Turnaround and Project Procurement: Pt. 1
This is the first in a series of blogs on optimizing SAP for Turnaround and Project Procurement.
βOne of the biggest business benefits of implementing SAP is the integrated supply chain, spanning from material demand through purchase requisition, purchase order, goods receipt, warehouse management, goods issue ad finally installation.
These benefits are magnified where we see high volumes, high material costs and high risks. Plant Maintenance is a perfect example of this trifecta.
Managing the routine and corrective maintenance of a large plant such as a refinery is an incredibly complex operation. Hundreds of skilled technicians, engineers and operators collaborate on a daily basis to maintain optimized operation.
Thousands of work orders are generated every year, requiring labor resource, equipment and materials.
We take this for granted now, but that wasn't always the case.
During the early years of SAP implementation in the 1990's we heard horror story after horror story of things that went wrong in plant maintenance materials management, and we want to recall a couple of these stories here.
In one example, a paper mill was about to commence the replacement of the main roll - a very costly piece of equipment. To his horror, the maintenance manager realized they had actually purchased two of these rolls in what can be best described as a 'career limiting move'!
Rather than own up to the expensive error, he elected to hide the evidence and promptly had a huge hole dug and buried it.
In other examples, warehouses were being filled with surplus materials from closed projects, turnaround materials were being 'taken' by projects and routine maintenance technicians, resulting in delayed startup.
The examples are endless and the consequences always the same.
And the sad thing is - they are easily rectified.
So what are the biggest challenges of turnaround material management?
1 - Turnaround / Project materials are not reserved for the project, meaning they are available to everyone
2 - Project materials are not held as inventory in the system. They are expensed upon goods receipt and recorded in a spreadsheet thereafter
3 - Turnaround / Project Planners order materials through a free text purchase requisition. This is done for convenience, yet turnarounds have a virtually unlimited planning timeframe.
4 - Turnaround materials are not updated, resulting in the wrong materials being ordered. Gasket specs are a good example. The cost and schedule impacts can be significant.
5 - The warehouse is not cleared-out after a turnaround event or major project, resulting in a build-up over time of surplus stock that can become a significant cost impact.
In the next blog we will look at solutions to these common problems that are available as standard to customers using SAP to manage their turnaround and project materials. βTurnaround and Project Procurement /2