Eliminating obstacles between the supply chain and work management functions often yields significant cost savings.
The work management organization at an electric generating station appeared to be understaffed and was performing many of its duties behind schedule.
An investigation revealed that resource constraints in the supply chain organization required work management personnel to perform component procurement and issuance functions. Subsequently, work planning suffered and delays in component requisitions resulted in high inventories to avoid expediting costs.
Process misalignments made the situation worse. Because the work management and supply chain departments reported to different executives with separate business objectives, the two functions did not collaborate when developing processes that impacted the other group.
Without losing sight of the operational benefits to be gained in a more effective work management and supply chain partnership — such as increased parts availability and improved productivity — there are sizable cost savings opportunities when the two functions operate in sync, including:
- Reducing inventories
- Minimizing expediting costs
- Lowering spare parts obsolescence
"By examining the interactions between the supply chain and work management functions the utility in the example above identified an opportunity to reduce inventory by 20% to 45%, resulting in millions of dollars in savings for the organization," says Nathan Ives, a senior manager in Ernst & Young LLP's Power & Utilities and Global Nuclear practices.
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