Outsourced and on-site

Posted on 6 May 2009 by The Manufacturer

Ian Ritchie, managing director of Brammer, a leading supplier of maintenance, repair and overhaul (MRO) products and services, examines how having an outsourced maintenance spares stores on-site can deliver significant financial and operational benefits to manufacturing companies.

Spares management is a complex issue for manufacturers in almost any sector. Rapid access to spares is vital to maintaining continuity of production and avoiding costly downtime. However, not only are the required spares often of low value and required infrequently, but the sheer range of components which a plant can need access to can be daunting. For many, that range of products means dealing with multiple suppliers across different product areas — from bearings and mechanical power transmission to hydraulics, pneumatics, tools and personal protective equipment.

This in turn leads to investment in engineering, purchasing and administration time to identify the required product, finding a supplier, negotiating a price, and then receiving and managing the goods, all many times over. Add to this ongoing stock management requirements and costs.

And all of these requirements are complicated by the fact that parts are often required at short notice — often immediately — to prevent plant-critical downtime.

It is no surprise that this time-consuming process affects productivity and effectiveness of both purchasing and maintenance teams. In the case of the hard-pressed maintenance team, this can often lead to a focus on short term fire-fighting — dealing with immediate requirements to keep production lines running — and never getting to grips with more strategic projects which would improve production output and efficiency and make more efficient use of energy, or undertaking preventative maintenance which would reduce the risk of future downtime.

Improving maintenance spares management
Maintenance spares stock management can frequently be an issue, with many companies holding a large value of stock ‘just in case’ as they lack reliable management data on their component usage. To compound this issue, stock is often replicated across numerous locations on site. In many instances, the items are not catalogued or recorded, leading to duplicated stock and cash unnecessarily tied up in inventory. It can be hard to know what is available, there can be poor stock turns and the constant risk of a production-critical component being missing when it is needed.

At a time when, more than ever, cash is king, any action which can be taken to eliminate waste in business process transactions — for example, raising purchase orders for multiple suppliers when the same goods could be obtained from a single supplier — and reduce inventory should be welcomed.

Indeed, many forward-thinking companies have identified that optimising maintenance and stores management can help to deliver improved performance by reducing costs, improving efficiency and eliminating expensive downtime that impact so heavily on overall profitability.

A solution to this issue is one which would reduce MRO spares processing and handling costs, while rationalising the supplier base, the number of spare parts used and amount of stock held, while guaranteeing quality and the continuity of supply of key parts.

There is a proven solution to this problem that is helping a growing number of major companies to reduce total acquisition costs and working capital — and, through the engagement of the expertise of Brammer and its leading engineering component suppliers, also delivering significant and measurable improvements in production output and operational efficiency.

On-site solution
This solution involves effectively establishing a Brammer branch on a company’s premises, geared entirely to meeting its needs in terms of spare parts inventory management and the expertise available. Indeed, an ‘Insite’ branch by-passes many of the problems associated with in-house maintenance spares management by outsourcing all procurement and inventory management issues to Brammer.

An Insite provides highly trained and experienced site-based personnel delivering dedicated MRO spare parts sourcing and technical support to keep production running smoothly, while offering many value-added services and solutions to the customer — freeing up the in-house procurement, engineering and maintenance teams to concentrate on other, more valuable activities, knowing that their MRO spares operation is in safe hands.

An Insite gives companies dedicated access to all Brammer’s resources and knowledge as well as the benefit from an innovative range of engineering services, production audits and technical support. With over 50 Insites in operation, the positive impact of this approach is already proven in the UK in many large production plants in different industrial sectors including automotive, food and drink, metals, packaging and pharmaceuticals, with customers including brewer Scottish & Newcastle and aluminium producer Alcoa. The production efficiency improvements generated have helped Brammer deliver some £40m of operational cost savings to customers since 2007.

Cost savings across the board
While Brammer’s pan-European sourcing operation can frequently purchase components more competitively than the client company, the real business benefits are delivered from the process improvements, stock management systems and technical support and advice that a Brammer Insite can provide.

Total component acquisition costs are significantly reduced, as the company is now dealing with only one supplier for all its MRO requirements, resulting in simpler invoicing with the option of electronic ordering and invoicing, helping to reduce transactional costs. The reliable management reporting offered will track component usage, which creates greater transparency and provides the basis for stock profiling, redundant stock analysis and targeted reductions in stock profiles and purchasing costs. The company is also only paying for spares that are being used rather than those gathering dust in a storeroom.

By using the technical consultancy and application advice available, engineers can substitute parts for those with a longer life expectancy and lower total cost of ownership, delivering further cost savings. Genuine parts are guaranteed too, as Brammer is an authorised distributor for most of the leading engineering component suppliers, which eliminates the risk of purchasing sub-standard or counterfeit parts through a non-authorised supply route.

Stock profiling will, along with vendor-managed inventory, result in standardisation of products and brand rationalisation. Standardisation means fewer products, which in turn means less stock and reduced working capital.

Improving production efficiency
Perhaps the biggest issue for most maintenance and plant managers, however, is optimising the production efficiency of their manufacturing lines. Maximising uptime is key to this and the support and capability of an Insite can be a major contributor.

An Insite’s operating hours are geared to the requirements of the company’s manufacturing operations. The on-site branch can be staffed and operational on a 24/7/365 basis, if required.

Companies also have access to experienced, independent technical expertise. The Insite manager can arrange for performance measurement and component kitting, while application advice, condition monitoring and energy efficiency surveys are further examples where an Insite can help to ensure that downtime is minimised and plant operational efficiency optimised.

Some manufacturing companies which have investigated the best way to develop their maintenance and stores management strategy have found that, by taking the bold step to outsource some or all of these functions, they are enjoying greater operational efficiencies and financial benefits. Brammer Insites are proven to deliver a combination of operational performance improvements and cost savings, while improving plant uptime and company profitability. The concept is an innovative partnership approach that will help to drive the competitiveness of the UK manufacturing sector forward.