In today's business climate, companies are continuously striving to reduce costs and improve efficiency. PepsiCo, home of some of the world’s most recognized and respected brands, realized that in order to maximize profits within its bottling division it would need to apply industry best practices to take advantage of major cost savings within its maintenance storerooms. The process would involve many phases but none of which could be achieved without first having the item master cleansed by experts who understood PepsiCo’s needs. After searching the industry, I.M.A. was selected as the best opportunity for PepsiCo to realize targeted savings and achieve the best results.
During the project, I.M.A. cleansed the entire PepsiCo database, which included 63 North American beverage facilities, and created a corporate item master containing accurate data which provided PepsiCo with the confidence to meet its other financial objectives. After the identification of all duplicate items, obsolete materials and insufficient descriptions, the new corporate item master contained more data than ever but with 36% fewer items, resulting in a far more efficient dataset for PepsiCo employees to work with. In addition, I.M.A. also assigned new corporate part numbers for each unique item allowing for the identification of duplicate items across all PepsiCo divisions, by direct duplicate as well as fit, form and function.
Using this new and improved item master, I.M.A. was instrumental in implementing the Inventory Reduction program by identifying all potential excess inventoried items, by plant and region. Other phases of the cost reduction program that would not be possible without first utilizing I.M.A. data cleansing services include:
1.) Vendor consolidation
2.) Part number consolidation
3.) Implementation of an aftermarket supplier program
4.) Creation of a virtual warehouse for bottling locations to share big ticket items
5.) Supplier buy back program
In order to maintain the integrity of the new corporate item master, PepsiCo recently contracted I.M.A. to manage all new items being added or modified through the Catalogue Management service. PepsiCo chose to use the Turnkey option, allowing I.M.A. direct access into its INFOR system to ensure all data is up to date, consistently standardized and always reliable.
Catalyst Paper (formerly known as NorskeCanada) had decided to undertake the clean up of its item descriptions internally. After more than a year’s effort involving nineteen team members, they had only managed to complete 70,000 of their 120,000 items. The time had come to call in the external experts for assistance: I.M.A. Ltd.
Gord Coburn, Manager, Strategic Sourcing at Catalyst, was first introduced to I.M.A. and its services through Invensys Avantis, an EAM software supplier, and valued Service Partner to I.M.A.
In less than six months, the remaining inventory item descriptions were cleaned, standardized and enhanced. “They really understood the problems our maintenance people were dealing with.” “They were good to work with.”
The original Catalyst team, consisting of Electrical, Mechanical, Instrumentation & Pipe Fitters from all four sites as well as two support people stayed focused on the backlog of obsolete and excess active items while the Inventory Specialist worked with I.M.A. as the Catalyst internal Quality Control (QC) expert.
With $80,000,000 in overall inventory, a 20% reduction was identified. They are currently managing the consumption and disposal of the excessive active and inactive inventory. Duplicates ran higher than 10% within all four sites; over $2,000 000 of obsolete parts were written off. The Catalyst target of $250,000 in annualized savings was more than realized; the project was deemed a success.
Asked what changes he might make if he had to do it again, Gord Coburn replied, “We wouldn't have started it ourselves. We had developed an inconsistent methodology which caused us a lot of problems and added to our timeline.” “We would have had I.M.A. do it all and learned to live with the new nomenclature.” “However,” he added, “an internal QC person is still required to ensure that the cleaned data meets internal needs.”
Keeping the data in synch across three systems continues to be a challenge. Three dedicated resources within the Catalyst organization currently manage the inventory item catalog.
Gord Coburn has high regard for the work I.M.A. did at Catalyst and often recommends their services to others.
Tim Brown, IT Director for Tembec’s Pulp and Paper Groups, was first introduced to I.M.A. at an IndusWorld conference. Discussions regarding our Catalog Management service were of particular interest to him at that time. He knew Tembec needed to improve its management of stores inventory, but managing the mills’ Stores catalogs across the corporation had always presented a challenge. It seemed that I.M.A. could provide them with an affordable solution to their problem.
At Tembec, each of their eleven Pulp and Paper sites operate autonomously, with responsibility for managing their own inventory. The decision to implement a new CMMS system company wide brought their corporate catalog issues to the forefront. And creating a corporate catalog of consistent inventory data was something I.M.A. could do for Tembec.
Tembec created a cross-functional team, including members from: Maintenance, Purchasing, IT and Stores. Together we tailored the data to Tembec’s internal needs. On a site-by-site basis, data was cleaned, standardized and enhanced, then amalgamated into the Corporate database prior to “go-live” with the new system. All this, while keeping many of the local site naming nuances intact.
“I.M.A. played an important role assisting Tembec in standardizing and improving business processes, systems and naming nomenclature related to maintenance, stores inventory, and capital spare part stocking activities.”
To date, six of the eleven sites are on the new system. At each site, duplicates and overstock items have been identified. The payback was evident almost immediately. Identified savings accumulated to a total of roughly $500,000 per site within the first three to six months after implementation. Additionally the standardization of the naming nomenclature has set the stage for many more e-commerce cost reduction opportunities.
The real value is realized corporately, enabled by the on-going Catalog Management service. Now Tembec is able to leverage purchasing, share spares, consolidate suppliers, reduce inventory levels, use down excess stock across the corporation and create regional and national purchasing programs.
“I.M.A. has worked with Tembec to design and implement a process whereby rapid easy access to a single view of stores inventory is available. We can now identify opportunities to reduce stores inventory levels as well as report on vendor performance across all of our mills."
Today, I.M.A. assumes all responsibility for the day-to-day additions/changes/deletions to the Tembec Corporate Catalog. In addition, it also manages the daily operations for Tembec’s Corporate Vendor file.
Years ago, at an Avantis Showcase, Steve Kay, Maintenance & Materials Director, formerly at Daishowa Marubeni International (DMI) (now with Footner Forest Products) was introduced to I.M.A. through a presentation workshop.
He liked what he saw and held onto the contact information for future needs. Of particular interest was the Data Scrubbing, Standardization & Enhancement service as well as the Inventory Analysis service.
When DMI started its project aimed at Reducing Inventory Levels and Improving Maintenance Efficiencies, Steve called I.M.A. to discuss how they might help.
He quickly assembled his internal team of MRO Stores, IT, Maintenance and Planning members to work with I.M.A. Together they formatted data using industry nomenclature and a standardized structure. “I.M.A. was excellent to work with. When we realized that we should not have removed manufacturer name and manufacturer part number from our Bearing item descriptions, I.M.A. quickly restored the information to suit our internal needs.”
Spot buy reductions have yielded savings of $393,977; inventory reductions of duplicates, excess and obsolete materials resulted in savings of over $1 million. “It was good value for money… a no-brainer.”
The story of DMI’s project success was recently shared at the Avantis 2004 Customer Conference. Asked if he would recommend I.M.A.’s services to others, Steve declares that he often does so.
When Steve assumed the additional responsibility for Purchasing at his mill, Catalog Management at DMI was out sourced to I.M.A.