Honeywell s Parts Management Program Reduce Costs and Minimize Risks to Your Operation

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1 s Parts Management Program Reduce Costs and Minimize Risks to Your Operation

2 There are Better Investment Opportunities than Managing Your Replacement Parts Inventory 2

3 Parts Management Program Reliability Capital Efficiency Technical Risk Planning 3

4 Reliability Ensure faster mean time to repair Eliminate unnecessary downtime 4 Increased Availability and Uptime

5 Technical Risk Planning Increase overall plant availability Establish an accurate benchmark for parts stocking Manage spare parts obsolescence 5 Predictable Costs

6 Capital Efficiency REDUCE INVENTORY CARRYING COSTS ELIMINATE LARGE CAPITAL OUTLAYS KEEP ANNUAL EXPENSES UNDER TIGHTER CONTROL 6 50% + cost reduction over conventional spare parts strategies

7 Parts Management Program Reliability Capital Efficiency Technical Risk Planning 7

8 s Parts Management Program Reduce Costs and Minimize Risks to Your Operation

9 Introduction In today s competitive environment, managing spare parts inventory at industrial facilities is critical for reducing total ownership costs and achieving the performance required of systems and equipment Even the smallest of delays can cost thousands of dollars in lost production and overtime Many industrial organizations are exploring ways to get their inventory and maintenance processes under tighter control 9

10 Challenges Facing Plants For process industry facilities, selecting, purchasing and managing the correct amount of spare parts is key to maintaining availability and safety Unfortunately, the rapid evolution of technology, along with ongoing changes in the global supply chain, makes this task complicated Take into consideration the upfront costs of inventory, combined with the high cost and overhead related to on- site storage, and it becomes clear how trying to manage spares can negatively impact profitability 10

11 Value of Parts Management s Parts Management Program enables process plants to achieve their goals for improving asset supportability and managing spare parts obsolescence Parts Management provides greater predictability of spare parts costs and helps plant managers maintain their maintenance, repair and overhaul (MRO) expenses within a fixed budget When system problems occur, having spare parts on hand to rectify the issue helps to minimize downtime 11

12 Value of Parts Management (Cont d) s Parts Management solution is valuable to companies seeking: Increased overall plant availability and uptime Alternatives to unexpected spare parts and capital outlay costs Improved control of inventory assets Reduced inventory carrying costs Immediate availability of critical spares (site stock) Improved inventory integrity Faster mean time to repair 12

13 Value of Parts Management (Cont d) By utilizing s Parts Management Program, your operation does not have to balance the cost of maintaining a spare parts inventory against the risk of process downtime works with you to ensure parts are available 24x7x365 to maximize system uptime owns and manages the parts inventory either at your site or in our location you make no capital outlay for spares Parts Management reduces your investments in spare parts while ensuring the right equipment is available in the right place at the right time 13

14 How the Program Works With a Parts Management agreement, customers pay a fixed monthly cost for spare parts availability Spares inventory is placed in a combination of on-site and off-site (or bonded) stocking On-site stocking guarantees immediate parts availability, while bonded parts ship within 24 hours from our centralized warehouse locations Agreement also includes an in-service warranty, where the customer s warranty period does not begin until the part is placed into service 14

15 How the Program Works (Cont d) To provide the highest level of operational security, works closely with you to define your precise parts management needs We get to know your system and plant operations, and based on historical trends and failure statistics for all system components, establish an initial benchmark for spares carried on-site Parts covered by the Service agreement should take into account the redundancy of systems, backup training and simulation requirements, site maintenance practices, and logistic factors to establish a practical level of spare parts inventory supporting your business objectives 15

16 How the Program Works (Cont d) As further protection, provides quarterly audits of the on-site stock and checks every circuit board to make sure it is at the proper revision level Parts Replacement option keeps you from overrunning your maintenance and repair budget, and is a cost-effective ti alternative to purchasing spares on demand All failed parts are replaced at a fixed fee as part of the agreement 16

17 How the Program Works (Cont d) Best of all, s Parts Management Program has a fixed annual fee for availability, which you can expense on a monthly basis along with the Parts Replacement option to cover the parts actually used Fixed fee agreement allows you to plan the system lifecycle l support strategy in advance with complete assurance you can control its cost When combined with s Lifecycle Management (LCM) or Solution Enhancement Support Program (SESP), Parts Management provides even greater economic results Customers get expert engineering assistance to help leverage system capabilities to optimize productivity, and also receive enhanced software releases and system updates 17

18 Benefits to Customers Industrial operations around the world have found s Parts Management Program delivers significant benefits that have a direct impact on their business performance Better Asset Control Avoid unnecessary build up of parts inventory over time Ensure improved Return On Net Assets (RONA) Improved Cash Management Eliminate large capital outlays for purchasing spares Implement a cost-effective and stable payment schedule Reduced d Inventory-carrying Costs Minimize or eliminate expenses associated with carrying your plant s spare parts inventory 18

19 Benefits to Customers (Cont d) Compared to the Parts Management Program for the same period, conventional inventory carrying cost (ICC) strategies cost two to three times more and do not provide the same high degree of protection 19

20 Benefits to Customers (Cont d) Typical experience oil & gas refinery A major refinery had nearly 10,000 I/O points, and was faced with maintaining a large population of field assets Thanks to Parts Management, the refinery was able to reduce its spare parts inventory carrying costs by 42% per year Refinery also improved asset reliability, reduced process downtime, and minimized maintenance expenses. 20

21 Benefits to Customers (Cont d) Typical experience chemical plant A leading chemical company was dealing with issues associated with a significant inventory of spare equipment at its production facilities The company reduced its spare parts inventory carrying costs by 63% per year by leveraging s Bonded Stock inventory Bonded parts ship within 24 hours from a centralized warehouse location 21

22 Benefits to Customers (Cont d) Typical experience pulp & paper mill In the pulp p & paper p industry, a medium-size mill achieved a 59% reduction in ICC from the bonded stock inventory approach Bonded stock also provides the mill with protection from downtime, as well as confidence that the right parts are always readily available 22

23 Conclusion By allowing to assume responsibility for your facility s parts management and relying on our around-the-clock support services, you re able to focus on productivity and uptime, which speaks directly to the bottom line 23

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