Right tool, right materials, right time, and right place saves companies 20% of overall costs - DHL

DHL, the global leader in integrated energy logistics, has identified key steps that can be taken by companies to re-design their maintenance, repair and operations (MRO) supply chain, in order to achieve 20% cost savings and ultimately create competitive advantage.

In the first of a series of leadership webcasts, experts from DHL’s energy sector discussed the challenges and opportunities that exist around MRO supply chains. Mark Johnson, Head of Global Energy Sector, and Jonathan Shortis, Vice President, Global Energy Development for DHL Supply Chain, discussed how in today’s economic climate an increasing number of energy businesses are looking at optimisation and cost reduction.

Within today’s increasingly tough business environment, efficient utilisation of labour, infrastructure and equipment is critical to the maintenance and operation of existing facilities across the energy industry. Whether operating an oil refinery or petrochemicals plant, managing a drilling operation on-shore or off-shore, mining, generating or distributing power, businesses cannot make the most of internal resources unless they can efficiently and consistently supply them with the right materials at the right time.

Showcasing the right tool, right material, right time, right place principle, the DHL experts explained ways in which companies can maximise their plant output, their maintenance productivity and their cost savings whilst improving plant and team safety and security.

Looking at the traditional supply chain model, Shortis explained the current complexities and maintenance challenges faced by many energy companies, which ultimately reduce manageability and increases costs.

This was followed by insight into how best-in-class organisations are re-designing their supply chains to enable significant improvements within the MRO supply chain.

Highlighting the importance of this, independent research by the Aberdeen Group has shown that MRO accounts for up to 16% of the cost of goods sold but 62% of total requisitions and that the top performers in MRO spend management programmes achieving close to 20% reductions.  With its global scale and energy expertise, DHL’s Maintenance, Repair & Operations (MRO) team understand how to achieve a streamlined and optimised supply chain.

 Presenting the new model, Johnson looked at the principles behind a re-design of the MRO supply chain and the three broad steps that can be taken to dramatically change the supply chain set up to a much more manageable and efficient system.

Offering examples Shortis highlighted the benefits that can be gained from this model, such as the implementation of efficient and streamlined supply chain solutions, improvement of plant congestion and inventory accuracy, decreasing overhead costs, as well as improvements in safety and CO2 emissions:

 “These benefits will vary, of course, from plant to plant. But just to put some benchmark figures on these gains, from our experience we’ve seen transport costs, warehousing costs and inventory values all decrease by around 25% following this kind of reorganisation and from consolidating and standardising products to reduce procurement cost, savings in the range of 10-20% are typical.”

By improving engineering effectiveness and increasing plant productivity, companies will ultimately derive the long term benefits of right tool, right material, right place, right time, developing a much more stable model of productivity whilst increasing plant availability and consequently production levels.