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Materials Management Opportunities in Operational and Maintenance Products Maintenance vs. Procurement – How to Win the Battle and the War

Author(s):

Michael G. Patton
Michael G. Patton, Senior Vice President – Purchasing, Material Logistics & Planning, FacilityPro, Dublin, Ohio 43016, (614) 638-4930; pattonmg@aol.com

89th Annual International Conference Proceedings - 2004 - Philadelphia, PA
Abstract

In most organizations there exists a constant battle over the stocking, ordering, and maintaining of products required by maintenance and operations. The Materials Management and Purchasing functions are often pitted against Maintenance, Facilities, Engineering, and Operations with respect to the number and types of SKUs, capital and critical spares, obsolete inventory, inventory investment, and turnover and program operation. Why does this happen so often and how can it continue today when all companies are looking to significantly reduce costs? The answer is simple: Fear of stockouts, perception of inventory as “cheap Insurance,” and the lack of knowledge with respect to the total cost of holding inventory. Fear of not having the necessary materials available when equipment fails and therefore stopping production/operations and the loss of revenue associated with that downtime. “Cheap insurance” is based on the thought process that inventory is typically expensed when received vs. issued and that cost is small compared to any potential loss of revenue that could occur if operations/production was halted for any measurable period of time.

Materials Management Opportunities in Operational and Maintenance Products Maintenance vs. Procurement – How to Win the Battle and the War — 25 KB (PDF)