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Public Service Organisations
Cutting Business & Operational Costs
Calculate my potential savings

 

Cutting Business and Operational Costs

 

“There’s Gold in Them Thar Stores”

How much money do you think your business has tied up in mro (maintenance, repair and operational inventory)? Most companies don’t know and are surprised to find that they have funds approaching 2%-5% of annual sales tied up in spare parts and other MRO inventory. That’s not all, a good deal of this inventory is never ever used, it sits on shelves for years and may stay there until long after the process it was stocked for has been superseded!

MRO inventory its Just In Case

Maintenance, repair and operational inventory is largely insurance; it provides a warm comfortable feeling for maintenance and operational people who have spares on the shelf “just in case” something happens. “When we bought the process we bought the full complement of spare parts,” is the usual response to the question “Why do we have so much spare part inventory for this plant?” Show me, how much I will save?

Stagnant Stock

What inventory turns are you getting on your MRO inventory? How many stock turns are you getting per year? Or to put it another way how effectively is the company’s money being used in this area? The answer is usually not very efficiently! Most companies are averaging less than 1 inventory turn per annum on this stock, many endure 1 inventory turn every 6 years or so. Thus the majority of this stock aka “Your Company’s Money” is sitting on shelves for years doing very little for your bottom line.

It’s the same the whole World Over

Don’t be too downhearted at this pernicious waste of company resources—It’s the same the world over. Engineering and Maintenance personnel faced with the requirement to improve service levels—have increased safety stock levels. Consequently in recent years MRO safety stock levels have increased by 30% to meet the hike in service level requirements. There was nothing else that could be done! — (The requirement for greater uptime—higher operational equipment effectiveness (OEE’s) determined increased inventory support stocks).That is Until Now!

What’s Changed?

The Internet has changed this situation a wired global economy means that your inventory data can be virtually pooled with other businesses and organisations in your locality and region to determine more efficient safety stock holdings, and thus save you and your business neighbours money on spare parts and inventory that you hold in common.  Show me, how much I will save?

Safety Stock (Inventory as Insurance)

Safety stock is the stock held in case of variability in demand or supply. Your supplier may have a temporary manufacturing problem and deliver spare parts and components late. Alternatively your process may experience a succession of unexpected failures of the same component. Both these situations can result in an out of stock failure. Safety stock is the stock that you hold to buffer against these occurrences. Figure1 shows a component inventory graph buffeted by the occasional late delivery or the exceptional use of stock.

Figure1

However, safety stock is only rarely used. In the example above, on only two occurrences has the inventory level fallen below the safety stock margin, yet business is burdened by the cost of maintaining rarely used safety stock, year on year. Cut the cost of this insurance by virtually pooling your inventory data with other local businesses and you can all cut safety stock levels. The more local businesses that pool their inventory data the greater the potential savings. brite-sparks examines the commonality of inventory and spare parts holdings within the pool and recasts safety stock levels—If you do suffer a succession of exceptional component failures we put you in touch with the nearest pooling member who has a surplus of these components. Figure 2 depicts the variety of supply and demand within a pooling group illustrating that despite all participants lowering their safety stock levels the diversity in usage and replenishment rates within the pool ensures that sufficient stock is on hand to meet any eventuality. Show me, how much I will save?

Figure2

The Nuts and Bolts

brite-sparks examines your spare parts and inventory data on a weekly basis — we provide secure automatic uploads of your data to determine usage rates and stock usage profiles. These profiles are compared with other businesses and organisations holding similar stock to determine new reduced safety stock levels.We also examine differences in inventory and spare part usage rates from one organisation and business to another to determine why some businesses are able to wring longer life cycles out of their inventory than the others! We invite these top performing businesses and organisations to share their secrets for success with the rest of us.

What Can I Save?

Lets take a local example to illustrate the savings, one drawn from our local fire service (not an obvious example but one that will highlight the magnitude of the savings that public utilities as well as businesses can achieve). 

The Nottinghamshire Fire Brigade has oxygen resuscitation equipment within all of its fire tenders; to equip these vehicles and to cover a potential disaster the Nottinghamshire Brigade maintains a maximum stock level of £25,000 sitting within a central store. This stock is allowed to reduce to approx £7000 before a replenishment order is processed. A safety stock level of £5000 is always maintained. However, within a 30mile radius of Nottingham lies Derbyshire, Leicestershire and Lincolnshire Fire Brigades all stocking identical oxygen masks in similar quantities, in addition Police, Ambulance and Hospital services in these localities hold identical supplies. Virtually pooling this one stock item from these organisations would results in a stock saving of £18,000

Take the savings test

The savings test demonstrates the level of annual savings you should realise through brite-sparks membership—The example looks at a typical medium sized N.American factory with MRO and spare parts inventory totalling $1,000,000 and examines the range of savings that can be accrued. A one off saving of $60,000 dollars is realised through the sales of surplus inventory. Recurring savings of $113,800 dollars annually are forecast for this facility through its use of brite-sparks pooling and online manufacturing support services. Pooling can be either through closed – single company or invited partner arrangement or open with local and regional businesses virtually pooling their inventories. Take the test yourself enter in your ROM (rough order of magnitude) estimates of inventory and downtime levels "click anywhere in the window " and see the savings you should realise.

