Midwest, U.S. (global company)
Integrated Supply Chain Management
Initial involvement: A large life sciences manufacturing company, based in the MidWest U.S. with global reach, enlisted Synovos integrated supply chain management services to bring added value to the company’s MRO supply chain program. With more than 50,000 SKUs and $20 million in spare part inventory spread across nearly a dozen storerooms, the client was looking to take an already strong MRO program to the next level.
A Synovos team of 13 employees, including multiple buyers and attendants, a site manager and others, worked to identify different processes and establish best practices to further drive down inventory levels without impacting service or creating production downtime.
Added Value: While the full storeroom management program delivered significant client savings through strategic sourcing, inventory optimization, and enhanced MRO storeroom management, it was clear the conditions required even more attention in order to meet client expectations. Well into the client contract, Synovos introduced a repair program initiative aimed at driving additional client savings while staying true to the initial goal of lowering inventory levels. Using a pre-identified list of parts that could be repaired, the team gained significant savings in the process.
Challenges: As with any MRO supply chain program, client acceptance and participation are mandatory to achieving desired savings. In this case, client maintenance technicians, engineers and others had to be convinced that returning specific parts to the storeroom to initiate the repair program would return value. It was important to overcome the stigma that repaired parts are less efficient or trustworthy than a new part.
Results Realized: By repairing instead of replacing tools and spare parts, Synovos has delivered 60% cost savings to the client, compared to the purchasing of new parts, in the year the initiative has been in place, adding still more value to the overall program.
An example involved a failed valve on one of the company’s production lines. Full replacement with a new unit would ding the budget at $4,345. But, an evaluation of the part and a better understanding of why it failed, unveiled that the failure was not catastrophic. Instead, it cost $1,053 to repair, bringing a 76% savings.
Over time, the site team, working closely with the client, set a minimum threshold of 53% savings. Meaning only repairs earning that minimum savings would be approved.
An added benefit to the repair program is the additional warrantee earned in the process. In some cases, the failed part may be covered by initial warranty which is then extend when the repair is made, driving still further savings.