customer desire for self-pick can be fulfilled

Less outbound transport costs

Why centralized warehouses in MacGregor?

Number of SKU’s and transactions do not justify various smaller,

inefficient local warehouses

Centralized warehouses are located at logistic hot spots and meet

customers requirement of lead time

Inventory expertise is missing for local warehouses and due to small

operation too cost intensive to build up.

Increased availability of high frequent materials can absorb sporadic

high demands in different ports in range of centralized warehouse

Close to main airports

5. Europe + Asia Distribution Centre Infrastructure Past Logistics Network

ADC

LCE

Hamburg USDC

Infrastructure Today's Logistics Network

Servigisitcs spare parts planning tool supports to classify parts

in accordance to Marine Stocking Policy

CRCMCF

BRBMBF

ARAMAF

CRCMCF

BRBMBF

ARAMAF

F M R

A

B

C

A = High Consumption Value > 80%

B = Medium Consumption Value >15%

C = Low Consumption Value > 5%

F = High Frequent material > 80%

M = Medium Frequent material > 15%

R = Low Frequent material > 5%

An example of

ABC/FMR Analysis

Classification Overview

CR CM CF

BR BM BF

AR AM AF

F M R

A

B

C

Standard Materials

Low Cost Materials

High Cost Materials

Other – Dying, New, etc

Classification as Purchase criteria

AF AM AR

BR

CR

BMBF

CF CM

Big obsolete risk

Avoid to stock or

reduce safety

stock

On stock with

careful follow up

On stock with

higher safety stock

Can be stocked

but contains

obsolete risk

Frequency

Vo

lum

e

High Low

Hig

hLo

wAF AM AR

BR

CR

BMBF

CF CM

Big obsolete risk

Avoid to stock or

reduce safety

stock

On stock with

careful follow up

On stock with

higher safety stock

Can be stocked

but contains

obsolete risk

Frequency

Vo

lum

e

High Low

Hig

hLo

w

Benchmarks to improve Inventory

management and increase efficiency

Main Benchmarks

Stock Turn

Stock out measurement >> Material availability “Risk of lost Sales”

Derived Benchmarks

Average stock value

Inventory consumption

Interest Charge for inventory

Storage Fee

Illustrative graphs

98,0

98,2

98,4

98,6

98,8

99,0

99,2

99,4

99,6

99,8

100,0

January February March April May June July August September October November December

Material Availability Risk of Lost Sales [%] - illustrative

Risk of Lost Sales 11 [%]

Risk of Lost Sales 12 [%]

Risk of Lost Sales 13 [%]

Facts, 2009 compare to 2012

Average stock value reduced by 25% from 2009 to 2012

Total Stock Consumption increased by 20,5% from 2009 to 2012

Average stock turn increased by 35%

Storage fee decreased by 14%

Interest charged (internal) decreased by 60% of the total interest.

Number of picked orders increased from 23%

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