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?