risk assessment and management of mro inventory
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Risk Assessment and Management of MRO Inventory. Shane McLellan Project Leader – Business Performance & Planning SaskPower. Discussion topics:. SaskPower Vision, location, business, structure, and history Materials Work/Process Management Overview The MRO Inventory risk assessment process - PowerPoint PPT PresentationTRANSCRIPT
© 2008 Eventure Events. All rights reserved.
Risk Assessment and Managementof MRO Inventory
Shane McLellanProject Leader – Business Performance & Planning
SaskPower
Discussion topics:
• SaskPower– Vision, location, business, structure, and history
• Materials Work/Process Management Overview• The MRO Inventory risk assessment process
– Materials tie to PM activities– Assessment process development– Leveraging SAP Doclink to retain knowledge
• Summary of Current and future initiatives
• Vision:– People and innovation. . . powering Saskatchewan to
a bright future.
is a fully integrated electric utility located in Saskatchewan supplying power to the entire province.
Relatively Speaking…..
generating facilities are strategically located:Hydroelectric – 854 MWNatural Gas – 538 MW
Wind – 172 MW
Coal – 1653 MW_______________________________
Subtotal – 3217 MW
Independent – 454 MW_______________________________
Total – 3671 MW
Plant maintenance and major capital projects are required to enhance aging equipment, implement new technical processes and develop new generation solutions. These activities have a significant impact on inventory holdings.
Materials Overview @ PPBU SaskPower
• Significant $ provision for obsolete inventory• > 150,000 MMRs (>95,000 with stock)
– Adding ~ 6,000 per year
• > 120 material groups• De-centralized structure for managing materials
and most inventory purchasing functions
MRO Inventory Required For…
• Maintenance– Planned maintenance activities
• Preventive maintenance• Weekly, monthly, quarterly, annual, etc.
• Repair– Unplanned break-fix maintenance activities
• As occur
• Operations– Consumables
• Used along side Maintenance and Repair or alone• May or may not be on BOMs
Inventory Decision?... Balancing Risks
• Do not Stock…potential for unit outage– Public / employee safety
• Forced brown-outs, essential services, extreme weather
– Reliability– Revenue: potential loss of generation capacity
• $70/MWh X MWh capacity of unit(s)
• Stock…potential for wasted resources– Lost capital
• Limited capital resources
Why do Inventory Assessments?
• Legal requirements (accounting rules)– Accurately value assets
• item cost $5000.00 ten years ago;• no longer required; and• no market value;• valued at scrap value minus disposal costs
• Business benefits (increase productivity)– Reduce non-value-added costs:
• initial purchase price• carrying charges• physical storage• administrative
PPBU $ Provision for Obsolete Inventory
…more on Business Benefits
• Identify obsolete materials– Recognize true inventory asset value– Utilize freed up space and resources for value added
activities including:• Procuring and maintaining required inventory;• Regularly assessing dead stock items;• Updating and managing SAP master data.
• Identify opportunities to reduce min/max stock levels (slow moving & costly items)
• Identify items that may be under stocked
% Dead Stock / Active Stock
• Is obsolete inventory identified and removed regularly?
• Presently, “No”; responses heard:– Too difficult!– Not enough resources!Or worse…– May need it some day.– Might be able to scavenge something from it.Careful!!– Its a slippery slope!
% Dead Stock / Active Stock• A slippery upward slope!
Process Optimization
• So how can we optimize the management (including assessment) of MRO inventory?
