Spare Part Inventory Optimisation

Operators of Oil & Gas assets have long struggled with the issue of managing so-called "safety stocks" of spare part inventory. Within Shell, this problem sits within the materials management discipline whichcovers the ordering, storage and utilisation of material assets such as subsea facility equipment or pipeline parts. Across all assets globally, Shell carries a huge stock of such items which ties up large quantities of working capital. Observations over time have noted significant issues such as unrealistic supplier lead times, rising inventory levels and associated carrying cost for some assets, andincreasing demands on warehouse space in certain locations. In response to these challenges, over the past 2 years an interdisciplinary project team has produced a tool, based on advanced analytical methods, that helps assets optimise stock levels and purchase strategies. This approach reduces the risk of deferment due to stock outs and prevents excessive stock carrying costs. It also supports on-time execution of maintenance schedules and so helps to maximise asset uptime.