renaissance hotel – seattle may 3, 2007

Presented by: Pat Thoms, Platte River Power Authority

& Jim Calvert, I.M.A. Ltd.

Renaissance Hotel – Seattle

May 3, 2007

APPAAmerican Public Power Association

Identifying Savings

Within

Maintenance Stores Inventory

APPAAmerican Public Power AssociationAgenda

Maintenance Inventory Facts

Benefits Realized from Clean Data

Return on Investment (ROI)

NorskeCanada Case Study

Platte River Case Study Open Discussion



• 10%-20% Excess-Active Inventories exist -- “A” items overstocked

• Active Inventory Value

is typically a 1:1 ratio Annual Spend

:

• Inactive/Obsolete (Emotional Inventory) represents at least 38%-40% of Inventory Value



• Duplicate Items exist:@ 10%-20% per Single plant@ 20%+ across Multi-plant corporations

• Industry Standards suggest that Spot Buy/Direct Purchases represent up to 30% of Annual Spend

• Spot Buys/Direct Purchases usually incorporate a 10% premium over unit cost

Inventory Segmentation

Electrical 26%

Required Active 27%

Inactive 53%

Excess Active 20%

Critical Spares 15%

Slow Moving Stock 22%

Obsolete Materials

16%

Bearings 21%

Fluid Power 15%

Instrumentation 12% P.V.F.

12%

Electrical 26%

Ind. Supplies 14%

OEM 40% MRO

60%




• User-friendly data for everyone (Maintenance, Stores, Procurement)

• Opportunity to Standardize on Manufacturers/Products

• Potential to Consolidate the Vendor base/Leverage Unit Cost

• Opportunity to Reduce Inventory Investment and Free up Cash


Opportunity to Identify and eliminate duplicate items

Complete, generic item descriptions (McMaster-Carr, Grainger)

Consistent structure & nomenclature throughout the database


“Virtual” warehouse of inventory across the corporation (Corporate Catalog)

Opportunity to Share Critical parts, Spares, etc.


• Virtually Every Project Requires ROI Support

• Companies Require 6-12 Month ROI to Justify Spend

• Companies are Required to Invest Time & Resources to the Recovery Process

― I.M.A. can Work with Suppliers re Disbursement of Overstock

― Internal Experienced Resources are also Necessary― Address items lacking proper information― Adjust min/max stocking levels― Identify obsolete parts




Sample Client Data:

15,000-40,000 sku’s per plantNo Single Corporate MRO CatalogCorporate Supply Agreements

• Multi-site client (7 plants)• > 240,000 total sku’s



Single Site Data:

• 17,671 sku’s• $11,623,737 Total Inventory Value

68% of inventory is inactive32% is active

(valued at $3,719,596)

Annual spend value $3,599,887 (1:1 ratio)



Single Site Data:

13% of inventory has excessive on-hand quantities

Value of the Excess is $911,113(24% of active inventory)

Eliminate duplicates

Return parts to vendor for credit



Single Site Data:

299 MRO vendors• Bearings & PT = 28• Electrical = 97• PVF = 30• Air, Hydraulics, Fluid Power = 111• Industrial Supplies = 61• Mobil Equipment = 5• Instrumentation = 75

3,762 annual purchase orders generatedSpot Buy purchases @ 12% = $431,986

Leverage purchase volumes within/across sites

Consolidate product lines

Reduce Supplier base

Reduce Spot Buy purchases



Single Site Data:

• Project cost: ~$90,000

• Savings: >$911,113

minimum ROI is 10:1

• Similar savings are found at each site across the company


I.M.A. Value Proposition:

• We help companies seize control over their MRO inventory. Our services consistently generate a greater than 10:1 return on investment and improve maintenance efficiency.

APPAAmerican Public Power AssociationI.M.A. Services

Catalog Management

Cleansing Analysis

ROI Facilitation

The Total

Solution

Platte River Power Authority (PRPA)Case Study


Platte River Case Study



Why the Need? PRPA was in search of new Maintenance

Management System ― Old system had 26 characters for part

description (+ long description field)

― Descriptions were inconsistent (20 years of different employees entering items)

― Maintenance was having a hard time finding parts they needed for a job



What We Did

Core team considered 6 systems

― Soon short listed to 3 --- presentations

Purchasing/Inventory/AP modules not included in initial plans

― But, why buy the puzzle when 3 key pieces were missing?

scope changed



What We Did

Avantis system selected― Avantis offered the option for cleansing

inventory parts (I.M.A. Ltd.)

― System had >200 character description, ability to attach drawings, pictures, etc. to items



What We Did

Up-front cleaning on our own― Populated missing manufacturer names

― Corrected spelling mistakes, dashes, hyphens, etc.

― Cleaned up vendor names



What We Did

For Data Cleansing, we worked with I.M.A. Ltd.

― 9,232 sku’s

― Submitted 2 reports:

― on-hand inventory

― vendor purchase history (4 years)



Results Cleansed data was loaded into our system

― Awesome new descriptions

― Now parts can easily be found

― Low duplicate part ratio (<1%)

New Avantis system allows drawings and pictures to be attached to item, which really helps planners



Before & After Samples:

BEARING, TAPER ROLLDescription

Mfg P/N

TIMKENMfg Name

203957Item #

1000005Control #

BEARING, CONE/CUP, TAPERED ROLLER, CONE P/N HM807049, CUP P/N HM807010

Description

Mfg P/N

TIMKENMfg Name

203957Item #

Before After




BEARING, TAIL PULLEYDescription

Mfg P/N

FAFNIRMfg Name

209784Item #

1000005Control #

BEARING, BALL, 1.7717” ID X 3.3465” OD X 1.0629” WD SINGLE ROW, CONRAD, 2 SEALS, WIDE RACE, TAIL PULLEY

Description

209KRR3Mfg P/N

FAFNIRMfg Name

209784Item #

Before After




SWITCH LIMIT OIL TIGHT NEMA 4/13

Description

Mfg P/N

ALLEN BRADLEYMfg Name

208859Item #

1010092Control #

SWITCH, LIMIT, LEVER SPRING RETURN 600V 550/600VDC 10A AC 0.1A DC 2NO 2NC NEMA 4/13 SERIES F

Description

1747-L531Mfg P/N


208859Item #

Before After




ALLEN BRADLEY PROCESSOR

Description

Mfg P/N


300292Item #

1000148Control #

PROCESSOR, SLC 5/03 4096 INPUT 4096 OUTPUT 500MA @ 5VDC 175MA @ 24VDC 8K MEMORY

Description

802T-ATPMfg P/N

ALLEN-BRADLEYMfg Name

300292Item #

Before After



Before & After Samples: Duplicates

GASKET 2 X 2 1/2 X 1/32Description

1E5629X0072Mfg P/N

FISHERMfg Name

203700Item #

1008561Control #

GASKET, 2” ID X 2-1/2” OD X 1/32” THK

Description

IE569X0072Mfg P/N

FISHER CONTROLSMfg Name

203700Item #

Control #

GASKET, 2 X 2 1/2 X 1/32Description

IE569X0072Mfg P/N

Mfg Name

207015Item #

1008561Control #

GASKET, 2” ID X 2-1/2” OD X 1/32” THK

Description

IE569X0072Mfg P/N

FISHER CONTROLSMfg Name

207015Item #

Open Discussion


Thank-you for this opportunity

& for your time!

renaissance hotel – seattle may 3, 2007

Documents

inventory investment

fluid power

investment roisingle

total inventory value68

investment roivirtually

clean datauserfriendly

clean datareturn

clean dataopportunity