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Where Maintenance and Supply Chain meet to form Integrated Asset Management

Work Execution Management planning and Condition Based Maintenance are getting a lot of attention these days – as well they should. Leveraging the data from “Internet of Things” sensors on equipment, combined with artificial intelligence has created ideal conditions to focus on what will or may happen rather than firefighting machine failures.  It has never been easier to establish failure modes before they manifest as downtime.

So, a good maintenance strategy lays out when mandatory and preventive maintenance will be scheduled, suggests how resources should be deployed to identify failure modes and how quickly interventions must be taken to maintain uptime.

Ensuring that strategy is attainable means having the craft skills, required tools, and asset availability to execute planned work in a timely manner. It also means having the right parts and supplies available.

This is where maintenance meets supply chain, and Integrated Asset Management is born.

Just getting the right parts and supplies where and when they are needed is a bit more complicated than it sounds…

  • The parts and supplies must be clearly identified and described so they can be found – in the workshop, in the warehouse, and/or at the supplier(s)’ facilities.
  • Parts and components must be stored in a way they will not disappear, deteriorate or be damaged, yet can be easily issued.
  • Inventories must be deployed close enough to point of use to be available when required, yet managed centrally to minimize administration costs and leverage stocking synergies across the operation.
  • Deliveries must be as inexpensive as possible while still getting supply where and when it is required.
  • Prices and costs must be predictable and as low as possible to drive longer asset life with low cost of ownership.

Not so long ago, many companies would design their own solutions to these challenges. They would build maintenance shops with warehouses, fill them with highly trained and equipped technicians, tools, testing equipment, and inventories.  Arms length relationships with equipment suppliers drove them to buy the recommended critical spares, and subsequent OEM parts to maintain their warranties. They worked with specialized distributors for consumables and other parts. They managed their own inventories, how and when deliveries would occur, and incurred extra costs when expedited deliveries were required. They leveraged their buying power with each of these players, who built extra profit into the prices that they could “give back” in power-based negotiations. The ensuing ecosystems were nicely profitable despite high inventories and material handling costs.

A New Deal?

New operating models are driving a greater service component into OEM and distributor capabilities. Inventory is being consigned (paid for only when actually used) or being held further up the supply chain where several customers can be protected with the same slow-moving critical parts and modules. Parts and supplies are being kitted to each major maintenance task, then sent back to be topped up. On-site storerooms are being staffed by distributor personnel. Repair shops are being staffed by OEM technicians. New commercial models are emerging where customers only pay for equipment when it is available (Maintenance and Repair Contracts – MARC – or “Power-by-the-hour” made famous by Rolls-Royce aviation engines).

These new models dramatically change the nature of the commercial relationship, through far more complex sharing of tasks, responsibilities and risks. Both Maintenance and Supply Chain Managers must adapt to these new realties. The regimes of “I decide and tell you what to do” are no longer effective.

In Summary

As we advance Maintenance Practices, leveraging advances in technology and thinking, so must we change the way we think about the supporting supply chain.  The role played by suppliers and the terms of engagement we employ will play an increasingly important role in determining the success of our Integrated Asset Management Strategy. Getting things done through independent third parties will be the subject of our next post.

Have you had any experience developing or implementing new commercial Models in Integrated Asset Management?

Please drop me a line and tell me about what you have learned!


About the Author:

Nicholas Seiersen has over 40 years of practical experience specializing in Supply Chain Management with particular focus in Strategic Sourcing, Supply Chain Planning, Logistics, and durably removing costs out of the total supply chain.

He has provided improved performance across many industry sectors including: Government, Consumer, Retail, Metals & Mining, Energy, Transportation, High Technology and Diversified Industrials.

Nicholas has authored or co-authored almost 50 publications, including the 2017 book “Le Bon Accord Avec Le Bon Fournisseur” and is highly active as professional speaker. Nick resides in Toronto, Ontario Canada.

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