MRO Inventory Pooling
What is your best monetary guess on the value of your current spare parts and consumable Inventory?  $  
What percentage of your inventory is unique to your organisation?    Typically 20%
What percentage of your inventory is surplus or redundant?    Typically 10%
What is your best guess on the annual cost of storing this inventory?    Typically 15% 
What typical ROM safety stock level is applied to your stock?    Typically 5%-10%
What percentage interest are you paying on borrowings?   Typically 10%

Value of surplus Inventory 

$  

Cost of storing surplus inventory 

$  
Downtime Reduction
What is your total annual production downtime in hours?    
What is your annual production downtime due to spare parts stockouts in hours?    
What percentage reduction in production downtime do you anticipate through on-line experts?    Typically 10%
What percentage reduction in production downtime do you anticipate through spare parts pooling?   Typically 10%
What percentage reduction in downtime do you anticipate through Manufacturing Intelligence ?   Typically 5%
What is your hourly rate for production downtime. $  

Annual Downtime Savings Hours

   

Annual Monetary Value of Downtime Savings

$  
Potential Benefits of Pooling Inventory and Purchasing
What is the annual spend on MRO Procurement? $  
Given the quality of your surplus inventory what percentage of the initial cost will you realise at sale ?   Typically 60%
What is your projected reduction in safety stock levels resulting from brite-sparks pooling?   Typically 50%
What is your projected reduction in overall stock levels resulting from brite-sparks Pooling    Typically 2%-30%
Aggregate Procurement cost reduction (10%) $  
Income from sale of surplus inventory $  
Total recurring Savings $  
Savings through safety stock reduction $  
Savings through reduction in overall stock levels $  

 

Not Organised Enough to Benefit?

Afraid that although there are significant savings to be had, you’re not sufficiently organised to make use of the opportunity? Many companies feel that they are not Internet literate enough or that their stores organisations are so disordered that they could never benefit from our services. Fear not we take you by the hand and guide you gently into this new digital world; we are with you every step of the way to get you and your business into shape to benefit from this new digital economy

  • First get your spare parts inventory together.

  • Declare an Amnesty and get all the stock in.

  • Next get a handle on your inventory by counting a little bit each day.

  • Count intelligently; count stock when it’s at its minimum, or when you’re out of stock.

  • Reconcile any differences and FIX THE CAUSE OF THE DISPARITY.

  • Enter the details, manufacturer, part number, quantity, location etc. into a database

  •  A sample program can be downloaded from the Brite-sparks site. 

These data will be automatically uploaded to brite-sparks and we can make a start on assessing your holding and usage profiles to effect savings.

Concerned about Business Confidentiality

We treat your data with the strictest confidence and will not sell or share it with any third parties. Your manufacturing capacities, spare parts usage rates and other business metrics are never divulged to others. The data you supply to us is sacrosanct.

Concerned about your systems security

The upload of your data is a one-way street; your system periodically sends us a file. The traffic is one way from you to us – After examining your data we send an email response suggesting appropriate inventory reductions. 

brite-sparks Services in a Nutshell

  • Smart Risk Free inventory reductions tuned to your business needs

  • brite-sparks E-procurement collaborate with others to secure purchase savings 

  • World class Manufacturing and Business Consultancy services

  • Around the Clock manufacturing support services

  • Commission free access to brite-sparks Sales and Auctions rooms

  • “Fetch a Spare”: brite-sparks Global spare part location and transportation service in partnership with DHL.

  • brite-sparks Knowledgebase user’s experience of suppliers, vendors components etc. 

We’re here for the long term

brite-sparks is a second wave Internet Company. We are here for the long term. Our strategy is simple and straightforward we will provide reliable, efficient, robust and affordable pooling and e-commerce Internet services based on first class technology. Our company is built on an unrivalled blend of old time engineering and business experience combined with some of the best talent on the Internet. We stand by our products with a money back guarantee that ensures that if you use the service and do not save at least your subscription fee within one year we will refund your subscription fee in full. No quibbles no caveats, our word is our bond.  Show me, how much I will save?

brite-sparks Unconditional Guarantee

We will save expenditures at least equal to your subscription fee or your Money Back! We are so confident of our ability to deliver outstanding value that we offer this exceptional money back guarantee. Try us for a year and if not delighted we will refund your money in full. 

A totally risk free Opportunity

What more reassurance do you need, we are providing a totally risk free opportunity to trial brite-sparks services at the special introductory price of £1000 per site. If we fail to save your business funds in excess of this subscription fee we will refund your payment in full.  Sign up now!

Joe Rice CEO brite-sparks.Com

 Joseph.rice@brite-sparks.com

Call me to discuss these service Monday – Friday 9am-5 pm GMT on +44(0)115 9061200