UK automotive manufacturer

Challenge

To establish a fully integrated supply solution for the client's industrial (MRO) materials.

Objectives

The challenge was multi layered.

  • Provide a uniform approach across a number of geographical locations.
  • Improve overall efficiency of stock delivery by reducing lead times without increasing inventory levels.
  • Reduce expenditure on materials through competitive tender.
  • Reduce overall material cost bill.
  • Introduce a new ICT solution to replace outdated legacy system.
  • Introduce common numbering practice across plants to support materials rationalisation.
  • Introduce an 'off site' solution which would work across all locations.

Solution

The objectives provided the challenge to IESA of producing standard processes, procedures and common training for over 32,000 users across a number of geographical locations.

The following were solutions we put in place to deliver the cost savings and process benefits into their manufacturing business.

  • Reducing lead times – we drove lead times down from an average of five days to just one day, meaning that most users received stock on the same day they requested it.
  • Stock levels – stock levels remained the same despite a 25% increase in MRO consumption – this was a real term reduction in stock levels.
  • Stores process improvements – by installing our bespoke system and streamlining stores processes throughout the business we provided a more efficient system for ordering and removed the incentive for suppliers to sell in additional, unwanted product lines.
  • Reduction of material costs – by working with and challenging existing suppliers we realised over £500,000 of savings in the first year of the service.
  • Introduction of an ERP system to manage transactions – by utilising the benefits of SAP for all key transactions and SAP data maintenance we removed purchase orders and invoicing from the client and moved to dynamic stock management resulting in huge cost and time savings.
  • Streamlined ordering authorising process – by taking advantage of a new cloud based platform we were able to completely redefine ordering authorisation and save over £650,000.
  • Reduced stock levels – to avoid stock creep a list of core products was set up with a common numbering protocol. With IESA as gatekeeper we helped the client avoid approximately £250,000 of additional year on year working capital cost.
  • Off-site location – IESA established an off-site facility directly adjacent to one of the main operations to support the MRO requirements of all sites. It now provides continuous delivery of over 15,000 products on a 24 hour basis.

Benefits

The scope of the project was such that the success would be measured against the following KPIs.

  • Process 220,000 stock purchase order lines.
  • Process 50,000 ad hoc order lines.
  • Over a quarter of a million total purchase orders.
  • Process 75,000 invoices.
  • The client receives one invoice per month.
  • 957 vendors consolidated into one.
  • 99% of stock available 24/7/365.
  • Over 3,000 users trained and provided with system access.

Having achieved these KPIs we were able to demonstrate the following benefits -

  • Over £500,000 product cost saving per year.
  • Over £650,000 of authorisation process savings per year.
  • Over £250,000 inventory are pay on use.
  • Over 40% savings on stores running cost.