Entec 3PMRO is a world class spares sourcing, procurement, logistics and inventory management service designed to optimise spares inventory for global clients with complex manufacturing operations spread across multiple regions.
A typical 3PMRO project runs in 3 phases following a mutually agreed plan:
To Establish the size of both the challenge and opportunity there is a short process of discussion and review, during which Entec operations research analysts, having signed a non-disclosure agreement (NDA*), review client spend and inventory data, running it alongside proprietary algorithms (developed during a 3 year Knowledge transfer program with University of Portsmouth centre for operations research and logistics) and Entec master data, to develop a costed proposal or ‘Business case for Change’ with calculated values:
The NDA is necessary as Entec will request confidential purchasing and inventory movements data from Client ERP (SAP, Maximo. JD Edwards, Oracle etc). It is accepted that this data may not always be complete; Descriptions and languages vary, content is not always accurate, but it is generally the best available source to create a value baseline.
Client language is discussed during the review, to best understand objectives, key drivers for success and correctly describe the various ‘baskets’ of value within a 3PMRO project;
As examples, 3 baskets of value could be collated as follows:
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Productivity
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Net P&L cash reduction opportunities through spend leverage, freight cost reduction, parts conversion (cross referencing) to the true source. P2P cost reduction.
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Operational cash flow
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Cash returned through improved payment terms, inventory optimisation, additional changes in operational cash flow achieved through the project.
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Cost avoidance.
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Avoiding added cost, changes to ways of working, automation steps implemented future purchases avoided as min/max levels are adjusted.
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Having agreed value and benchmarks with key stakeholders the project follows a tested 3 phase strategic plan
Phase 1 – Offshore spend management: Entec take ownership of the sourcing, procurement, logistics and payment process for client regional or site level ‘offshore’ parts supply including capital equipment, general operating spares and consumables.
Phase 2 – Onshore spend management: having evidenced value during phase 1 Entec teams move onshore to begin another round of vendor consolidation, moving closer to the operations addressing local supplier relationships ensuring the supply of warranted goods from compliant sources.
Phase 3 – Inventory optimisation: With accurate procurement, vendor performance, global logistics, SKU level inventory movement, risk and actual consumption data, Entec can begin a process of inventory review. The developed plan delivers optimised spares with improved fluidity of critical components as ‘turn rates’ are reviewed and parts stock points repositioned to meet Global, regional and local consumption patterns
It should be noted that an Entec 3PMRO project is not a tactical change of direction it is a strategic plan taking some time to implement. The timeline will depend on the client’s ability to drive or influence compliance. A project of this nature has multiple stakeholders to convince, there will be ‘noise’ as multiple suppliers become focused into one supply chain. However, a practiced plan, with minimal local suppler disruption, evidences no manufacturing operations productivity impact as continuity of supply is considered a key driver in all 3 phases.
Examples:
Project Fulcrum, is a world class MRO materials management program, improving cost and optimising inventory at a local & regional level, change managing spares stock from the clients current ‘Just In Case’ model to one with managed risk, where globally visible insurance spares are delivered ‘Just In Time’.
Entec deliver ‘Fulcrum’, to the world’s leading premium alcoholic beverage company, as a 3rd party MRO (3PMRO) project, in three phases:
Phase 1: Control is exercised over offshore/imported spares, optimising the supply chain and reducing total cost of ownership through the removal of non-value add links. Spares are delivered in weekly consolidated schedules, from multiple global suppliers, with simplified documentation, import processes and a single set of payment terms. MRO materials are categorised and grouped, based on the usage frequency, cost to carry, supplier type. Entec jointly manage the supplier relationship with the client, categorising by 3 levels of strategic importance. To measure best cost and deliver service excellence. Entec’s advanced reporting tools and ‘app’ enable the end user to track and recognise the benefits achieved through Fulcrum in real-time.
Phase 2: Local procurement is standardised, creating global agreements with major manufacturers, offering locally managed stock or using a fixed price e-catalogue, automating and ensuring compliant local standards in procurement.
Phase 3: In the final phase Entec deliver the greatest return, releasing tied capital to operations as inventory models are optimised locally, regionally and globally around demand. Planned and unplanned maintenance needs are met, through a fully managed stores, with service measured against written agreements reported to KPI’s. Storerooms are redesigned, constructed around sound principles which are safe, secure and monitored for continuous improvement. Clients benefit from improved working capital.
Project Blue:
Is currently a regional project designed along the same lines as Fulcrum, it has global visibility within the client operations, procurement and finance leadership and will launch into 3 additional client regions during 2020 to create a genuinely global solution.
Project benefits are reported at site and line item level monthly, then summarised quarterly in the following format with left column ‘Old’ or pre project ways of working and the right column new ways of working:
