Manufacturer had more capital tied up in indirect stock than direct goods.

A chemical manufacturer with multiple process plants sourced mechanical seals supplied from one supplier. This was a key supplier and the cost of change to a different provider would be too high. We were also happy with the quality of the goods provided and the service received, so we wanted to build on that relationship.

Having such a high value of capital tied up in the stock was an inefficient use of the company’s resources.

Reduce the value of indirect stock without impacting on process plants.

Mechanical seals were a first priority where the blueprint could be rolled out to other types of goods.

We formed a cross-functional team including the supplier.

Together, we listed all the applications on site and the specification of their seals and looked to see if any could be consolidated. From that, we conducted an analysis of the quantity of seals installed on site compared to the quantity stocked on site or with the supplier.

With this, we were able to build a list of what was readily available and how many we needed to keep in stock to cover the quantity of installed units on plant. Redundant items would not be replaced once the stock on the shelf was issued to production.

For seals with exotic elements we reviewed the options for stocking only the rare parts. In future, we would ship these parts to the supplier for them to make a complete unit using the additional, common parts. This would then be urgently shipped back to site for installation. This reduced note only the quantity of stock but had a significant impact on the value of items stocked.

The major outcome was we reduced the stockholding by 28%.

Additionally, we had a list of all mechanical seal applications on site and an accurate Bill of Materials for spare parts.

We were also utilising the supplier much more effectively, with access to their extensive stock of parts.

• Procurement
• business process
• Inventory Management

• Manufacturing