The working capital of the moving assortment is expected to be reduced by 7% combined with a workload reduction and less stockouts. bp will be able to harvest this result within two years after resetting the new parameters. For the moving items, bp uses the new parameters. For the slow moving parts, the decision tree will first be applied in workshops. By applying pareto techniques, bp will maximize the impact by focusing on a minority of parts.
For capital intensive parts that rarely move, business knowledge needs to be incorporated in stocking decisions. The decision tree of Gordian enriches data with crucial process and supply information.
planning & warehouse supervisor
BP has thousands of parts on stock. Classification on price and demand frequency revealed that the majority of the working capital sits in expensive parts, predominantly in slow and non-movers. In addition, optimisation of the moving assortment has potential to reduce working capital with less stock outs and reduced workload. bp asked Gordian to update the stock parameters, i.e., reorder points and – quantities, and to develop a procedure to determine the required stock levels for slow and non-movers.
For moving parts a working capital reduction can be harvested by optimizing min/max levels. Regular demand of parts after resetting the parameters will eventually result in inventory reduction. Gordian calculated the parameters with the Spare Parts Management Studio. bp and Gordian worked together to check exceptions, e.g., spike orders and lead time peaks, and perform crosschecks to validate the stocking parameters.
Expensive slow and non-movers need to be available when down time risks are significant. With limited data history you cannot make inventory decisions based on statistics alone. Gordian helped bp to rationalize stocking decisions and introduced a decision tree. The tree helps to mitigate crucial process- and supply risks in determining the required stock levels.