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Objective of an efficient materials management

Objective of an efficient materials management. The objective of an efficient materials management is to provide. the right materials ( tools , work tools , spare parts , supplies ) at the right quality. the right time at the right place and in the right amountand.

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Objective of an efficient materials management

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  1. Objectiveof an efficientmaterialsmanagement

  2. The objectiveof an efficientmaterialsmanagementistoprovide • therightmaterials (tools, worktools, spare parts, supplies) • at the right quality. • the right time • at the right place and • in the right amountand Measureofeffectiveness The materialsmanagement must subordinate all actstoeconomicefficiency! Measureofefficiency

  3. The stages on thewaytoefficientmaterialsmanagement Aim 4. Measurement ofperformance 3. Choice ofmethodsandinstruments 2. Specificationofrequirements 1. Precisedefinitionofobjectives Startingpoint

  4. Specificationofrequirements Concrete order requisition Organization Storage strategies Definedavailability Minimal costs Storage locations Storage quantity Procurementstrategies Specifiedqualityrequirement

  5. Influencingfactors determine determines determines Requirementsforthemaintenancematerialsmanagement

  6. Clarificationofrequirementsanddefinitionofthe design • Implementationof an plant structuration • - with identification of risks & Probabilities & Consequences • - and determination of reaction times • Determination ofvalueandconsumptionfrequency • Determination ofprocurementopportunities Whatisneededwhereandhow fast do i needit? Howisitmostfavourabletoprovide?

  7. The principalissuesof an efficientmaterialsmanagement • Stock storageor order ifrequired? • Whereistobestored? • Whatarethesafetystocks? • Whenisthe order initiation? • Howbigshouldbetheprocurementquantities?

  8. The classification and Unification of Terms* allows an order in the items An MRO Warehouse requires obtaining benefits through:• Duplicate inventory identification• Avoid false out-of-stock warnings• Simplification of inventory searches• Reduce equipment downtime * Standard ModifierDictionary SMD

  9. TheStrategicSupplyModel It is based on a series of activities that must be carried out in order for the model to succeed. Without following through all the necessary steps to discover the trends in spending and where you will find the opportunities, you are simply buying in the traditional way. Companies that have implemented Strategic Sourcing policies report a reduction in inventories of between 50% and 70%. This six-step model links the entire process together in data collection, and leveraging that data, through Vendor Management and Tracking. Each step has very specific needs and requirements

  10. TheStrategicSupplyModel Step 1.Recopilation and analysisStep 2. Develop a sourcing strategyStep 3.Provide ConsolidationStep 4.Relation with RestructuringStep 5.Evaluation Best PracticesStep 6.Provider Management and Reporting

  11. Determinantsofstoragestrategy Store or order ifrequired?

  12. Assessmentofproductionlosses Prerequisites: • No personal injury, no environmental- orproductdamageandnodamagetothesystemcausedbythelossofproduction • Assessmentofriskofcustomerloss Whichcontributionmarginscanescapeus? Whatstoragecostswe save? - Revenues minus variable costs, takingintoacountexistingbuffercapacities • Costofstoragebinsandwarehousemanagement • Imputed Interest • Possiblycalculatorydepreciation - + Decisionsbycomparisonofcontributionmarginsandinventorycosts

  13. Storage locations • Central warehouse • Low administrative costs • Lowerstorageamount • Higher inventoryturnover • Higher utilization • Decentralizedstorage • Short transportroutes • Short transportationtimes • In anycase a centralwarehousemanagementsystem • Fundamentally a centralwarehouse due tolowercosts • For material withlowvalueforregularlyrecurringactivities (usuallyoperatingmaterialsandworkingaids) handbearingsclosebytherespectivepointofusearejustifiable

  14. Importanceof stock materials Determination oftheimportanceof stock materialsbased on the ABC-analysis Procedure 1. Determination oftheannualconsumptionvalue (theproductofvalueandconsumptionfrequency) ofthe stock materials 2. Sortingofthe material in descending order byannualconsumptionvalue 3. Determination ofthecumulativeannualconsumptionvalues 4. Drawing ofreasonablelimits Concentrationofeffort on A-materials, referringto optimal inventorylevelsandinventorytracking

  15. Disadvantages and Limitations of an ABC Model Critical Equipment. Critical equipment with additional equipment in stand by Important Equipment Trivial Equipment Financial Rules for the Management of the Stock of Refinements for Critical Items (look IFRS & http://tracet.in/blogposts/depreciation-as-per-companies-act-2013/)

  16. Exampleof an ABC-analysis

  17. Cumulatedshareofconsumptionvalue Cumulatedshareofthenumberofmaterials

  18. Determination oforderingtimes stock Regular Consumption incominggoods order Reorderpoint Safety stock level t Replenishment time Buffer

  19. Sporadicconsumption - Predictable time ofneed Order atthe time ofneed - Random time ofneed Storage strategy in considerationofefficiency Sourcing Warehouses. Consolidation and Warehouse Management by Suppliers?

