gra - asset driven supply chains
TRANSCRIPT
Asset Intensive Services
Maintenance Planning
& SchedulingSupply Chain Procurement
Your ‘untapped’ potential
SUPPLY CHAIN STRATEGY, PLANNING & EXECUTION
Asset Driven Supply Chains Overview
To effect overall success of an organisation,
MRO businesses must be highly integrated and
managed with the common goal of assuring
availability and reliability at an acceptable cost.
SUPPLY CHAIN STRATEGY, PLANNING & EXECUTION
© GRA 20173
Consulting Professional
ServicesSystems Training & Education Benchmarking
• Supply chain strategy, planning & execution specialists
• Australia’s premier specialist supply chain firm
• Work at strategic, operational & implementation levels
• Sophisticated yet practical
• Consistent track record of delivering sustainable capital, cost & service results
• Over the last two decades, we have worked with 200+
organisations across multiple industries to turn their supply chains
into a competitive advantage and have helped our clients identify
combined savings of more than $10 billion in value
Who we are…
Manufacturing
Demand Inventory Supply
Procurement Warehousing Transportation
© GRA 20174
We work across the end-to-end
supply chain and deliver sustainable
results with our proven change management
approach.
We offer a wide range of “hands
on” services from supply chain
planning support through to expert
project management.
We implement and support best-of-
breed supply chain solutions, as
well as provide other expert
technical services
In partnership with the Supply Chain Business Institute we deliver short courses, tailored
corporate training, mentoring and
executive symposiums
We measure your performance
against best-in-class companies and industries to
identify improvement opportunities.
Consulting Professional
ServicesSystems Training & Education Benchmarking
GRA is Australia’s premier, expert consulting
firm specialising in supply chain & logistics
strategy, planning and execution.
We offer consulting, professional services, supply chain systems, training and education and
benchmarking across a broad range of industries. For the last two decades, we have worked with
over 200 organisations to turn their supply chains into a competitive advantage.
What we do
How we’ve grown
People
Places
Portfolio
Partners
Our team has grown to over 50 expert supply chain management professionals.
Our offices in Melbourne, Sydney and Canberra as well as local based teams in Brisbane.
GRA has rapidly expanded its client base. We have worked with some of Australia’s leading and largest organisations including Lion, Simplot
and Asahi Schweppes
Our strategic partners now include the likes of JDA, Llamasoft, GAINS and Ariba
2017 saw us reach a 21 year milestone of
providing comprehensive cross-industry
supply chain expertise to companies across
Australasia
21years
Turning supply chains
in to a competitive
advantage
© GRA 20175
© GRA 20176
Results
Revenue Cash Cost
Improved Service Level
Performance 5-10%
Increase in Sales
Revenue
20 – 40% Reduction in
Inventory Free Cash-
flow
5-10% Reduction in
Supply Chain Costs
Operating Cost Reduction
ROCE
Improving inventory balance, supply chain availability & responsiveness
Ability to fund business initiatives from operating cash flow (OCF) improvements
Improving both fixed asset (facilities) and current asset (working capital) efficiency
Improving profitability by reducing fixed and variable operating costs (manufacturing, storage, distribution, inventory, transport, procurement & labour)
Improved return on capital employed (ROCE))
Improved debt to equity ratios
Value CreationValue Creation
GRA are uniquely positioned in the supply
chain market, offering success based fee
arrangementsOur remuneration is linked to our
client’s realisation of actual,
documented improvements
7
‘The best ways of gaining advantage in an asset
based environment is about being prepared,
agile and aligning yourself with partners who can
get you where you need to be.’
