Addressing the

Challenges of an

Extended Supply Chain

Your Speakers Today

Don Valentine, Operations Director – Absoft

Limited

3

Today’s Agenda

Introduction to Absoft

Extended Supply Chain - definition

Foundations of an efficient Extended Supply Chain

Determining the criticality of goods

Stocking strategy

Sourcing strategy (supplier performance)

Returns management strategy

Integrated system strategy

Real World

Actionable workbenches/analytics

Q&A

Addressing the

Challenges of an

Extended Supply

Chain

4

Who is Absoft?

We design, build, test, deploy, support and

optimise SAP solutions

20 years oil & gas industry experience

Specialist SAP Consultancy

SAP UK’s Oil & Gas Partner

Global turnkey project capability Absoft has deployed SAP into 39

countries worldwide…

• EUROPE

• MIDDLE EAST

• AMERICAS

• AFRICA

• ASIA

5

Extended Supply Chain - Definition

Local & Global suppliers

& customers

Internal “Suppliers” and

”Customers”

Global

transportation

Challenging environments

(Onshore, Offshore, International)

Multi-lingual,

Multi-national,

Multi-currency

6

Extended Supply Chain - Definition

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

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Extended Supply Chain - Definition

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Which materials should I

hold where ? – offshore,

local hub regional hub

How do I achieve the right

stocking policies and right

level of inventory holdings ?

What strategic

relationships do I need to

form with my

international/local service

providers/vendors ?

How do I achieve

transparency in the ESC

and provide the right

information to the right

people to support them in

making good decisions ?

How do I track returns –

lack of process is messing

up my inventory accuracy ?

8

Foundations

Lay the Foundations

Determining the criticality of Goods

Stocking Strategy

Sourcing/Expediting Strategy

Returns Strategy

Integrated System Strategy

9

Foundation - Criticality

Know what equipments are critical

Introduce a ranking

Critical Equipment

Critical Maintenance Activities

Where-used Maintenance plans

Where-used Spare part BOMs

Defines importance of stock

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Foundation – Equipment Criticality

Impact of failure

Probability of failure

Very likely

Likely

24 hours 7 days 1 month

7 days 1 month 3 months

1 month

6 months

Serious injuries

Minor injuries

Slight injuries

No injuries

Major impact

Minor impact

Slight impact

No impact

Plant shutdown

Process shutdown

Equipment shutdown

No impact

Not likely

3 months

3 months

6 months

6 months

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Foundation - Criticality

Impact of failure

Probability of failure

Very likely

Likely

24 hours 7 days 1 month

7 days 1 month 3 months

1 month

6 months

Serious injuries

Minor injuries

Slight injuries

No injuries

Major impact

Minor impact

Slight impact

No impact

Plant shutdown

Process shutdown

Equipment

shutdown

No impact

Not likely

3 months

3 months

6 months

6 months

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Foundation - Criticality

Maintenance Activity D

efine c

riticalit

y

for

Master data effort

Equipments

Maint. plans

BOMs

Classify critical

equipments

Classify critical

activities

Maint.plan where

used?

BOM

where used?Component stock

param.

Critical spare

s x

-

refe

rence lis

t

Package 3

Package 2

Package 1

t1 6 12 18 24

13

Foundation - Criticality

Know what equipments are critical

Introduce a ranking

Critical Equipment

Critical Maintenance Activities

Where-used Maintenance plans

Where-used Spare part BOMs

Defines importance of stock

14

Extended Supply Chain - Context

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Critical materials

identified and held in

the appropriate

locations

24 hours

7 days

1 month

>3 months

15

Stocking Strategy – Conclusion

Define stocking strategy with relevant KPIs

Introduce adjusted performance reports

Measure stock control KPIs

Prioritise by ranking – given by maintenance

Make educated decisions

Adjust stocking strategy and min/max accordingly

ABCD

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Foundation – Stocking Strategy

ABC(D) classification

B – middle 15%

demand value

A – top 80% demand

value

+ Critical spare

+ High value

C – bottom 5% value

D – no usage

Promotion –

Long Lead /

Scarcity

B – middle 15%

of all materials

A – Top 5%

C – bottom 80%

of all materials

D – no usage Demand <= 0

ABC – Analyse demand value over

last 12 months, then sort top-down

Demand Value Stock Catalogue

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Foundation – Stocking Strategy

Stock KPIs

Criticality

High Value

SLA’s

ABCD Classification

Stocking

Policy

Replenishment

Parms

Inventory

Count Parms

Dead

Stock

Lead

Times

…..