  20. Order quantity Large quantities… • …offerpriceadvantagesthroughhighdiscounts • …meanlowerspecifictransportcosts • …leadtolowspecificorderingcosts • …leadtohighstoragecosts • …represent a highcapitalcommitment (andhighimputedinterest on theaverage stock) • …incresetheriskoftechnicalobsolescenceofinverntoriesbecauseofthelow stock turnover Small quantities… • …behaveexactlyreverse

  21. Determination ofthe optimal order quantity • Example • Value per piece 100 € • Annual requirement 100 pieces • Constant consumption • Order costs 30 € • Transport costs 100 € • Storage space 100 € / year • Imputedinterest rate 10 % Economic order quantity

  22. Graphicaldeterminationofthe optimal order quantity costs Optimum order quantity

  23. Potentials toreducecosts in materialsmanagement • Check requirementstomaintenance due tomarketrequirementsperiodicallyandorientatethematerialsmanagementtowardstherequirements • Check online-order opportunitieswithfixeddeliverypromises • Conductregularinventoryanalysiswith professional warehousemanagementsystems • Considerpotentialsfromthestandardizationalreadyattheconstructionofnewplants

  24. MRO MANAGEMENT DATA AND RESULTS FOUND IN PREVENTIVE MAINTENANCE PROGRAMS MRO • Studiesconducted in industryindicatethatonaverage 58% of theannualinvestments in materials and sparepartsgeneratedbyMaintenance, Repairs and Overhaulactivitieswillremain in thewarehousefor more than 3 years and thatabout 68% of so-called Stock KeepingUnits ¨SKUs¨ that are acquiredeachyearwillnotbeused. And in additionthis MRO supplyvolumegrowsonaveragealmost 7% annually.

  25. MRO MANAGEMENT DATA AND RESULTS FOUND IN PREVENTIVE MAINTENANCE PROGRAMS MP PROGRAMS • Having a PreventiveMaintenanceprogramdoesnotassureyouthatfailurewillnotoccur. More specifically, 11% of failures are relatedtoage, 68% of failures are relatedtothebeginning of thefunctionorlife of theequipment and theremaining 21% isto Azar, thentheremaining 89% willhavetobeTreatedwithsomeothertool.

  26. MRO MANAGEMENT DATA AND RESULTS FOUND IN PREVENTIVE MAINTENANCE PROGRAMS OEM Vendor Maintenance Plans At a past International Maintenance Conference, Steve Turner of OMCS International reported some interesting stats after a PMO review of OEM maintenance recommendations. If you are reliability focused, budget constrained or people constrained this is important information: • 21% of the OEM maintenance tasks could be deleted • 23% of the OEM maintenance tasks intervals could be extended • That is 44% of OEM/Vendor maintenance recommendation that is costing you money or labor – that is not preventing or detecting a potential failure! • 12% new maintenance tasks added that were not included in the OEM plan •  6% of the OEM maintenance tasks intervals were shortened • 38% of OEM recommended maintenance tasks: Use as is • 96 new failure modes were also discovered during the maintenance review that had not been revealed by OEM. Steve reported that these numbers are typical and demonstrate that accepting OEM Maintenance tasks can not only cost more – they may be inadequate in preventing or detecting potential failures.

  27. RECOMMENDATION IN THE FINANCIAL MANAGEMENT OF INVENTORIES Thereexistsbetweentheholder of theInventory (Warehouse) and betweenthefinancialpartfrictionsbythepossession of thisinventory. The natural financial, amonglessisbettersincetheydirectlyaffecttheresults of thecompany and thetaxesyouhavetopayforyourmembership. In addition, itiseasytofindthat in theaccountingbooks, thelowturnover of someitems, generallyexpensive and that cause problems in itsconservationinsidethewarehouse, isreflected. Whathappensisthatmany times withthefinancialpart, isthatitpressesforitselimination, becausethearticleis in bookswith a highvalue, and theywantto cancel saidassetbecausethatgivesgoodfinancialnumbers.Theanswertothisapproachmaybe as follows: Ifthefinancialpartwantstounsubscribe, itis fine as it has manyargumentsthat are valid.Hereitwouldbeworthwhileto explore in theircompaniesthatthisactiontakeseffectbutonly in thebooks. Thisistoallowphysicalexistencewithouttouching.

  28. RECOMMENDATION IN THE FINANCIAL MANAGEMENT OF INVENTORIES Therefore, theitemwillhavezerovalue in stock of theplant as ifithadbeenconsumedtheitem, and thuswethinkthatnobodyisharmed. Of course, theseitemsmustbeperfectlyjustifiedtheirreasonforpermanence in thewarehousebyMaintenance. IfMaintenance can notreview and justifythoseitems, hardlyanyoneelsewillwanttokeepthem in theWarehouse. Thecriterion of effectingthephysicalchangebeforeitisscrappedwouldnotcorrespond, sincewewouldprobablybemaking a preventivechangeforanitemthatmayhave a randomfaultpattern, thatis, no oneguaranteesthatsuch a replacement Can notfail at any time evenbeing new, in additiontoperforming a maintenancetask, usuallyexpensive, withoutanyneedtojustifyitfromthetechnicalpoint of view

  29. Conclusion An efficient design ofmaterialsmanagement in maintenanceispossibleonlyunderthefollowingprinciples: • The assessmentofefficiencyispossibleonlyunderdefinitionandconsiderationsoftheobjectives • The objectivesresultfromtherequirementsoftheprimaryprocess (Production). Market, technologyandregulationsdeterminethemaintenancestrategy • The maintenancestrategydeterminestherequirementstothematerialsmanagement. Withoutknowledgeorspecificationofthestrategynoefficientmaterialsmanagement! • As marketconditionschangedynamically, thematerialsmanagement must bereviewedregularly in termsoftheireffectivenessandefficiency

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