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PTC > Case Studies > How Metso implemented Service Parts Management (SPM) in the Cloud to unearth value from its global supply chain

How Metso implemented Service Parts Management (SPM) in the Cloud to unearth value from its global supply chain

Technology Category

Platform as a Service (PaaS) - Data Management Platforms
Infrastructure as a Service (IaaS) - Cloud Computing

Applicable Industries

Mining
Oil & Gas
Recycling & Waste Management

Applicable Functions

Logistics & Transportation
Procurement

Use Cases

Supply Chain Visibility
Inventory Management
Demand Planning & Forecasting

Services

Cloud Planning, Design & Implementation Services
System Integration

The Challenge

Metso, a world-leading industrial company, was facing challenges with its global supply chain. The company was using a location-based, on-shelf availability model, which resulted in isolated and independently managed inventories across its 39 locations. This approach was inefficient and reduced Metso's ability to serve its customers effectively. The company also had to manage intricate material flows, making it difficult to predict part lead time. Furthermore, the constraints of a legacy system and a focus on individual supply issues rather than broader strategic improvements were hindering Metso's growth and profitability. The company needed a solution that could match its complicated network and grow with its business.

About The Customer

Metso is a world-leading industrial company serving the mining, aggregates, recycling, oil, gas, pulp, paper, and process industries. The company is headquartered in Helsinki, Finland, and reported net sales of EUR 2.6 billion in 2016. Metso operates a global network of over 80 service centers, services professionals, and employs over 11,000 people in more than 50 countries. The company's operations are spread across 39 locations, each of which used a global inventory management system. However, the inventory at each location was managed independently and isolated from the inventory in the entire Metso supply chain.

The Solution

Metso adopted PTC’s Service Parts Management (SPM) with Multi Echelon Optimization to manage its global supply chain more efficiently. The solution allowed Metso to move from a location-based planning to planning the supply chain as a whole. The implementation of SPM started with a pilot phase in June 2014. During the initial months, Metso's cost of inventory increased as the system evaluated product mix and procured the optimal inventory levels. However, once the right parts were procured in the right locations, inventory stopped increasing and started to go down. The design, build, and implementation of the project took place over nine months, with a highly focused project team dedicated to the launch. Much of the team’s focus was on change management and master data as the go-live would be simultaneous in all the 39 locations. SPM was integrated into Metso's global SAP, improving efficiency.

Operational Impact

Metso was able to manage its parts more holistically and connect its 39 locations, leading to improved efficiency and cost savings.
The implementation of SPM allowed Metso to evaluate product mix and procure the optimal inventory levels, leading to a decrease in inventory cost after the initial increase.
The integration of SPM into Metso's global SAP improved efficiency and made implementation easier.

Quantitative Benefit

The pilot phase of SPM implementation resulted in savings of more than EUR 30 million.
The addition of the MultiEchelon Optimization Phase 2 module in October 2015 resulted in an additional EUR 11.6 million in inventory cost reductions.
The inventory turn had increased by 18%.