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Stocks and Spares Through the Internet
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Stocks and Spares Through the InternetArticle courtesy of : sparesFinder.net What do you do when a vital piece of equipment goes down, and takes an important production line with it? The first thing is to look in the stores for a replacement. Wasn't there a plan we all agreed last year to keep stocks of some vital spares up to pre-determined levels? If everyone is doing their job, you can simply pick out the replacement part and replace the failed one. But life isn't always that simple. There was an error in the last order; the wrong item was delivered, and it hasn't been put right yet. Or the stores is out of the spare you want and for some reason the re-ordering system hasn't kicked in. So what's the next port of call? Your supplier, of course. Well, they reply, we can get one, but it has to come from Timbuktu and it will be delivered here on Thursday week. Not much good if your production line is crippled and you are losing £10,000 a day. So you ring a mate at the site down the road to see whether, by chance, he has a spare one. And after him you try another, and so on until you find what you need. Collaboration is the wayThere's nothing new in getting spare parts from a friend. Engineers have been helping each other for a long time, regardless of the company, by responding to a cry for help and passing a vital spare through the fence. But now there is a very efficient way to do it, using the Internet. This is how it works: first you get the company to allow you to log on. Then, if you're over 45, you swallow your fear. From this point on it gets easier. Suppose that you are a subscriber to the web site of sparesFinder.net. You call up www.sparesFinder.net, tap in your password and search its database for the part you need. It takes a minute or so. Then you are able to look electronically at your own stores holdings, at those of your supplier and also - and this is the exciting bit - at the surplus inventories of all other operating companies subscribing to the sparesFinder.net system. That is a huge pool to which you never had access to before, and increases enormously your chances of finding what you want. sparesFinder.net's scheme is the kind officially encouraged by the UK Government. "Facilitate industry-wide projects to substitute collaboration for competition where there is no logical basis for competing." Those are the words of UK Energy Minister Helen Liddell late last year and aimed at the oil and gas industry. But they could well apply to any other industrial sector. Making it easierUsing an Internet database is all very different from making telephone calls one by one. A single call gives you a list of, say, the nearest ten locations holding the part you want. There are contact details; all you have to do is ring and negotiate. The list isn't just a catalogue, because each item is a real entry in someone's inventory. Of course, you can use the Internet in other ways to find spare parts. You can probably contact your normal supplier that way. But in doing so you will be following the traditional "vertical supply chain" from manufacturer of the spare part through supplier to end-user, you. The sparesFinder.net system is different because it links users horizontally, and so provides that huge pool to search in (see Figure 1). Or you could buy through an e-auction; the problem there is that you want the part now, and the auction follows its own timetable.
Becoming a heroThere is another interesting advantage in horizontal linking. Most operators keep plenty of spares just in case; it's expensive to buy them and keep them, so accountants are always pressing for the numbers to be reduced. If you are sourcing spare parts through a system which makes you confident you can locate the spare you need when you need it, you can gratify the accountants and reduce stock levels of spares. Valuable working capital is freed. Spares inventories on a large site run into tens of millions of pounds, and the annual cost of storing them is at least 20% of inventory value. Taking stock levels down by a few percent should save enough money to make you an instant hero with management. Figure 2 shows how spares stocks can be rationalised.
And what about the spares that you are never going to need, because they are obsolete, or you've dispensed with the equipment which they fitted? This Internet system provides a forum for disposing of such surpluses. Instead of paying the disposal people to take them away, someone pays you and collects at their expense. In addition to making visible those spares which are actually available, spareFinder.com's Trade Centre acts as a spur to the disposal and sourcing system. The sparesFinder.net system provides software which gathers information from spare parts inventories. It is quite a simple business, usually taking no more than half a day. With firewalls, and the flow of information being one way - outwards - the software has no effect on your internal systems. And it is compatible with major management information systems. Figure 3 shows the whole system.
Who's doing whatMany major industrial companies, contractors and suppliers are either using the service or looking seriously at it. In oil and gas, operators such as Shell, Mobil and Agip are on board. On-shore, BP Amoco, Texaco and Sasol are subscribing from countries as far apart as New Zealand, South Africa and the UK. In chemicals, Du Pont has signed up five European sites and contractors AMEC and Foster Wheeler are using the service to deliver management value to customers. Names from the power sector using the system include TXU and Transalta, while Enron, Dynergy and Reliant are very enthusiastic. In mining, Anglo Gold was one of the first in, while BHP, De Beers and Rio Tinto are evaluating how the service can best be implemented across their organisations. In summary, the sparesFinder.net service is being used in 14 countries and currently offers a virtual pool of over 7 million industrial parts. More information from sparesFinder.net on +44 208 789 9222 or from the web site.
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