Parts storeroom helps hone competitive edge
Staff -- Purchasing, 3/6/2003 2:00:00 AM
Fast. Efficient. Capable of satisfying such tough customers as Coca-Cola and Anheuser Busch. The process used to produce aluminum cans at Rexam Beverage Can Americas, Chicago, is considered by many to be world class. To achieve high levels of operational efficiency (a plant is capable of producing several million cans in a day), the company has successfully embraced such industry best practices as Six Sigma, lean manufacturing, ISO 9001, and JIT.
The beverage can manufacturing business is competitive; opportunities to reduce costs include the aluminum used in the production process, machinery used to produce the cans and the spare parts and other supplies used to maintain the equipment.
"Usually an afterthought at many companies, MRO is critical to our business," says Jim Mayer, manager, supply chain operations and customer service, Rexam BCA, Chicago. "We believe we have an impact on the company's cash flow, efficiency and ability to satisfy customers."
Implementation of SAP R/3 (enterprise resource planning software) and its predictive maintenance module revealed inefficiencies in the company's storeroom. Working with its MRO supplier, the supply chain operation reorganized the storerooms at each of the company's 17 can- and end-producing plants in North America. The effort has helped to lower inventory levels of MRO supplies at the plants by 30%, significantly reducing internal costs.
"We need suppliers who can deliver and be innovative with us," says Mayer of the growing role of the relationship Rexam BCA has with its MRO supplier, Motion Industries, Birmingham, Ala. "This is a good example of strategic partnership."
Simply put, the storerooms are now operated like a supermarket. SAP software provided capability of using barcode technology to address inefficiencies. All parts in the storeroom are bar coded; each part is associated with certain equipment. (Preventive maintenance software helps determine timing of machine upkeep; a bill of materials identifies each part used to maintain the equipment.)
All Rexam BCA personnel use badges that function as "credit cards" for acquiring items from the storeroom. When an operator on a production line needs a part, the computer shows exactly what part is needed and where it will be found in the storeroom. When the barcode is scanned and a part removed from the storeroom, the system automatically reorders the part. To trigger inventory procurement, Rexam BCA relies on just-in-time deliveries and predictive maintenance projections. Downtime is not an option at the plants that run 24 hours a day, seven days a week.
The first newly designed spare parts storeroom is in Rexam BCA's plant in Fremont, Ohio. Next, the company worked with Motion Industries on the storeroom at a plant in Chicago. By the end of 2002, all 17 plants had model storerooms up and running.
Considered a strategic supplier (who is critical to the process, a designation Rexam BCA typically reserves for select suppliers), Motion Industries assists the supply chain operation with such efforts as product substitution (including buyback of obsolete inventory), identifying duplicate inventory in a drive toward product standardization, and consolidating inventory (helping to identify critical spares to reduce downtime). One indication of the importance of the relationship: Executives of both companies communicate often and have met at the distributor's headquarters in Birmingham.
Motion Industries assisted with consolidating the motor inventory at Rexam BCA's Chicago, Ill., plant. Working with employees at the plant, the supplier helped to reduce motor inventory by 77%, cutting costs associated with managing it. It now manages the company's motor inventory through a vendor managed inventory (VMI) program. "Based on its expertise and experience working with its motor suppliers, Motion is able, in many cases, to determine our needs before we do," says Mayer.
At other Rexam BCA plants located throughout North America, the relationship with Motion Industries has been equally successful. The supplier has assisted in product substitution (belt drives) and other standardization efforts (of hoses, in addition to motors), further lowering inventory levels and reducing equipment downtime.
Meanwhile, Rexam BCA developed and installed at each plant an Internet portal for internal customers that provides real-time information they need to do their jobs.
Created on the company's Web site, the portal is linked to SAP R/3 and contains reports and other electronic documents. Its use is expected to help improve internal processes through standardization and by unifying multiple order entry systems. It will help to reduce time spent on paperwork and to optimize inventory levels.
Through the portal, users have access to the supplier Web sites—such as Motion Industries' e-commerce site, MotionMRO.com—to place orders, obtain pricing, and check shipments, etc. At the same time, the supplier may view Rexam BCA open orders, payment status and inventory levels. Because of the new spare parts storeroom and other initiatives, data accessed through the portal is considered by the company to have a high rate of accuracy.
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