To successfully transform an asset intensive
supply chain the following important
capabilities are required
Knowledge of Assets/Parts supply chains, the value drivers and
unique planning requirements
Ability to identify and apply the appropriate strategies to build a
business case and identify risks and opportunities
Experience in developing strategies with appropriate financial
and non-financial information
A deep understanding of the structures and processes required
to take organisations from current state to best in class
An ethos of up-skilling, and experience in lifting organisations
capabilities via education, training and coach mentoring
Ability to model costs, constraints and volumes in a complex
environment for inventory, transport and warehousing
Strong communication and change management experience
Key success factors
© GRA 2017
Experience
Aerospace, Defence & Shipping
• Jointly led the design of a new supply chain organisational structure. Provided inventory optimisation domain
expertise into the conduct of a pilot for an advanced planning and optimisation tool
• Used a combination of business process redesign, inventory optimisation tools, data integrity programs and staff
education, training and mentoring programs to deliver significant savings including reduced inventories, increased
service levels and budget savings through a reduction in over repairing
Rail, Power Generation & Utility Infrastructure
• Conducted a detailed supply chain review that led to the sponsoring of a multi-million dollar supply chain
transformation project
• Supported the design and implementation of an outsourcing strategy to take supply chain costs “off book”
• Delivered millions of dollars in inventory savings
• Managed a programme of work to facilitate integrated maintenance delivery management with improved asset
material master data, robust supply chain performance metrics optimised sourcing strategy and inventory
optimisation
Oil, Gas & Mining
• Developed visual management dashboards to drive operational maintenance delivery plus business intelligence
reports to facilitate material & inventory management
• Optimised project material management supply chain process linking with project portfolio / integrated activity
planning process to facilitate reduced material investment, increased surplus reuse and more effective work delivery
Heavy Manufacturing
• Extensive engagements spanning inventory management reviews, inventory optimisation and business process
redesign for clients including Toyota, Honda, Renault-Nissan and Cummins Engine
Our experience and track record with asset
driven clients is significant
Issues addressed in these engagements
Data quality, completeness &
governance (supply data, maintenance
data, configuration data), including
identifying and quantifying rotable stock
holdings
Integration of financial planning with
repair and spares planning
Reverse supply chain performance
Process re-design – minimising the
number of moves and hand-offs for an
item
Integrating pipeline planning with
workshop repair planning
Supply chain design, performance
measurement and performance
management
Contractor performance management
Establishing demand planning and
replenishment planning – moving
beyond MAX/MIN or ROP/ROQ8 © GRA 2017
© GRA 20159www.gra.net.au
In an asset intensive environment, effective supply chain
management can help cut costs, improve asset safety,
efficiency & productivity enabling organisations to become
established as ‘Operator of Choice’
Challenges We appreciate the cultural & organisational
challenges with supply chain improvement in
the asset intensive sector
Information Systems
Maintenance
Supply
Asset
Management
Engineering
System
Availability
CustomerSuppliers
Management Structure
The challenge with supply chain improvements
• Management background is frequently engineering-focussed
rather than supply-focussed
• Skill levels and knowledge of the users can be an issue given
engineering, rather than supply chain asset management, is
often the predominant discipline. Limited cross pollination of
supply chain capability across heavy asset sectors
• IT systems and business processes for supply chain, finance,
project and maintenance management are often not integrated.
‘Supply’ is often managed and optimised in isolation whilst
accepting constraints of the adjoining business functions (and
sometimes also vendors)
• Traditional finance driven business priorities driven by optimising
CapEx & OpEx rather than Cashflow (sometimes subject to
regulatory constraints)
9 © GRA 2017
• Significant material portfolio often with slow moving, sporadic demand patterns
• Mix of inventory, direct supplied and repairable materials
• High level of contingency purchase as actual requirement may not be known
until work is executed
• Dependence on upstream engineering, maintenance and configuration
management processes to standardise assets and spares, where possible
• High cost rotable items and insurance spares (sometimes capitalised)
• Long life cycle products (20+ years) with diminishing source of supply/repair
sources
• Obsolescence impacting the availability of parts and suppliers
• Extremely complex and often poorly maintained asset & material data
landscape
• Balance between operational and project based delivery of work
• Often remote and therefore exponentially costly last mile logistics
Differences We understand asset intensive supply
chains have differences to consumer supply
chains
Asset intensive driven supply chains are characterised by:
• The supply chain is designed to support Asset construction / maintenance
and not sales, which changes the importance of some traditional supply
chain metrics (e.g. stock turns)
• Extremely low tolerance to Asset / System down time. Complex (often
remote) planning of skilled resources dependant on materials. Material
non-availability can have disproportionate costs
• Various demand types with different challenges and the mix between
demand types and CapEx / OpEx funding is not always cut and dried
o Capital Project: Delivering new capability, connections,
