Spare a thought for spares e-procurement

The Internet is particularly useful for improving, even automating, business processes – and an as yet little used example is spares e-procurement. By linking maintenance, repair and operations (MRO) parts buying to production materials purchasing you can aggregate what are ordinarily quite separate processes. Benefits include rationalising suppliers, reducing inventory and, most important, having the right part in the right place at the right time. But what does e-procurement mean here? At one end of the scale there’s spares requisitioning and purchasing using email and web searching. At the other is automated processes, in which the maintenance/asset management system establishes automatic acquisition or replenishment of parts from preferred suppliers as they are needed or consumed, based on price and delivery performance. Delivery direct to the appropriate location – at pre-negotiated cost and with defined service level agreements (SLAs) – ready for fitting can be part of the process. Portals to efficiency “You have to sort out your core processes first,” cautions Adam Gilbey, a consultant at enterprise software vendor IFS. “But now forward-looking customers are looking at portals as a way of automating the way they operate.” He argues that once a spares supply chain is stable, e-procurement software and portal technology can be used to great advantage to take the drudge, expense and variability out of it. And maintenance is a natural for this, not necessarily because it’s particularly high value, although in much of manufacturing it certainly can be, but because it’s critically important to the health of production – and portals and aggregation get right away from locally managed, often ill governed, ad hoc alternatives. “e-business functionality combined with asset management helps manufacturers realise significant cost and time savings,” agrees Simon Rothwell, director of alliances at asset management software developer MRO Software. “e-business technology enables an organisation to manage its inventory across the enterprise and centralise it into one system, eliminating the need to buy and carry buffer stock at every plant.” But, so far, few are doing it. Rolls-Royce, for example, has both local site and central systems. Ian Farquhar, IT director at Rolls-Royce Combustion Systems’ Hucknall site, says the company is a collection of sites each with different maintenance systems, and that “it’s difficult to get a handle on spares inventory, stock usage and the rest”. Rolls also has its central Facilities Services Maintenance company powered by MRO’s Maximo system, covering all machine data capture, scheduled and predictive maintenance, spares procurement and so forth – but “it’s not linked to production.” General Motors, meanwhile, has announced it has a package of shop floor e-commerce tools, designed to streamline its supply chain all the way from the machines that drive most MRO to the suppliers’ doors. And it can work the other way round. There are web marketplaces like sparesFinder, designed to complement inventory systems, so a site can see what spares are available across its organisation and that of a co-operative. Just knowing where a spare part is allows you to avoid unnecessary purchases. Rolls-Royce is using sparesFinder to list its surplus inventory and has sold several items this way. Shortly after implementation the firm found itself buying as well: a customer in Singapore had requested a part which was not on its shelves and was on six week lead time. A quick search located a part at Agip UK’s warehouse in Aberdeen, and the two arranged a deal. Mostly in maintenance, supplier choice is about location, availability and delivery performance, rather less price. e-procurement may be unglamorous in this context, but it can certainly be a very effective tool.