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Unlock Your Supply ChainUnlock Your Supply Chain
Supply Chain OptimizationIn the Mature ProvinceIn the Mature Province
Rick MagnusonDirector of Analytics
The North Sea Province• Mature fields with new discoveries coming
on lineon line
W ll D l d I f• Well Developed Infrastructure
• Variable asset profiles per producer
• Emphasis on efficiency and challenging conditions
North Sea Supply Chainspp y• Good access to supplier base
• Logistics challenges
• Shore base and platform locationsShore base and platform locations
S ti it l j t d illi • Supporting capital projects, drilling, production and decommissioning
The Business Mandates• Contain or reduce operating costs while
operating and maintaining safetyoperating and maintaining safety• Actively manage inventory investment• Actively manage suppliers and spend• Regardless of any complicating conditions, g y p g ,
accomplish your mission in less time, less capital and less mistakes
• Oh by the way, learn and improve continuously
Can you tell me?y• What % of your inventory items originated as a
project return or work order cancellation?project return or work order cancellation?• Could you produce a quick list of critical spare
parts for your operation?parts for your operation?• Who are your top 3 valve suppliers?• How much inventory do you have stored at 3rd
party locations?Can you answer these questions?questions?Quickly & Easily?
OPTIMIZE YOUR SUPPLY CHAINOPTIMIZE YOUR SUPPLY CHAINHow do we get there?
Transformational Options
• Business Process Outsourcing
• Enabling Technology and Devices
• Partnerships
The Quality Circle
Y D L t f W k i Thi AYou Do a Lot of Work in This Area
Not Much in ‘Closing the Loop’
What’s the KEY?Your
B i S t DATABusiness System DATA is the KEYis the KEY
To Unlock Your Supply Chain
Primary ERP Functionality• Specialized for transaction execution and
accountingg
• Primary feedback mechanism is through Primary feedback mechanism is through financials and historical reports
• Not designed to transform and orient data for analysis purposesanalysis purposes
What’s Missing?• Help in decision support (at whatever
frequency)frequency)• Exception management & alarms to tell you
where to take actionwhere to take action• Automatic generation of metrics and KPI’s• Ability to create repeatable mgmt processes
aligned to strategy
Where Are You Now?• Basic Phase
• Improve your data – divide and conquer• Use Existing ERP Reports• Maybe pivot tables in Excely p
• Intermediate Phase• Setup a data warehouse • Setup a data warehouse • Leverage the data with a custom reporting tool• Begin to collect basic metrics• Begin to collect basic metrics• Some level of management reports
Where Should You Be?• Optimization Phase
• Use a business intelligence or ANALYTICS Use a business intelligence or ANALYTICS application
• Analytics applications can ‘remember’ important Analytics applications can remember important facts (v. data warehouse which fully ‘refreshes’)
• ‘Crunches’ the numbers for you, so you spend more y , y ptime on identifying solutions than problems
• Automatic generation of standard metrics & KPI’sg• Organizes your data to proactively manage it
Let’s see how someone got thereLet s see how someone got there…
GLOBAL MATERIALS MANAGEMENTANALYTICS PROJECT
UNLOCK YOUR SUPPLY CHAINUNLOCK YOUR SUPPLY CHAIN
Materials Mgmt Challengesg g• Inventory (and Materials Operating Expenses)
always seems to be growingalways seems to be growing• Reorder levels need to be adjusted• No consistent approach to stock management• Standard metrics, KPI’s and management , g
reporting across all the business• Needed ability to adapt tools to local business Needed ability to adapt tools to local business
conditions and customs, yet manage stock activelyactively
What Happens Each MonthExtract Data
SAP, otherExtract Data
Segmentation
Profile Data
UploadApproved Adjustments
• Apply business rules• Apply economic models• Apply optimization
algorithms
Compare Recommendations
AgainstCurrent algorithms
• Generate recommendations• Generate metrics & KPI’s
Exceptions Filter
CurrentSettings
ReviewExceptions
Results of Optimization• Issue: Share knowledge and strategies
• Resolution: With a common tool and greater understanding of inventory concepts, knowledge sharing and retention increased
Results of Optimization• Issue: Reset reorder levels
• Resolution: Using statistical methods, identify forecast usage and proper reorder levels
Inventory reduction from reduced inventory levels and surplus removal – currently 400% of project cost
Results of Optimization• Issue: Identify critical spare parts
• Resolution: Use the accurate equipment criticality ranking (from maintenance) to update SAP MM Criticality flag for a full review to proper service levels
Results of Optimization• Issue: Revise Project Return Policy
• Resolution: Generally improve visibility to returned items and ability to use, scrap or surplus in a timely manner
Results of Optimization• Issue: Identify materials for OLA or vendor
stockingstocking
• Resolution: Large numbers of direct buy items were flowing thru the warehouses, helped identify those items as potential stock
Results of Optimization• Issue: Adjust location of inventory
• Resolution: Review off-shore and satellite locations to determine not only how much but which parts to store at each location based on usage or projected usage
Results of Optimization• Issue: Improve Management of Change
• Resolution: With the ability link materials to equipment (by issue history or BOM), when equipment is de-comissioned or replaced, spares can be eliminated as well
Results of Optimization• Issue: Generate inventory metrics and KPI’s
to measure performance (within sites and to measure performance (within sites and between sites)
• Resolution: Development of management reports which tie operations and maintenance activities back to inventory delta
Final Project Resultsj• Reduction where possible of surplus and excess p p
inventory• Matching of current supply to demandMatching of current supply to demand• Improvement of critical item management
D l t f t bl t • Development of repeatable management processes
• An outstanding ROI for the project
How to Unlock Your Supply Chainpp y• Use decision support tools to effectively analyze
your data (active stock analysis)your data (active stock analysis)• Generate industry standard metrics (e.g.
i l l MTBD )turnover, service level, MTBD, etc. )• Should be configurable to you local
circumstances and conditions• Obtain measurable savings and improvementg p• Decision support tools can be affordable and
quick to implementquick to implement
Optimization ProfilesEquipment
PerformanceMaintenance Effectiveness
Inventory Optimization
SupplierPerformance
Procurement Effectiveness
MRO Supply Chain Effectiveness
Asset Performance Visibility
Maintenance Performance
Visibility
Inventory Performance
VisibilitySupplier Quadrant
Analysis Category Analysis Procure-to-Pay Visibility
Life Cycle Costing Analysis
Component Failure Analysis
Standardize Preventative
Maintenance Plans
Maintenance Budget Analysis
Optimize Consumables &Critical Spares
Levels
Obsolete and Surplus Stock
Supplier Performance
Analysis
Supplier Management
Contract Performance
Analysis
Pricing Analytics
Transactional Cost Analysis
Warehouse Service Level AnalysisAnalysis
Equipment Criticality Analysis
Budget Analysis
Bills of MaterialAnalysis
Disposal
Material Master Data
Standardization
Management
Vendor & Service Master Data
StandardizationSpend
Classification
Level Analysis
Data Quality Audit
Thank You
Any Questions?
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