Focus

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Stocking Strategy – Conclusion

Define stocking strategy with relevant KPIs

Introduce adjusted performance reports

Measure stock control KPIs

Prioritise by ranking – given by maintenance

Make educated decisions

Adjust stocking strategy and min/max accordingly

20

Extended Supply Chain - Context

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Critical materials

identified and held in

the appropriate

locations

Stock or Non-stock

policy set –

replenishment and

inventory

management

parameters

established for

materials at locations

21

Foundation – Sourcing Strategy

Sourcing in the international extended Supply Chain can be

interesting !

Local

Local specifics - tax, local content, payment methods…..

Currency

People

Local reporting

Local Costs

International

Freight Costs + Import taxes

Customs

Collaboration with F/F, Customs, Customs clearance agencies…

Lead Times

Visibility of goods status

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Foundation – Supplier Performance/Expediting

Manage and report events in expediting

Use Ranking of critical jobs

Capture events in supply chain

Prioritised requirements

Highlighted delivery threats

Improved availability and stock levels

Work (Req By Date)

Requisition

Purchase Order (Del

Date)

Receipt (Int’l)

Pick, Pack, Ship

Receipt (Local)

Pick, Pack, Ship (Local)

Receipt (Remote)

Key

Dates

23

Extended Supply Chain - Context

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Critical materials

identified and held in

the appropriate

locations

Stock or Non-stock

policy set –

replenishment and

inventory

management

parameters

established for

materials at locations

Supplier Relationships

established locally and

internationally – supplier

performance measures in

place

24

Foundation – Returns Management

Define the returns scenarios (recommended actions)

Define the processing steps that support each scenario &

allowed processes for each step

Determine the systematic model – and implement

Accurate inventory, tracking of goods throughout repairs,

rentals mob/de-mob management

25

Foundation – Returns Management Strategy

Remote Site 1

Remote Site 2

WH Vendor

• Returns

• Rentals

• Repairs Integrated Supply Chain

processes that when mis-

managed compromise the

supply chain

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Returns – Conclusion

Define the returns scenarios (recommended actions)

Define the processing steps that support each scenario &

allowed processes for each step

Determine the systematic model – and implement

Accurate inventory, tracking of goods throughout repairs,

rentals mob/de-mob management

27

Extended Supply Chain - Context

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Critical materials

identified and held in

the appropriate

locations

Stock or Non-stock

policy set –

replenishment and

inventory

management

parameters

established for

materials at locations Returns Management –

scenarios, procedures

defined and deployed

Supplier

Relationships

established locally

and internationally

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Foundation – Integrated Systems Strategy

CMMS Criticality

Inv Mgmt Stocking Policy

Replenishment Parameters

Stock Counting

Purchasing Local/International Sources

Logistics International Shipping

Cross-Docking

Containerisation

Extended Supply Chain

Work Orders, Priorities

Bills of Material

Materials, Vendors,

Contracts

Materials, Quantities,

Stocking Policy, Stock

Categories

Routes, MOT, Containers,

Shipments

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Foundation – Integrated Systems Strategy

“Single version of the truth”

Data flow

Document flow

Multi-Currency capability

Tax/Customs capability

Language capability

Local reporting capability – Local Content, SPED, SIOP, OHADA, REPETRO…..

End-to-end procure to pay support

Collaboration capability

Mature/sophisticated system security concept

Reporting capability

ERP

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Outcome

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Critical materials

identified and held in

the appropriate

locations

Stock or Non-stock

policy set –

replenishment and

inventory

management

parameters

established for

materials at locations

Supplier

Relationships

established locally

and internationally

Freight

Forwarders/Service

Co’s integrated into

your processes/

procedure, data

• Transparency

• Single version of the truth

• Integrated Analytics

• Scalability

Returns Processes –

scenarios mapped and

workflow enabled

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Outcome

Remote Site 1

Remote Site 2

Local Hub WH

Local Vendor

Regional Hub WH

Regional Hub WH

(F/F)

