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Spare Parts Management with SAP
Gregg Manley - Mitch Williams Kraft Foods North America - Gregg Manley - Mitch Williams Kraft Foods North America
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MRO Materials Processes Integration of PM and MM
Agenda Background Stores MRO Support Material Master MRO Materials Processes Integration of PM and MM Data Analysis & Reporting Learnings Key Performance Indicators (KPI) 2
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Background
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Stores Why do you have a storeroom? Nice to have
Collection point for our stuff Place to put our over-bought Materials we need on hand Place to hang Minimize downtime Central rumor control Optimize purchasing Better manage through measure Reduce inventory investment A place for everything and…
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What do you include? Stores Spare Parts for Equipment Supplies
Production Support Site Supplies Maintenance Safety
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Stores Storage Areas. How you store your material will affect material quality, accuracy and availability. Crowded unorganized areas become "black holes" for missing parts. Crowded areas also cause increase damage to product that is often disposed of without inventory corrections being made. Maintaining proper lighting, shelf and materials labeling, and organization makes it easier to stock, find, and count materials - thus increasing levels of accuracy, maintaining material quality and happy campers…
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Stores Layout Stores Area “C” Bin Receiver’s Office “B” Bin
Expensed items Store’s Office “A” Bin “B” Bin “C” Bin COUNTER Receiver’s Office Area Secured Storage
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Stores Consider… Common parts such as bearings, seals, belts, sprockets, chain, etc, should be stored together. Exception when exclusive for an equipment. Non common parts should be stored with other parts for the same piece of equipment. Try to keep high moving common parts close to the door or counter.
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Stores Spare Parts Questionnaire* – 8 Points Required Material
Material Availability 0-12 Hrs 1 12-24 Hrs 2 24-48 Hrs 3 3-7 Days 4 > 1 Week 5 Production Critical Element Down Equipment Line Area/Plant Count One Two Three Four Five Est. Annual Movement Redundant Total Points: *Courtesy of Linda Dietzel, Hershey Foods
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Stores Administrator Attendant(s) Receiver(s) Requisitioner Approver
MRO Support Stores Administrator Attendant(s) Receiver(s) Requisitioner Approver Buyer Back up support
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MRO Support Stores Administrator Accountable Management of Inventory
Performs MRP Reviews and Adjusts MRO Requisitions Creates/Maintains Material Master Data Maintains Bills of Material Supports the stores attendants and receiver Reports
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MRO Support Attendant(s) Receiver(s) Perform Goods Issues and Returns
Inventory Updates Material Master Tools Control Receiver(s) Performs Goods Receipts and Returns A/P Exceptions Contacts Vendor / Requisitioner
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MRO Support Requisitioner Approvers Operator Mechanic
Completes Requisition Form Mechanic Plans / Allocates materials to Work Order Pick List Creates Non-Stock Materials Requisition Approvers Production Supervisor Maintenance Coordinators and Supervisors Engineering Manager Other in approval flow
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MRO Support MRO Buyer Back up Support RFQ and sourcing
Creates PO’s and places Orders Follow up and expediting A/P Exceptions Communicates with Stores Administrator Back up Support For all functions Available Maintain segregation of authorizations Contingency plans / Emergency
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Material Master Views Basic data* Sales Classification* Forecasting
Purchasing* Purchase Order Text* MRP1** MRP2** General Plant Data Storage** Accounting Sales Forecasting Work Scheduling Production Resources/Tools Warehouse Management Costing Plant/Storage Location Stock *Global **Excluded from nonstock materials
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SAP Material Masters Compared
Stock (Inventory) Non-Stock (Non- Inventory) Description Description Unit of Measure Unit of Measure Material Group Material Group Classification Classification Purchasing Group Purchasing Group Purchase Order Text Purchase Order Text Price Price Current Inventory Bin Location MRP Levels (optional) Availability Check Labels Bill of Material Bill of Material Purchasing History Purchasing History Goods Issues History (Usage through PO History) Cost assigned at Issue Cost assigned at Receipt
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Material Master
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Material Master
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MRO Materials Processes
Originator Approver Stores Observe Need Emergency? Yup! Requisition Nope! Requisition Approve Goods Issues Receive Materials Perform Tasks
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MRO Materials Processes
Requisition slip Assignment Materials Description Tracking
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MRO Materials Processes
Component Allocation Materials allocated from BOM list Additional materials through Plant material via description Classification Direct entry Availability check Access to Material Master from the Work Order
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MRO Materials Processes
Pick List Work Order number Material number Description Quantity Bin Location Easy Issue Huge time save Less Transcription errors
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MRO Materials Processes
For Order – Goods Issue
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Material Resource Planning
MRO Materials Processes Reservations and Material Resource Planning Work Order Components Material Resource Planning MRO Purchase Order Allocate Material Creates Reservation* MRP1 Issue Material Manual Reorder Point Fixed Order Point Fixed Order Quantity System Orders Requirements Reservation Exceeds Replenish to Max MRO Requisition Created *optional settings Received* Planner Coordinator Mechanic Other Master Data Stores Administrator Stores Administrator Purchasing Receiver
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SAP Typical Material Movements