maintenance or asset renewal as part of a large portfolio of
engineering projects
o Maintenance: Balanced between preventative and corrective
activity and driven by asset management and maintenance
policies
o Operations: Consumable materials used for day to day activities
10 © GRA 2017
Increased asset
complexity and reliability
Drive for Operational
Excellence
Move to Collaborative
Maintenance Planning &
Execution
Trend Asset Consequence
• Requirement for more sophisticated support equipment and
qualified maintenance staff is shifting work back to OEMs &
other specialists
• Dependence on fewer more highly skilled technical resources
• Higher expected asset utilisation and availability drives
reduced MTTR (Mean Time To Repair)
• Demand for real time operational management & performance
information
• Reduced Cost to Serve (Cost of delivering Work Orders or
Maintenance)
• Greater demands to leverage data & process in ERP, project
portfolio planning and other connected applications to manage
extended delivery network
• Increasing sophistication of maintenance & project portfolio
planning & scheduling processes
Impact on Supply Chain
• Re-evaluation of sparing requirements & complex support
contracts driven by maintenance strategy change
• Increased customer expectations for supply chain responsiveness
& performance
• Less transactional buying and more strategic sourcing for parts,
services & logistics focused on total supply chain cost rather than
unit cost
• Greater drive to plan & manage supply chain left to right / end to
end including delivery, materials & logistics
• Increased focus on performance metrics / visual process
management
• Increasingly sophisticated collaborative planning across the
supply chain supporting reduced lead-times with information
replacing inventory
• More robust planning enables optimisation of supply chain
execution
Connected Equipment &
Increased Data / Analytic
Capability
• Moving from MTBF (Mean Time Between Failure) to predictive
failure probability
• Strong business case for Asset Data improvement and
Governance
• New data understanding enables optimisation of maintenance
& asset planning (e.g. reactive / proactive mix)
• Renewed focus on Transaction & Master Data facilitates
significant opportunities in demand management, procurement
strategy & inventory optimisation
• Increased system maturity facilitates process optimisation &
development
Supply chain trends We are helping asset intensive businesses
evolve to address emerging competitive
priorities
11 © GRA 2017
Asset Management Inventory and LogisticsSourcing and
Procurement
Sourcing strategy/ Category
Plans
Contracts
PO Processing
Expediting
Asset Master –
Catalog, BOMs
Inventory Plan
Catalog and PR Generation
Warehouse & Logistics
Asset Acquisition
Asset Management Plan
Work Planning and
Scheduling
Work Execution
Work Completion
(Return parts / Rotables)
Work Closure
Repair Dispatch
Supply Chain Strategy Examples
• Formalise supply chain considerations in acquisition –
standardisation of SKU. Develop business processes that
manage the segregation of CAPEX and OPEX (or
COMMON vs DIRECT) inventory
• Import accuracy and completeness of master data (asset
register, BOMs, task lists and material masters)
• Rationalise & optimize sourcing strategy & requirements
• Improve integrated planning developing collaborative supply
plans informed by maintenance & project plans
• Optimise inventory holdings across chain (hub, spoke,
asset/work location and mobile). Leverage advanced
planning tools to forecast demand. Develop business supply
processes that manage direct & inventory replenishment
with both common & project inventory
• Improve integration and efficiency of transactional work
management, logistics and purchasing processes, systems
and processes
• Enhance warehouse and logistics processes, e.g. returns,
inventory accuracy, kitting and delivery, elimination of slow
moving items
• Formalise repair processes – repair specifications, suppliers,
repair pooling, tracking and targets
1 2 3
4 5
6
7
8
Initial Developing Defined Managed Optimised
Supply Chain Maturity Several approaches exist to identify supply
chain performance maturity and address
these issues
12 © GRA 2017
* Priority 1 to 5 where 1 is Low
+Maturity A to E where E is High
Common themes Although different heavy asset sector supply
chains have different priorities & maturity
they have common themes
Heavy Asset / MRO
Supply Chain
Focus Area
Aerospace DefenceTransport
& UtilityOil & Gas Mining
Heavy
ManufacturingShipping
Pri
ori
ty*
Mat
uri
ty+
Pri
ori
ty*
Mat
uri
ty+
Pri
ori
ty*
Mat
uri
ty+
Pri
ori
ty*
Mat
uri
ty+
Pri
ori
ty*
Mat
uri
ty+
Pri
ori
ty*
Mat
uri
ty+
Pri
ori
ty*
Mat
uri
ty+
Strategy 3 C 3 C 3 C 4 D 4 D 2 B 3 B
Strategic Sourcing 5 E 5 D 4 D 5 E 5 E 2 B 5 C
Competency 4 C 4 C 4 B 4 B 4 C 4 A 4 B
L2R / e2e Management 3 B 3 B 5 C 5 C 5 D 3 B 4 D
Collaboration 4 D 4 C 5 C 5 C 5 C 4 C 4 D
Planning Systems 4 B 4 C 5 C 5 C 5 C 3 B 4 B
Asset & Material Data 5 E 5 E 4 B 4 C 4 C 3 A 5 D
Maintenance Scheduling 5 E 5 D 4 C 5 C 5 C 5 D 5 D
Maintenance Planning 5 E 5 D 5 C 5 C 5 C 5 C 5 D
Logistics 3 C 3 C 4 C 5 D 5 D 3 C 3 C
Inventory Management 4 C 4 C 4 C 5 C 5 C 4 B 4 C
Integrated Project Planning 3 B 3 B 4 C 5 D 4 C 2 B 4 B
13 © GRA 2017
SUPPLY CHAIN STRATEGY, PLANNING & EXECUTION
Head office | East Melbourne Victoria Australia
P | +61 (03) 9421 4611 F | + 61 (03) 9663 0579 E | [email protected]
TYPICAL RESULTS
20-40% inventory investment reduction
increased service levels ranging up to 99.9%
10%-15% reduction in supply chain operating costs & 5%-20% spend management savings
the ability to fund business initiatives from operating cash-flow (OCF) improvements
improved return on capital employed (ROCE)
a minimum 3:1 ROI (10:1 to 30:1 typical)
LIKE TO KNOW MORE?
Visit us at www.gra.net.au
We are Australia’s premier expert consulting firm
specialising in supply chain and logistics strategy,
planning and execution
"We saved $14m in six months.
We're used to being promised
these kinds of numbers; we’re
just not used to having them
delivered."
Wing Commander, Royal
Australian Air Force (RAAF)