With benefits including improvements in the engineering stores area, coupled with supply chain consolidation, outsourcing engineering stores currently represents best industry practice.
An increasing number of British manufacturers are moving towards a business model which encompasses fully outsourced engineering stores. This approach allows the manufacturer to engage with a single supplier for its requirement of engineering spares. Benefits of a fully managed engineering stores model, include a movement towards best in class processes for stock management and ultimate inventory control. Stock will be right sized for business needs, often resulting in a reduction in inventory levels, and cross-site visibility of available inventory will be greatly improved.
One of our clients has recently outsourced its manufacturing stores to an industry leading service provider. This not only provides greater control in terms of the day-to-day management of engineering spare parts, but also enables the manufacturer to take advantage of competitive pricing offered by the service provider. 4C supported the negotiation of the outsourced stores contract to ensure that best value continues to be delivered for engineering spares requirements.
Adding Sustainable Value
Outsourcing stock replenishment and inventory management allows 4C to focus on working with the service provider to add layers of value to deliver year-on-year savings. These savings are generated via multiple channels such as Product Innovation, Standardisation, OEM parts conversions, Compressed Air Audits, Condition Based Monitoring, and Energy Efficient equipment, such as motors and pumps.
New technology and product innovation has seen a growing focus on Total Cost of Ownership (TCO). An example of TCO relates to motors and their life cycle management. A motor typically consumes 100 times its purchase cost in electricity in its lifetime. A low initial purchase cost can therefore be deceptive. An investment in a high efficiency motor will see year-on-year, demonstrable hard savings in energy consumption. These measures also enable businesses to take advantage of the Enhanced Capital Allowance Scheme, which provides tax relief for investments in equipment that meets energy-saving criteria.
An Outsourced Future
10 years ago the outsourcing of engineering stores was not unheard of, however, it was not common practice. As the MRO sector continues to evolve, an increasing number of manufacturers are reaping the rewards of adopting the process. This best practice strategy enables businesses to benefit from highly efficient, optimised engineering stores and looks set to become increasingly fruitful.