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July 27, 2017
Whole solution greater than sum of its parts
By: Andrea Paciaroni & Elliott Segarra

The time has come for a collaborative energy platform for spare parts management.

Major players in oil and gas are implementing digital capabilities to drastically improve asset utilization and reliability, manage shutdown, worker safety and logistics. The Internet of Things (IoT), artificial intelligence (AI), machine learning, cloud architectures, robotic process automation (RPA) and mobility are fueling transformation.

In a refinery, for example, connected smart sensors monitor assets and predict failures. Complex analytics optimize production schedules based on changes in supply and demand. Workers and contractors are kept safe through wireless sensors and wearables that track plant location, air quality and vital information.

Other processes, however, have seen little innovation. Among the laggards is spare parts management, operating on 15- to 20-year-old processes and ongoing challenges including:

  • Excess working capital invested in piles of spare parts dispersed across warehouses, storerooms and yards.

  • Critical spares being out of stock when failures occur.

  • Poorly maintained master data containing duplicates, poor item descriptions, and lacking in critical attributes for operations and logistics.

  • Excessive use of free-text requisitions due to convoluted catalogs and requisitioning processes.

While 3D printing has great potential, it doesn’t resolve weak management of master data. It also has limitations with applicability and scalability. Upstream and downstream operations consume thousands of parts requiring complex engineering design and strict testing for quality.

The concept of each company chasing the same information from the same vendors is inefficient. Four factors should motivate moving to a collaborative solution:

  1. Upstream and downstream companies have a high percentage of parts commonality with the global pool of manufacturers.

  2. Effective management affects asset reliability, safety and industry reputation. Failures can result in fatalities that reverberate across the world.

  3. The concept of each company maintaining its own spare parts item master is obsolete. Individuals routinely use and trust platforms such as Facebook, LinkedIn, Google Maps and stock-trading platforms. Similarly, information on spare parts could be maintained in a single record, then shared and accessed by oil and gas companies.

  4. Today’s technology supports a value-generating ecosystem. An industry platform could connect with applications for enterprise resource planning (ERP) systems.

A digitally driven, collaborative ecosystem could disrupt the status quo with limited investment from each player. Using cloud architecture, a Spare Parts Energy Platform (SPEP) could provide master data to be shared across the industry. Each company’s ERP system would read the common item master to support internal cataloging, requisitioning, purchasing and inventory management.

The concept is a sort of “Amazonification,” from upfront customer experience to back-end requisition-to-pay processes. The platform would allow companies to exchange and sell slow-moving and obsolete inventory. Similar to online retail sites, there could be sharing of reviews, lessons learned, and information helpful for maintenance and operations workers.

Instead of each company struggling with their own master data cleanups, industry players could join together and partner with digital firms for a solution much greater than the sum of its (spare) parts. Agile techniques can be used to rapidly develop a prototype to demonstrate the potential.

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