Intn’l Vendor

Intn’l Vendor

Critical materials

identified and held in

the appropriate

locations

Stock or Non-stock

policy set –

replenishment and

inventory

management

parameters

established for

materials at locations

Supplier

Relationships

established locally

and internationally

Freight Forwarders

registering receipt,

pick, pack, ship –

transparent goods

tracking

• Transparency

• Single version of the truth

• Integrated Analytics

• Scalability

Returns Processes –

scenarios mapped and

workflow enabled

32

Foundation

CMMS Criticality

Inv Mgmt Stocking Policy

Replenishment Parameters

Stock Counting

Purchasing Local/International Sources

Logistics International Shipping

Cross-Docking

Containerisation

Extended Supply Chain

Work Orders, Priorities

Bills of Material

Materials, Vendors,

Contracts

Materials, Quantities,

Stocking Policy, Stock

Categories

Routes, MOT, Containers,

Shipments

33

Joined Up Acting

Process vs Function

Ops/Projects Procurement Logistics Ops/Projects Logistics

Work/Demand Procure Mobilise

Execute

Demob

Execute

Finance &

Controlling

34

Real World

CMMS Criticality

Compliance Windows

Inv Mgmt Stocking Policy

Replenishment Parameters

Stock Count

Purchasing Local/International

Sources

Logistics International Shipping

Cross-Docking

Containerisation

Extended Supply Chain

35

Real World – Making it work

Integration Vehicles – Dashboards/Workbenches

Integrated Workbenches

“Where’s my material reporting”

Returns Workbench

Purchasing

Expediting/Material Availability Reporting

Purchasing Analytics – Vendor performance

Inventory

Inventory Analytics

Criticality

Critical Element Dashboards

Maintenance Planning Boards

Decision Support Tools

• Customer Focussed

• User friendly

• Drill down

• Traffic Lights

• Actionable

Workbench/Dashboard

• “Where are my materials”

• Returns Analytics

• Expediting Analytics

• Sourcing Analytics

• Inventory Analytics

• Criticality

36

Example – “Where are my Materials” Dashboard

Full Supply Chain

Demand -> PO -> Receipt (Intl) -> X-Dock -> Pack -> Ship -> Receipt (Local)…..

Single version of the truth, full traceability, no blind spots

37

Example – Returns Workbench

38

Example – Material Availability Dashboard

Dashboards by

Location /

Discipline /

Priority

Drill Down/Act

Delivery threat as traffic light

39

Example – Purchasing Analytics

Probability of on time delivery by supplier in 2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-100 -90 -80 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80 90 100

Days early / late

Craig

Score

Other

“Worst Actor” Suppliers On-Time Performance

• Clarity of Purpose

• Actionable

• Trending

but take care…

were the delivery

dates realistic ?

40

Example – Inventory Analytics

Rule Sets

A = critical materials

A = materials with high value

Rules Sets

A top x% of the materials with the highest demand value

over the last 12 months.

B next y% of the materials with the highest demand

value over the last 12 months.

C last z% of the materials with the highest demand value

over the last 12 months.

D all other materials with 0 demand value or negative

demand value over the last 12 months.

Update Stock Count Rules A count x times a year

B count y times a year

C count z times every two years

D materials will not be counted.

Update Repl. Parms ROP

ROP Qty

Safety Stock

+ Delivery Lead Time

+ GR Processing Time

Dead Stock Inventory Turn

B – middle 15%

of all materials

A – Top 5%

C – bottom 80% value

of all materials

D – no usage

Stock Catalogue

41

Example – Critical Element Dashboards

End-User – Status of my Critical Maintenance

Benefits

• Transparency on where critical equipment issues

• Highlights areas for root cause analysis – work delays due to late materials/stock outs

42

Real World – Making it work

Integration Vehicles – Dashboards/Workbenches

Integrated Workbenches

“Where’s my material reporting”

Returns Workbench

Purchasing

Expediting/Material Availability Reporting

Purchasing Analytics – Vendor performance

Inventory

Inventory Analytics

Criticality

Critical Element Dashboards

Maintenance Planning Boards

Decision Support Tools

• Customer Focussed

• User friendly

• Drill down

• Traffic Lights

• Actionable

Workbench/Dashboard

• “Where are my materials”

• Returns Analytics

• Expediting Analytics

• Sourcing Analytics

• Inventory Analytics

• Criticality

43

Absoft’s Approach

Analyse

Design

Build

Run

Technology Process

People Use of technology

to support

people in

executing best

practice processes

Actionable

Analytics