Lonmin Plc The SAP PM Journey Process Division. Power without control is meaningless. SAP PM without structure and execution suffers a similar fate.

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1 Lonmin Plc The SAP PM Journey Process Division Power without control is meaningless. SAP PM without structure and execution suffers a similar fate.

2 Our journey explained Welcome to Lonmin Process divisions SAP PM journey 2007 to Present 2

3 2005/6 Lonmin SAP is rolled out as the ERP for Lonmin FI, PM, MM, PS SAP PM rolled out in March 2006 PM (Planned Maintenance) Policy and Strategy developed with 3 rd Party Roadmap developed linked to Strategy and Policy Reporting developed linked to Strategy High level support in terms of management Very little to no support structure on the floor PM Roll out and Roadmap audit outsourced (2006/7) 3

4 2006 SAP Architecture - Billing to sundry debtors - Procurement & Inventory Management - Human Resources & Payroll SCADA* Field Service Support PP Production Planning EDI QM Quality Management Work Clearance* MM Materials Mgmt. PM Plant Maintenance SM Service Mgmt SD Sales & Distribution HR Human Resources CAD R/3 TR Treasury GIS AM/FM FI Financial Accounting CO Controlling AM Fixed Assets Mgmt IS Industry Solutions WF Workflow PS Project System - Financial Accounting - Management Accounting - Asset Management - Project Systems 4

5 Our journey explained Setting the scene of forthcoming PM attractions 5

6 2007 Lonmin Process division PM start Accepted the assignment to put PM in place at the Process division Review began System, Structure, Support SAP PM accepted as functional at the start Assumption is the Existing SAP PM blueprints requested and studied (LINK) Existing PM Policy and Strategy studied and understood Deep dive into plants, interaction with PM teams at the BMR, PMR, SME and Concentrators Interviewed PM personnel ito system/support High and low level 6

7 2007 State of the Asset Assets were run down, poor state of disrepair, inefficient, unpredictable Plants operated well above design capacity, low availabilities, instability Breakdown maintenance was the norm Reactive, high cost No cost maintenance months was acceptable Cost control! Major onsite sub stores and scrap, JIC spares out of control - Reactive Few engineers and planners, few and far between Poor understanding of what PM really entailed Fire Brigade mentality Reporting not standardized and irregular Not properly governed 7

8 2007 State of the System - SAP SAP PM was set up and rolled out per plant various standards SAP PM set up to mirror old systems and practices Non std SAP Non standardized set up of functional locations, eq numbering, schedules Reporting guideline not followed Reporting done on Excel, irregular with No or little governance Blue prints was not understood, necessarily followed nor displayed Central SAP PM support was poor and not guided at the PD SAP integration with MM was very poor and not as per SAP std 8

9 2007/8 On your marks, get set,. An Asset management Charter was drawn up, CEO sign off requested [L] Structure was proposed and recruitment started Very specific set up [L] RACI set up and used to review role profiles and write new ones [L] Engineers, planners and maintenance specialists appointed A State of the Asset audit commissioned by a knowledgeable 3 rd party Photographs taken per plant, recorded the baseline [L] MM tackled Contracts, Stores, Procurement, Stock rationalization started Training suite put together and scheduled Indoctrination began (L) 9

10 2007/8 On your marks, get set.(cont ) A PM Asset management booklet put together and rolled out PM way [L] A maturity chart picked and rolled out PM/MM link [L] Rhythm and Routine put in place around KPI s and reporting (weekly) (L) PM planning meetings set up and started Policy written Planner assessments set up, done and tracked per plant (3 monthly) (L) PM health check for SAP compliance set up and done per plant (3 monthly) SAP PM blueprints reviewed and put on posters rolled out to plants (L) Split Breakdown and Planned maintenance teams to stabilize plants 10

11 2008 On your marks, get set,.(cont ) Required reporting set up and rolled out, properly governed in Excel Maintenance Specialists all exposed to std PM training from MTECH First Roadmap Audits done, all plants scored as a baseline [L] Improve failure prediction and analyses skills for PM teams based on RACI Succession planning entrenched via recruitment process and structure(s) Making Engineering, Maintenance and Asset management visible EXCO Make link between Asset Management (Maintenance) and Safety Create an Auditing culture to drive CI process around PM and SAP 11

12 Our journey explained SAP PM review and re-rollout - Optimine 12

13 2008 SAP PM Optimine Project Agenda Review Exiting Business Blueprint ( Lonmin value chain) Asset Management Strategy Business Processes & detail design Training strategy & documentation Review exiting PM Roadmap Determined detailed PM Mindmap Developed new PM Roadmap

