1. Objective of an efficient materials management

2. The objective of an efficient materials management is to provide the right materials (tools, work tools, spare parts, supplies) at the right time at the right place in the right amount and the right quality. Measure of effectiveness The materials management must subordinate all acts to economic efficiency! Measure of efficiency

3. The stages on the way to efficient materials management 1. Precise definition of objectives 2. Specification of requirements 3. Choice of methods and instruments 4. Measurement of performance Aim Starting point

4. Specification of requirements Concrete order requisition Defined availability Specified quality requirement Organization Storage strategies Procurement strategies Storage locations Storage quantity Minimal costs

5. Influencing factors Technology Market Regulations Maintenance requirements Maintenance strategy Requirements for the maintenance materials management determine determines

6. Clarification of requirements and definition of the design Implementation of an plant structuration - with identification of risks - and determination of reaction times Determination of value and consumption frequency Determination of procurement opportunities What is needed where and how fast do i need it? How is it most favourable to provide?

7. The principal issues of an efficient materials management Stock storage or order if required? Where is to be stored? What are the safety stocks? When is the order initiation? How big should be the procurement quantities?

8. Determinants of storage strategy Procurement costs Reaction times Procurement market Contribution margins Storage costs Buffer capacities Storage possibilities Standards Consumption pattern Store or order if required?

9. Assessment of production losses Prerequisites: No personal injury, no environmental- or product damage and no damage to the system caused by the loss of production Assessment of risk of customer loss - Revenues minus variable costs, taking into acount existing buffer capacities -Cost of storage bins and warehouse management - Imputed Interest -Possibly calculatory depreciation Which contribution margins can escape us? What storage costs we save? Decisions by comparison of contribution margins and inventory costs - +

10. Storage locations In any case a central warehouse management system Fundamentally a central warehouse due to lower costs For material with low value for regularly recurring activities (usually operating materials and working aids) hand bearings close by the respective point of use are justifiable Central warehouse -Low administrative costs -Lower storage amount -Higher inventory turnover -Higher utilization Decentralized storage -Short transport routes -Short transportation times

11. Importance of stock materials Determination of the importance of stock materials based on the ABC-analysis Procedure 1. Determination of the annual consumption value (the product of value and consumption frequency) of the stock materials 2. Sorting of the material in descending order by annual consumption value 3. Determination of the cumulative annual consumption values 4. Drawing of reasonable limits 10-15% of the materials70-80% of the valueA-materials 30-40% of the materials15-20% of the valueB-materials 50-60% of the materials5-10% of the valueC-materials Concentration of effort on A-materials, referring to optimal inventory levels and inventory tracking

12. Example of an ABC-analysis MaterialConsumption value Cumulated share of the number of materials[%] Cumulated share of consumption value[%] Classific ation 458010,048,54A 725020,069,46A 216030,082,85B 1010040,091,21B 63050,093,72C 82560,095,82C 52070,097,49C 91580,098,74C 11090,099,58C 35100,0100,00C

13. Cumulated share of the number of materials Cumulated share of consumption value

14. Determination of ordering times Reorder point Safety stock level t stock Replenishment time Buffer Regular Consumption order incoming goods

15. Sporadic consumption - Predictable time of need Order at the time of need - Random time of need Storage strategy in consideration of efficiency

16. Order quantity Large quantities… …offer price advantages through high discounts …mean lower specific transport costs …lead to low specific ordering costs …lead to high storage costs …represent a high capital commitment (and high imputed interest on the average stock) …increse the risk of technical obsolescence of inverntories because of the low stock turnover Small quantities… …behave exactly reverse

17. Determination of the optimal order quantity Order quantity Order value Order costs / year Transport costs / year Storage costs / year Capital costs / year Total costs / year 110030001000050513055 330010003333150154498 55006002000250252875 1010003001000500501850 151500200667750751692 25250012040012501251895 5050006020025002503010 100100003010050005005630 Example -Value per piece 100 € -Annual requirement 100 pieces -Constant consumption -Order costs 30 € -Transport costs 100 € -Storage space 100 € / year -Imputed interest rate 10 % Economic order quantity

18. Optimum Graphical determination of the optimal order quantity costs order quantity

19. Potentials to reduce costs in materials management Check requirements to maintenance due to market requirements periodically and orientate the materials management towards the requirements Check online-order opportunities with fixed delivery promises Conduct regular inventory analysis with professional warehouse management systems Consider potentials from the standardization already at the construction of new plants

20. Conclusion  The assessment of efficiency is possible only under definition and considerations of the objectives  The objectives result from the requirements of the primary process (Production). Market, technology and regulations determine the maintenance strategy  The maintenance strategy determines the requirements to the materials management. Without knowledge or specification of the strategy no efficient materials management!  As market conditions change dynamically, the materials management must be reviewed regularly in terms of their effectiveness and efficiency An efficient design of materials management in maintenance is possible only under the following principles: