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Improving the links in the supply chain
Over the last two years, Inenco Industrial Solutions has made significant improvements to their supply chain, bringing better responsiveness and reliability to customers in the mining segment.
According to Crispin Dobson, General Manager Operations with Inenco, these improvements have translated to shorter order lead times and increased delivery reliability to Inenco businesses.
“We manage our supply chain with a planning and forecasting system that bolts on to our ERP. We’ve customised this extensively in the last couple of years to provide more focus on localised customer usage, and by doing so, we’ve been better able to forecast the product types and quantities that we need to have available,” Crispin explained. “This means customers can be confident that we have the right parts, at the right place, at the right time.”
In a mining context, essential components such as bearings, electric motors, drive shafts, pulleys and belts, will all need to be serviced or replaced periodically. Most customers have preventative maintenance programs in place to replace these parts at regular intervals. In such cases, parts are ordered to be stocked in advance. However, unplanned, emergency breakdowns, can and do occur.
“If a mining operation experiences a breakdown, then that’s time lost in production. Whether it be crushing or grinding ore, or extracting the minerals, a breakdown can have devastating consequences – we’re talking tens of thousands of dollars for every hour lost,” Crispin said. “So, it’s absolutely critical that we can get the right parts to those customers when they need them. Our challenge is having the correct mix of parts, and in the right location, to be able to provide this emergency service to customers.”
In terms of customer reach, the Inenco network is unparalleled. Crispin overlooks the distribution of parts from four distribution centres (Sydney, Melbourne, Brisbane and Perth) to over 80 stores nationwide. He said: “Whether customers are in metropolitan, rural, regional or remote mining towns, we’ve got them covered.”
Importantly, the relationship that Inenco has fostered with its suppliers has been essential to improving their performance and delivery times. Crispin and his team have implemented a supplier continuous improvement program whereby measures such as DIFOT (Delivery In Full On Time) are used to assess and improve performance. Since the program started, Inenco have managed to double the delivery performance of their main suppliers.
“We may have thousands of items on order from each supplier and until the last couple of years, the lead times for some of these have been up to six months, making them very difficult to plan. Under this program, we’ve focused in on certain product ranges to be able to reduce the lead time, and we hold our suppliers accountable to their quoted delivery times,” Crispin explained.
The collaboration goes both ways, as Inenco provides their main suppliers with a rolling 18 month forecast of purchase order recommendations. This forward visibility allows suppliers to plan their own supply chains better thereby resulting in better order fulfilment for Inenco customers.
“The forecast is not a commitment, but it is a strong indication of our buying intentions. We’ve also been able to achieve 70% accuracy with our forecasts which is just about as good as you can get without a crystal ball,” Crispin said. “Many of our suppliers manufacture their wares overseas so this forecast makes a big difference – as even if we haven’t finalised the exact product mix, we’ve got time booked on their production lines already.”
The supply chain team at Inenco have also been working to improve other processes to help suppliers. For example, with some suppliers they’ve modified the way that they put in orders, placing them by sub-groups or product type, rather than just sending in an order with a long list of various parts.
Achieving these results – and working to improve processes – has taken a lot of collaboration and face-to-face time between the formal quarterly review meetings that Crispin and his supply chain team have with key suppliers.
“It’s worth celebrating the fact that we’ve managed to double the delivery performance of our suppliers in the last two years. This is the result of a lot of work from my supply chain team and also the supply chain teams of our suppliers,” Crispin reiterated. “Of course, these benefits translate directly to our customers.”
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