MRO Materials Processes SAP Typical Material Movements Movement Text Affect 561 Stock into stores Sets 1st inventory 101 PO Receipt Receive item from PO Updates Inventory Average Price Changed 102 PO Reversal Reverse 122 Return to Vendor Reverse 201 Goods Issue to Stock from stores Cost Center to designated Cost Center and GL 202 GI Reversal Reverse 261 Goods Issue to Stock from stores Work Order to default GL and Cost Center of Work Order 262 GI Reversal Reverse 701 Physical Inventory Overstock 702 Physical Inventory Missing stock
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Integration of PM and MM
Equipment A piece of equipment is an individual object that is to be maintained independently Perform tasks / maintenance for the object Collect and evaluate maintenance event and cost data over a long period of time Master data for specific information Location Account Assignment Manufacturer information (Model, type, etc) Acquisition Value Defaults (Work Center, Planner Group)
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Integration of PM and MM
Material A material is an individual object that is to be maintained independently Defined inventory or non-inventory Collect and evaluate historic data over a long period of time Purchasing Usage Master data for specific information Basic Data Classification
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Integration of PM and MM
Bill of Materials (Equipment and Material) Where Used Lists Equipment # 1 Equipment # 2 Equipment # 3 Material # Equipment # 4 Material # Material # Material # Material #
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Inventoried Materials (HIBE)
Integration of PM and MM VENDOR Inventoried Materials (HIBE) Purchase Order Received Work Order Review and Approval MRO Requisition Pick List Stores Stock Materials Material Resource Planning “For Order” Goods Issue EQUIPMENT HISTORY
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Non-Stock Materials (NLAG)
Integration of PM and MM Non-Stock Materials (NLAG) Work Order Non-Stock Materials VENDOR “F” Type Requisition Review and Approval Purchase Order Materials Received EQUIPMENT HISTORY
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“F” Services or Materials Received
Integration of PM and MM ACCOUNTS PAYABLE CONFIGURATION VENDOR Work Order Purchase Order Materials “F” Type Requisition Invoicing “F” Services or Materials Received EQUIPMENT HISTORY
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Data Analysis and Reporting
List Edit Screens Material Documents Purchase Orders Plant Maintenance Information System Planner group analysis Location analysis Logistics Information System Purchasing Values Materials usage Custom Reports Cost to Maintain Equipment Services Materials Equipment History
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Data Analysis and Reporting
Feed back to End Users Accounting to Management Total Plant Maintenance Costs Each Team (Planner Group) Services, Materials, and Labor Highlights Budget Performance Account Assignment Accuracy Team Performance Maintenance Activities Equipment Performance Top Problems Top Costs
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Learnings 100% Compliance to process Descriptions
Inventory accuracy Accounting data & Cost analysis Minimal inventory investment Descriptions Best Search Tool Material BOM’s linked to Equipment BOM’s Communication Engineering – Change Management Non-Stock Materials History Logistics Information System 2
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Why track KPI’s?? To measure processes To measure Costs
Key Performance Indicators & Reporting Why track KPI’s?? To measure processes To measure Costs To measure performance To identify opportunities for Improvement If you don’t track it you can’t improve it.
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The 5 Basic KPI’s that we track
Key Performance Indicators & Reporting The 5 Basic KPI’s that we track Inventory Accuracy Service Level Inventory Value Inventory Turns Undocumented Movements ( Slippage)
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Inventory Accuracy Key Performance Indicators & Reporting 1 -
Calculation: Part #’s with correct counts Total # of Part #’s counted X 100 OR Part #’s with incorrect counts Total # of part #’s counted X 100 1 -
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Key Performance Indicators & Reporting
Inventory Accuracy … What can it tell us? Is the goods issue, receipt, and return processes followed Are there training needs for the personnel that interact with the stores Is the cycle counting process controlled Is access to the stores controlled
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Service Level ( Fill Rate)
Key Performance Indicators & Reporting Service Level ( Fill Rate) Calculation: # of line items completely filled Total # line items requested X 100 OR # of line items not completely filled # of line items requested X 100 1 -
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Key Performance Indicators & Reporting
Service Level …. What does it tell us Are the min/max settings adequate to support customer needs Are the customers communicating to the stores of planned spare parts needs Is the MRP process frequency adequate
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Inventory Value Key Performance Indicators & Reporting Calculation:
Financial period end inventory value Beginning Inventory balance plus receipts for the period minus goods issues for the period.
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Inventory Turns: Key Performance Indicators & Reporting Calculation:
forcasted: $ amount of goods issued X 12 Total inventory value Actual: sum of last 12 months goods issued ( $$)
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Key Performance Indicators & Reporting
Inventory Turns …. What can it tell us? Is there excess Inventory Is the procurement process overburdened. Are the min/max’s adequate Is there an opportunity for re-engineering of parts with long lead times
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Undocumented movements ( slippage)
Key Performance Indicators & Reporting Undocumented movements ( slippage) Calculation: Net Dollar value of gains and losses total number of Part numbers that quantities were adjusted up total number of Part numbers that quantities were adjusted down.
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Key Performance Indicators & Reporting
Undocumented movements ( slippage)…. What can it tell us?? Is the goods issue, receipt, and return processes followed Are there training needs for the personnel that interact with the stores Is the cycle counting process controlled Is access to the stores controlled
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Expansion to Basic KPI’s
Key Performance Indicators & Reporting Expansion to Basic KPI’s $ value of parts that have no movement in the past 2-3 years % of requisitions that have been turned into Purchase Orders within hours $ value of cost avoidance due to diligent evaluation during the Replenishment process.
