Improving procurement in equipment services
What they needed
An ASX listed business was seeking to improve its cashflow and inventory usage after acquiring new equipment and boosting its maintenance and operations capability. But what inventory should it purchase, when, and from where?
These decisions were complicated by a range of factors, such as the requirement to sustain high availability and utilization of equipment, while maximizing cash flow and adhering to SLAs. Owning, maintaining and operating equipment nationwide is also complex, with interrelated procurement, maintenance and operations processes, and fluctuations in supply and pricing. Added to this is the constraint and risk related to deployment of capital for parts and, despite a considerable enterprise resource planning system (ERP), its current state of analytics maturity was limited to spreadsheets with ad-hoc analysis.
To support its ambitions, the business partnered with Elara.
What We Did
Elara developed a high conviction use case to optimize in the procurement space. The process of purchasing equipment and parts with capital was selected as a prime opportunity to improve performance. Elara defined the business rules, target outcomes and degrees of success that gave the solution a measure of operational performance, such as maximizing cash-balance net present value, minimizing deviation from the capital schedule and maximizing availability.
Activities were coordinated between the technology business unit, data and analytics, and the procurement unit to align on key objectives, decisions and use of the solution.
Elara then configured a minimum-viable-product insights engine was configured, which included:
An integration with various business systems, ranging through spreadsheets, data bases and event queues.
Use of simulation, scenario, and full potential analysis to calculate prioritization of strategic operating model changes.
Use of advanced mathematics to calculate work allocation to employees.
An interactive user interface to allow live interaction with the system.
Elara prescribed a weekly nationwide procurement shopping list to improve availability, cash-flow and return on capital.
The solution was able to identify:
A bankable 10 percent improvement to monthly operating cash-flow while adhering to a capital deployment schedule, over an 18-month period an expected 5 percent increase in average monthly availability.