A Seminar Hosted by Network International

From Inventory Collectors to Inventory Managers

Rick Jones, A d k P Ri k J Anadarko Petroleum l

Before State
Minimal confidence in inventory data (descriptions, condition, even ownership) No storage/maintenance procedures Massive audit exceptions dating back to 1990 Minimal internal utilization Few dispositions No formal junk program Well returns collected Physical inventories performed every two years Duplication of data entry (SAP, Cards) Extended period well charges Inaccurate transfer pricing ( p g (58% error rate) ) And one lonely person that really wanted a career change

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Plan
Get executive management engagement
Carrying costs, cash flow and CAPEX

Get the people and training Prioritize the problems and dont get distracted!
Warehouse consolidation and clean-up Emphasize internal utilization Improve front end processes

Change physical inventory approach y Actively address old audit claims

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Results
Warehouse clean-up completed $35MM of internal utilization in first year Audit backlog eliminated 60 day response to new Monthly desk audits on all warehouses Risked based physical inventory approach Reconciliation includes yard records National junk program established Well return programs set up with suppliers Continuous disposition efforts Extended well charges practically eliminated Transfer pricing shifted to Accounting p g g SAP front end built Tackling non-controllables

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A Seminar Hosted by Network International

Inventory Management
Cost Avoidance
Kendall Morvant, Willi K d ll M Williams G Pi li Gas Pipeline

Supply Chain - Inventory pp y y

Inventory Tasks M i t i M t i lC t l Maintain Material Catalog Standardize Descriptions A l Analyze Hi t i l U Historical Usage and P h d Purchase L d Lead Times Materials Shared Throughout System When Appropriate Manage Emergency Pipe g g y p Conduct Physical Inventory Counts Every Two Years
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Inventory & Surplus y Management Systems

Oracle (Procurement & Inventory)
Review Material Requisitions Ch k I Check Inventory Module f O t M d l for Over Max M Quantity Prepare Transfer Between Stock Locations Cancel Line Item on Requisition S Scorecard C t A id d Cost Avoidance

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Inventory & Surplus y Management Systems

PowerPlant (Add on to Oracle PP&E)
Review Available Construction Surplus Verify Location and Condition Notify Project Accountant to Transfer Cancel Line Item on Requisition Scorecard Cost Avoidance

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Process Summary y
Oracle Requisition from Engineering Powerplant Surplus List from Construction Screened by Investment Recovery S db I t tR Sourced from Surplus List vs. New $$ Redirect using Internal Material Transfer Avoid Oracle External Purchase Order Material still tracked for reconciliation
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A Seminar Hosted by Network International

Inventory Management
Inventory Key Aspects to Investment Recovery
Caleb Bloyd, ConocoPhillips Investment Recovery Analyst Sofyan Lubis, ConocoPhillips Inventory Lead

Inventory Key Aspects to Investment Recovery I t tR

What areas of Inventory Management are strongly related to Investment Recovery? Housekeeping H k i Stock Set Up Review Bill of Material Data Integrity (BOM) Optimization Push and Pull (Excess & Dead stock) ( )

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Common Opportunities
Key Aspects Housekeeping Common Opportunities Housekeeping Program Material Preservation Program Core Preservation for repairable item(s) Review and Approval Equipment maintenance and configuration Initial stock at minimal level Access material identification from retired equipment More accurate stocking levels Leads to Standardization of Processes Better utilization of Material Master Numbers Stock Set Up

Bill of Material Data Integrity (BOM)

Optimization

Right size orders Enough size for low value item order Low Max/Min Ratio for expensive item Urgent Request PO Cross Reference to Surplus Materials Transfer oppo u es a s e opportunities

Push and Pull (Excess & Dead stock)

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A Seminar Hosted by Network International

Managing Surplus Materials after Mergers and Acquisitions

Tom Hedgepath pp y g Director of Supply Chain Management Denbury Resources

Where the heck is Baker Montana??

Acquisitions and Mergers 101 What did we get ourselves into? g Where are all of our new locations? Do we have enough staff to handle? How are they accounting for inventory and surplus
is it still charged to the location or brought back into location, an inventory account?

Do THEY even know what they have? (Were hiding (We re

the expensive stuff up by our house so we can keep a an eye o it nobody can walk o with it!!!) on t obody ca a off t t )
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How to start and do it ASAP!

Take full inventories If an inventory wasnt provided with acquisition i t t id d ith i iti
documents, do one quickly. Even if one WAS provided at close, do your own close own.

Decide on an inventory software program A you going t use your companys or th i ? Are i to theirs? Does either company even have a good tracking
software? ft ?

Can you easily integrate with accounting software?

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Do we need it??
Determine TRUE conditions not what its on the
books for

Do you have a field that has a need for this anymore? I it current technology, or better off in a museum? Is tt h l b tt ff i ? Let other fields know your plans either speak up or
forever hold your piece f h ld i

Give everyone a deadline to request the equipment

CONTACT
NETWORK INTERNATIONAL!! O O
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Do we need it??
Everyone likes the comfort of having spare parts and
inventory at their disposal (Honey Holes) ( Honey Holes )

They also like to be the ONLY ones that know where to

find these parts in an emergency (Job security)

If your surplus is older than your youngest engineer,

you ve youve probably held it too long!

Set a turnover goal successful suppliers turn their

inventory multiple times in a year dont hold yours don t more than 1 year without using it somewhere.

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Make disposal fun or a game

Raise pride levels in each field make it a contest to
see who can generate the most sales revenue and make their fields a showcase

No money budgeted for clean up? Start with one area

and watch the interest grow. You may find out that you can offset clean up costs with the money you raise from sales (if you can convince your accountants to let you apply the money back to clean up!) pp y y p)

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 E (All Eyes on inventory) Bring VISIBILITY to your

inventory so y use what you have rather than buy y you y y new materials.

E. R. A. S. E. some of the debt from acquisitions

R Return on your Investment (Reduce acquisition y ( q

costs by getting rid of things you dont need)

A Accountability (Know everything y have and y( y g you

TRACK it)

S Standardization (Make all fields live up to same ( p

guidelines and report everything equally)

E Environmental be e t ( e G o e ta benefit (Be GREEN a d a good and

neighbor)
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QUESTIONS & ANSWERS

Network International A Liquidity Services Marketplace