The Materials (MM) Process
Specify
Source
Buy
Inventory
Use
The Maintenance (PM) Process
Initiate
Plan
Schedule
Execute
Complete
Integration ofMM and PM Processes
Specify Source Buy Inventory Use
Initiate Plan CompleteExecuteSchedule
Plan : Specify & Source
Decision; Schedule : Buy
Plan, Execute, Complete : Use
SAP Functionality to Manage Inventory
• The Material Master Record (MMR)– Material Resource Planning (MRP)
• MRP Type• ABC
– Bill of Material (BOM)– Document Linking– Classification– Serialization
MRP Type – Material Resource Planning
• V1: min / max maintained– Slow or fast moving critical items– Fast moving non-critical items
• PD: required items ordered at WO release– No stock maintained– Typically not a critical item
• ND: maintain record for information purposes– Not currently used but may be used in the future– May have been used in the past (contains history)
ABC – Analysis of MRO Inventory
• Separating essential from non-essential– A: Essential stock items that:
• Are directly critical to generation of MW• May be fast or slow moving (usually slow)• Are typically high value (not always)
– B: Non-essential stock items that:• Can be ordered at WO release• Typically have shorter lead times
– C: Essential Stock items that:• Are not directly critical to generation of MW• Would significantly impact business if stock-out occurs• Are fast or slow moving (usually fast)• Are typically low value (not always)
ABC Indicator & MRP Type
• Classifying essential and non-essential– A: items critical to generation of MW
• MRP of V1 (min/max maintained) with Lot Size HB• Slow or fast moving (usually slow)• Typically high value (not always)
– B: items can be ordered at WO release• MRP of PD (no stock maintained) with Lot Size EX• MRP of ND (no stock maintained) with no Lot Size
– C: items not directly critical to generation of MW• MRP of V1 (min/max maintained) with Lot Size HB• Non-critical items used frequently (high quantity)• Typically low value (not always)
BOMS
BOMs tie Materials to Plant Maintenance
Document Linking in SAP
Document Linking in SAP
A Picture is Worth a Thousand Words…
Other Tools• Spares Optimization System (SOS)
– Proprietary software– Used 2000 – present to varying degrees– Comprehensive– Resource intensive– No workflow
• SaskPower’s Material Assessment Database (MAD)– Built in-house– Used 2006 to present– Less comprehensive than SOS– Resource friendly and fast– Newest version contains workflow
• Other ….
SaskPower’sMaterial Assessment Database• Key Requirements of Assessment Tool
– Workflow• Move documents through assessment process
– Integration• Maintain key information including photos
– Transparency• Provide for easy tracking of process
At SaskPower we built an assessment tool based on previous knowledge and the above identified requirements.
Slow Moving Material Assessment ProcessA
gent
Age
nt’s
Sup
.P
lant
Con
tact
Pur
chas
eD
ept.
MM
/PM
BP
P
ASSESS ?
REVIEW
MANAGE
APPROVE
Maintain orDispose
Y
Y
DESIGN
N
COMPLETE
REPORT
ASSIGN
N
N
Views – Plant Contact View• Choose assessments to assign
One click to access the tasks in “Your Responsibility” View
Views – My Responsibility View
Views – Other Views that are Available
• By Plant & Role
• By Plant & Owner• Supervisor View• Sortable View
• By Plant & Status
Material Overview
BOM information…
Used on past work orders…
History of material movements….
Link to Functional Location Structure
Recommendation only
Link Assessment to MMR in SAP
MAD is One of Many Current Initiatives
• Process Development / Improvement– SAP MM/PM (ABC, M Status, S.Proc., offset)– Sub-processes (receipts, issues, salvage…)– Block Maintenance– Training
• Material Risk Assessments– Controlling function / operations management
• Standard Supply Agreements• Measures & Dashboard
– Lotus Notes
Future MAD Plans
• New MMR / Change MMR• Risk calculator
– Factor in cost of replacement energy, MWs impacted and lead time to replace
• Move process to SAP Portal• BI / BOb reporting
New / Change Material Request Assessment Process
RE
QU
ES
TM
AN
AG
EM
EN
TP
UR
CH
AS
ED
EP
T.
ASSESS ?
REVIEW
Approve
MAINTAIN
Y
CLARIFY
MM
/PM
NOTIFY
NOTIFY
N
Goal for December 2008…
Risk Calculator
• Cost of replacement energy: $70/MWh• MWs impacted: derate or outage
– 10 to 300 MWhs
• Lead time to replace– 10 days to 2 years
SAP Portal – MAD:Assess, Create, Change
• Workflow and authorizations• Integration of information (transactions)• Transparency of assessment history
Boundary Dam
ManagerA B
C
D
TurbineCoal
Purchasing
Stores
Legal
There Are Lots of Players…
Finance PPBU
Power Production
BPP0001 0002
0003
0004
0005Eng. Services
Ops. Support
HR
Legal
…and it gets more complicated
Finance
Key Lessons:
• SAP is only as good as your data…and your management of work and process.
• Process is key:– Ownership required at the plant (all levels)– Effective MM/PM work/process management tools– Supported by BPP, Purchasing, Legal, etc.
• Opportunities exist for utilities to reap huge benefits from MRO inventory risk assessments.
© 2008 Eventure Events. All rights reserved.
Shane McLellanProject Leader – Business Performance & Planning
Power Production; [email protected]