14 2008 SAP PM Optimine, AM Strategy Updated 14

15 2008 SAP PM Optimine, back to std SAP Assembled a Project team headed by Expert PM consultant and core owners team for duration of the Optimine project Great need for reviewing and revamping the SAP PM master data Review and changing of order types (PM01,2,3,4 to LM01,2,3,4,5,6,7) Functional location standards and changes Link to Asset registers (L) Equipment numbering standardized (Plant Design) Reporting review and BW set up of KPI reports (Business Objects (BO)) (L) 15

16 2008 SAP PM Optimine, back to std SAP Cont. Optimine team identified; Masterdata team, Process team and Training team CMMS PM Audit (L) Develop Optimine Business Case (Lonmin value Chain - EXCO Approval) Develop Optimine project plan Change Management Strategy Project Kickoff Project Progress Meetings & Weekly Status Report

17 2008 Optimine Technical Process management & Data management Improvement of PM business processes (ARIS modelling) Ensure continuous System Process Integrity and Understanding Data management Ensure continuous Master data integrity Collate and improve documentation registers Load doc registers on SAP and link to equipment via SAP DMS (L) Develop and load catalogue codes (Damage and cause codes) 17

18 2008 Optimine Technical aspects ECC6 Access to SAP simplified via a Portal (Portal View) Process modeling for PM done on ARIS ( Link- Business processes ) Training documentation set up SPP (SAP productivity pack) Authorizations done via GRC (Governance risk compliance) Change Management done via Solution Manager Reports SAP standard; BW and BO EHP5 (Enhanced pack 5), Functionality

19 Results PD Availabilities up and stable across the business units (LINK) PM entrenched as the Maintenance philosophy Plant stability and subsequent efficiency improvements are sustainable Ultimate result Increased production Use the Planner competence tool [L] Skilled PM teams and PM IDP Succession in place Reporting stable Rhythm and Routine in place at PD 19

20 To Be.. BW (BO) reporting completed and in use, NO MORE excel! Move from Planned to Predictive Manitenance Entrenched Rotables and Repairables process Stable MM interface with world class stores No more sub stores only Kanbans Planners are SAP super users or capable 20

21 Variability 12 Stability SAP PM & MM Maturity chart Don t buy it Informal buying Redundant stock Buy it when you need it Free text Orders Needed it yesterday Stock Maximisation Panic Buying High Logistics Cost High Procurement Costs Expediting Stock outs Many RTS s (Returns to stores) Them & us Materials Management Maturity Get it before You need it Controlled consumable stores Material Storage Strategy Material/Service Master Rotable s Management Vendor Management Contracts Effective delivery to users Good stock accuracy Pro-active expediting Minimize sub stores Planned Contract Consolidation Free issue Stock Minimization Material Supply Strategy Vendor Consolidation Commodity Focus Vendor QC No sub stores Procure smarter Proactive Maximize Operational Stability Mature Contracts Scheduling Agreements Optimize Stock Turns Partnering Stable Regressive No care culture Equipment decay no maintenance no capital replacement Increasing costs Equipment failure BACKWARDS Don t fix it Reactive Breakdown culture unplanned standby/callouts /overtime rework no equipment improvement Waste time, materials, people High maintenance costs Fix it after it breaks Planned culture (80:10:10) production planning planned maint. Adherence to schedule WO turnover Controlled quality minimal rework Material management BOM s in place contractor SOW s delivery point mng. Fix it before It breaks Maintenance Maturity Improvement culture Pareto RCFA RCM Condition Based Maint. Equipment improvement fault catalogues use based task lists life cycle costing design out maintenance Safer equipment Don t just fix it Improve it Asset Utilization Business Alignment Departmental Integration Supplier & Technology Alliances Knowledge sharing Low maintenance cost FORWARDS 21

22 The PM Structure Maintenance Planner Custodian of PM, Loyal to the policies and procedures Increase Efficiencies Prevent Failure Maintenance manager Loyal to the strategy and policy of the plant Birds eye view on the processes in and around PM Supports and directs the team Ensures RACI is maintained Monitors discipline within the system and processes Maintenance Foreman Loyal to his team Executing plans Mobilise Resources Manage Priorities Coach team React to Failure Prevent Recurrence Maintenance Specialist Loyal to specifications and standards RCA, FMEA Re-engineer FLAC 22

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