What is it?
New machines, work centers, lines and equipment are put into commission all the time. Many companies have clear, well documented processes to manage these events – conceptual design through “ready to operate”. Identification of required spare parts is always part of the process but is typically the last step when both time and budget are in scarce supply.
Faced with these dual pressures, companies typically just adopt the manufacturers recommended parts list and move on to more pressing concerns. This however is where the problem starts. A general rule of thumb: only about 30% of these items, now in inventory and aging, will ever be issued– representing an immediate obsolescence risk and impairment to working capital from day one. But what if you did need the part one day? Can a part that has been held in stores for in excess of 3 years be expected to perform?
Chances are you are introducing some form of operational risk that might have otherwise been avoided if the part had simply been purchased closer to time of use. For these reasons, and many more, Xtivity have developed a structured approach to Asset Provisioning that helps our clients work through these important stocking decisions – maximizing capital effectiveness while minimizing operating risk.
Making informed decisions regarding asset provisioning requires the consideration of variables, a few of which are:
Doing this right is a data intensive exercise that must be supported by a robust methodology that has the buy in of all functional stakeholders. Through a combination of our proprietary software and domain expertise, we have developed a proven approach that can efficiently resolve the tradeoffs required to establish a robust stocking strategy.
- Improve Stocking Recommendations – more of what you need to support ongoing operations, less of what you don’t
- Reduce Obsolescence Risk – the best way to avoid obsolescence is to ensure what is added to inventory is going to be used.
- Working Capital Effectiveness – our clients are often able to significantly reduce committed capital through the employment of our approach but even if the net amount remains the same, confidence that it is invested where it matters most is greatly improved.