Inventory management is crucial to the day-to-day management of an asset-intensive business. Companies across asset-intensive industries like Oil & Gas, energy power & distribution, mining & extraction and engineering, regularly experience inventory discrepancy problems particularly when inventory data is entered manually or isn’t controlled centrally.
Incorrect inventory management can seriously affect day to day operations and the bottom line – with needless purchase and storage costs. You also run the risk of running short on items essential for the running of your business and experiencing downtime as you wait for a key part.
The critical challenges for inventory management
- Strategic spare parts ordering
When pumps and other essential equipment break down, they need replacing asap. There’s a long lead time for these – with weeks or several months for ordering. If you don’t order and store vital spare parts well in advance, the site could experience losses from downtime.
- Incorrect purchasing decisions
Having no central, comprehensive, real-time inventory reporting can lead to vast sums of money being spent needlessly to buy machinery or materials that you already own but have housed at a different site or in the wrong location in your warehouses.
- Managing Shelf Lives
If high volume raw materials such as chemicals are left languishing in storage, they can often deteriorate and not be fit for use. With such a short shelf-life, some chemicals need to be ordered almost on demand, which is usually something that manual inventory management cannot keep up with.
- Personal safety requirements
PPE – personal protective equipment has a continual ordering requirement. Checking condition of stock required for workers safety is essential for the security of your workforce. These items need to be ordered in advance, safely stored, and the stock kept topped up to ensure that your businesses safety levels are optimum.
- Vendor Managed Inventory (VMI) and Consignment
For costly equipment or high-volume orders, you may prefer the vendors to hold stock on your behalf, and they send to you when needed, this is called Vendor Managed Inventory or VMI. You can also purchase equipment on consignment, whereby you own the stock, but it’s kept at another third-party facility, and you pay for it once you need to use it. These two options can keep costs low, but you might just be transferring the cost of storage over to the supplier and still pay for it through their premium service. Some businesses are using a combination of VMI, consignment and their own warehousing facilities to juggle stock storage – so you will need an optimised inventory reporting solution to see everything that you own.
- Obsolete technology
Technology is constantly changing; some of your equipment can go out of date quickly. You will need to ensure that there is enough lead time to take immediate advantage of new industry innovations as well as keeping an eye on technology that will benefit you in the months/years to come.
- Climate complications
In hot countries like Africa, the deterioration can be a lot quicker for your spare parts and your chemicals. Lead times for like-for-like replacements in Africa are massive as parts often need to be ordered from international suppliers in the US, Japan or EU. It can take months to receive a part – long term strategising and predictions on what your site will need are essential to keep things running smoothly.
With all these challenges, the threat of production loss is that much higher when there’s manual or partly manual inventory management. Keeping individual tallies of your inventory at various sites can lead to confusion and ordering issues.
Intelligent, automated systems can prepare for inventory problems and plan ahead of time, to ensure less downtime is experienced across the business.
Working smarter with Progressive – Infor EAM and Maximo
If you’re looking for best-of-breed Inventory Management or EAM (Enterprise Asset Management) systems tailored to your sector that integrates both finance, maintenance and warehouse departments – all in one easy to control solution – Progressive TSL recommends implementing IBM Maximo or Infor EAM. Both of these solutions are leaders in the Gartner EAM Magic Quadrant for their solution’s ability to execute and the completeness of its vision.
These multi-faceted systems offer you full visibility of your supply chain, including your inventory.
Some of the key benefits for these all-in-one approaches are:
- Easy to search inventory – full view of all stock across all locations
- Material Replenishment Processing (MRP) – the automated ordering of critical spares and reducing unnecessary manual ordering and waiting at a time when you need it.
- Single, real-time view of assets – so that you can make better decisions on purchases and use of your storage.
- Fully scalable and highly adaptable to workflows – as your business grows or changes, so will the solution.
- Makes use of handheld technology – to give on-the-ground tagging and reporting – including handheld barcode scanners and reporting functionality.
- Track and manage all assets – complete access to all your assets means that you can maintain what you have while quickly purchasing anything else that your business requires. You can also see how much time is spent repairing certain assets to decide on updates or upgrades to equipment.
Providing the Sparrows group with a better financial picture using Infor EAM
Sparrows group came to Progressive TSL with a business need for a fully operational Purchase to Pay solution. Including inventory, contracts and tender management and workflow issues. They had problems with their existing inventory systems which were mostly manual and relying on spreadsheets, meaning that sometimes there were multiple versions of the truth.
We consulted with the Sparrows Group, and we recommended that they implement Infor EAM using Progressive TSL’s best-practice framework.
The Progressive TSL solution offered Sparrows group:
- Efficiency savings through automating their time-intensive manual processes
- True visibility with auditable workflow and a single version of the truth
- Better purchasing decisions
- Reduced approval cycles for operational and financial approvals
- Improved data security
- Mobile access to the system via any device
- A proven solution that could be rolled out across the global Sparrows Group
If you are struggling to keep your inventory management accurate and up to date, contact us, to discuss a solution using IBM Maximo or Infor EAM that best fits in with your working practices and finance infrastructure.