oil & gas Field equipment

Implementing a standardized requisition process to reduce inventory build-up.

Project highlights:

Client's Perspective:

"Implementing an improved and standardized requisition process will allow us to significantly impact one of the primary drivers of inventory build-up"

Situation:

In this Middle East location, a central warehouse supports numerous client operations with parts, supplies and spares. Inventory in the central warehouse is known to be abnormally high. Removing waste and then standardizing the future state requisition process will enable a sustainable inventory reduction through a significant decrease in overall cycle time. Lowering inventory levels will also help reduce losses from obsolescence and inventory wastes (tied-up capital, tracking, storing, moving, etc.) and will improve customer service and lower costs.

Approach:

• Dissect and then reconstruct the requisition process using value stream and other mapping techniques in a team-based setting
• Develop an optimized process comprised of two components:
  
  -A standard template applicable to all geographies
  -Special considerations based on local requirements and customs
• Focus on cycle time to assure the organization that customer demand could be met (no out of stock) while inventory levels are brought down over time

Results:

The creation of the new requisition process was accelerated by actively engaging process stakeholders in the design and implementation of the future state solution. Specific achievements included:

• Improved communication - new process is transparent, feedback loops are installed, reservation system is cancelled, responsibilities allocated and KPIs installed. All Rig Managers and Rig Staff can monitor order progress
• Standard items put on automatic replenishment so they would not unnecessarily clog the system
• Alignment was reached on utilizing an electronic tracking and replenishment system as opposed to the out-dated paper process
• 80% improvement in stock movement cycle time by addressing critical constraints within the system. A more efficient process resulted in a 25% reduction in the labor effort required to accomplish this 5x faster process

Want to find out more about Kaufman Global's approach and the critical success factors in a project like as this? Contact us.