A simple step with far reaching benefits30/4/20
An idea that has changed the Procurement, Supply Chain Management and Service Support for good.
Ambey Mining Pvt. Ltd. (AMPL) is a large mining company, with operations pan India and major mining projects in West Bengal, Jharkhand, Chhattisgarh and Orissa. As the operations of AMPL grew, so did their fleet of tippers and skilled manpower to deliver efficient, productive and profitable operations. This required the effective use of equipment and manpower in all projects, depending on the needs to make the best use of the infrastructure. As a result the challenges were best-in-class service and maintenance of the tipper and higher retention of the manpower.
AMPL came up with a novel idea of creating an independent company called, “Equipcare” to take care of procurement of equipment, service & maintenance of tippers, hiring, training and competence development of the drivers and technicians, and last but not the least sourcing of spare parts and lubricants for tippers. Few years ago, AMPL had taken a wise decision of creating a fleet of a single brand of mining tippers and today they have a fleet of over 300 Volvo FMX tippers. AMPL’s turnover is expected to cross Rs. 900 crore in 2019-20 and has manpower of over 5000 people. Currently the major sites of operation include Rajmahal near Dumka, two sites near Asansol, Katapahari near Dhanbad and Amrapali and Daltunganj near Ranchi. The fast paced growth is reflected in the current production of 2 lakh plus Cu.M per day, which includes OB, coal mining and transportation.
An initiative that is already paying rich returns. It was in July 2018, the new company Equipcare was born with a focus on equipment procurement and maintenance, as well as supply chain management as an independent profit center. Today Equipcare has around 900 people with its main workshop in Durgapur for major engine and gearbox overhaul, a central warehouse for parts and lubricants, a fabrication facility for rebuilding of tipper body’s, HEMM Buckets, Undercarriage and conversion of old tippers into tankers and fuel bowsers and developing of mobile service vans.
As the business grew, so did the needs of the business. With a fleet of over 300 Volvo tippers which is a mix of 15 year old to the latest Volvo FMX tippers, spread across 6 to 7 major project sites, inventory control became a major challenge. Depending on the need, different project sites were receiving spare parts from Volvo as well as secondary vendors. This created a problem of proper fitments and different warranties and excess inventory.
“Earlier various secondary parts vendors used to visit our site and request the people-in-charge to certify the quality of parts for procurement. This would leave the decision of judging quality, certification of parts and finalizing of commercials with multiple players.”
Parts sourced from different vendors resulted in different life spans. This resulted in higher number of breakdowns lowering the uptime of the vehicles. The other concern was to identify the problem of breakdowns. The spare parts sourced from different vendors were put together in the tippers and no one vendor could be held responsible. Management of lube inventory was another challenge, as any lube available was used at project sites and it was at the discretion of the Service Technician at site. The life span variation of spares could not be defined and the secondary parts changed the assurance of the vehicle life span, thereby causing problems with Preventive Maintenance.
“As a large organization, our tippers are moved from one project site to another depending on the production requirement. Maintaining the tippers from other sites was a challenge, since the model of tippers varied and not all sites were stocking spares for all models.”
When we studied the issues arising from use of parts from secondary suppliers, the bigger picture became clear. It was “penny wise, pound foolish” to use secondary parts and save some money initially and creating problems at the level of inventory, fitment, variation in life span of parts and supply chain management. It resulted in higher inventory management, higher downtime and lower efficiency of operations. “The difference between excellent and poor quality goes far beyond appearance. You can’t see the choice of materials or tolerances, for example, but they make a big difference over the long run.”
It pays to put your eggs in one basket. We had the advantage of only Volvo tippers fleet. So we decided to bring in a synergy of Aftermarket support through sourcing Genuine Spare Parts and Lubricants from Volvo after careful evaluation of cost and advantages.
This decision of Equipcare has worked wonders for AMPL’s efficiency and productivity, resulting in better profitability for the organization. The synergy of parts from a single source has ensured that procurement of the parts is planned well in advance, with better inventory and supply chain management.
“With single vendor procurement, it has removed the multi-level decision making and ensured ethical practices of procurement.
Today 80% of the procurement takes place from OEM with rate contracts. With one point control the entire parts procurement process is managed at central level, streamlining the entire process of parts supply chain management.”
Equipcare is the first organization to sign a Rate Contract for parts with Volvo. This has resulted in better rates, consistent supply, easy availability and efficient parts supply management, across all project sites. The costing, sourcing and supply is managed centrally, which has stopped variation of suppliers, rates and different warranty periods. The result is better parts and lubrication management with centralized control of cost and supply. The uniform source of lubricants has ensured that the quality is maintained across all project sites.
Equipcare has also built an expertise in fabrication such as converting old Volvo tippers that have completed their lifespan for mining application, but are good enough for applications like water sprinklers and fuel bowsers. They also build Service Vans on truck chassis for use in mines.
“Our easy access to Volvo parts helps us in refurbishing the old Volvo tippers into tankers and bowsers”. This is a win-win situation for both Equipcare and AMPL.
For AMPL, the uptime of the Volvo Tippers is better than ever before with flexibility to use Volvo Tippers wherever and whenever to meet the dynamic production requirement. This idea of Equipcare, an independent organization to take complete responsibility of service and maintenance of Volvo Tippers and all other equipment– is paying rich dividends.
“With single vendor procurement, it has removed the multi-level decision making and ensured ethical practices of procurement. Today 80% of the procurement takes place from OEM with rate contracts. With one point control the entire parts procurement process is managed at central level, streamlining the entire process of parts supply chain management”
MR. SARUP AGARWAL - BUSINESS HEAD, EQUIPCARE
“All in all, Genuine Volvo Parts are vital to maximizing uptime and achieving the most profitable truck ownership possible.”
MR. SARUP AGARWAL - BUSINESS HEAD, EQUIPCARE