Union Camp in Savannah Develops Cost-Saving Spare Parts Program Inventory tracking and repair management system originated by mill stores, purchasing, E&I, and vendor team saves $650,000. Pulp & Paper Magazine Union Camp Corp.'s Savannah, Ga., complex is the worlds largest facility of its kind. With nearly 3,300 employees, the facility maintains four manufacturing operations: a pulp and paper mill, box plant, bag factory, and chemical manufacturing facility.
Like most pulp and paper facilities, the mill has been taking a long hard look at its operations to reduce costs. Recently, Jack Kinzie, electrical and instrumentation (E&I) superintendent, started an electrical board repair team to find ways of reducing costs through better management of spare parts. This project has the potential to reduce board repair costs as well as provide for cost avoidance in all areas of the mill.
Background. Within the E&I Dept., individual groups were acting autonomously with their spare parts inventories. This created a situation where substantial amounts of inventory were unaccounted for. Because inventory is a large expenditure for the mill, Union Camp knew this presented a problem- and a huge opportunity to shave costs.
Says team member Ray Edwards, mill stores assistant superintendent, "Some departments had spares that other departments didn't know about. Someone would withdraw a component from the storeroom's inventory, causing it to fall below the min/max criteria. This would set up a reorder situation when, in fact, usable spares could be available elsewhere in the mill. When it's just a few circuit boards, and you can end up in bad shape real quick."
To attack the problem, Union Camp assembled a team of E&J, mill stores, and purchasing personnel. Given the name Electronic Board Management (EBM) Team, the group's task was to develop and implement a program to identify, certify, repair, track, and inventory all electronic components in the mill. The team consisted of the following people: from the E&I group, superintendent Jack Kinzie, assistant superintendent Dave Hill, foreman Dave Murphy, planner Charlie McAuliffe, and electrician Russell Lewis; from mill stores, superintendent Lamar Terrell and assistant superintendent Ray Edwards; from purchasing, senior purchasing agent Ted Flake.
With the full backing of mill management, the EBM Team acted quickly, calling in several vendors with whom they had previously contracted for repair of their spare boards. Spearheaded by Dave Hill, the EBM Team's objective was to find the most efficient, cost effective solution that would satisfy all of their needs. The team ultimately chose a system offered by Phillips Service Industries (PSI): its trademarked RAC system, short for Repairable Asset Control. After choosing this system, the EBM Team added two new members from PSI: account manger Chris White and RAC coordinator Charles Milliken. What the company proposed, and what ultimately led to its membership on the team, was a completely new way of looking at repairable spare parts. Under this system, all of the components in a given plant or facility are considered to be repairable assets.
Defining The System. Unlike a typical storeroom management system, this one completely tracks usable inventory and eliminates excess or obsolete inventory. Among its features is the ability to track the disposition of every spare part in a mill. The system in use in Savannah consists of the following:
Base computer to store all repairable asset information
Set of bar-code labeling equipment
Set of bar-code readers
Coordinator (PSI employee who works directly with Union Camp personnel and is responsible for setup, all bar coding, and maintenance of the system).
System implementation is broken down into two phases. During phase one, the coordinator, working closely with mill personnel, roots out every repairable asset in the mill and labels it wit a bar code. (The Union Camp system covers printed circuit boards exclusively.) This bar code carries information such as the type of component, its manufacturer, model and serial numbers, revision level, and other identifying characteristics.
All repairable assets are then entered into the base computer that is housed in mill stores. It was during this phase that Union Camp team discovered the system's cost-avoidance potential: by completing the inventory of three areas in the mill and utilizing the vendor's free certification service, the team is winding up with a leaner inventory of known-good spares. By knowing where redundant or unnecessary inventories exist, and knowing which suspected bad spares are actually good, Union Camp is now eliminating redundant orders and unnecessary repair charges. To date, this has resulted in an estimated cost avoidance of $650.000 since the program was installed in September 1992.
Phase two of the program is the ongoing tracking of all repairable assets and is, at this writing, still in progress. At the completion of phases one and two, the disposition of every component is known at the touch of a key. Information immediately available to anyone using the system includes the following:
Location of the components within the stores area
Floor location of components removed for machine repair
Quantity of each component in stock
List of components out for repair (vendor, when sent, date due back, repair price, warranty, etc.).
In addition to the above, the system is tracking failure rates of components and warranty rates of repair vendors, and is identifying problem areas by flagging components that have excessive failure rates.
