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Streamlining storage of test equipment at siemens Hengelo : a capacity based approach

Velde, G.H. van der (2013) Streamlining storage of test equipment at siemens Hengelo : a capacity based approach.

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Abstract:Siemens Hengelo assembles compressors and gas turbines for the oil and gas industry. After the completion of the assembly, the compressor must be tested. Since a compressor cannot run ‘dry’, a closed loop is created. The pipes used to connect the compressor to the loop are the subject of this research. Every compressor is different; they are all uniquely designed and engineered to fit exactly at the oil source were they will operate. Therefore there are different pipes needed every time. The pipes differ in length, diameter and the pressure they can handle. Hundreds of pipes with all kinds of different characteristics are in stock to connect a compressor with the permanent installed pipe system. With every new compressor test new pipes are manufactured and added to the warehouse, while the pipes last forever and thus are never removed from the warehouse. The warehouse has reached its capacity limits, storage space is a scarce resource at this facility located in the city centre of Hengelo, and the capacity is likely to reduce due to road construction plans at the warehouse location. This leads to two research questions for this thesis: 1) How can test pipes be removed from the warehouse in a systematic way? 2) Can we prevent the necessity of new test pipes? The cost of one pipe runs from 3,000 to 7,400 euros. Currently there are at least 421 pipes in stock. Only 15 loops per year are built. This leads to a warehouse with expensive parts while 30% of the items, equalling 70% of the storage space, was not used in the past four years. To answer both problems, the historical usage data of all test pipes is analysed to search for patterns that can be used to forecast usage. Main subjects of analysis are the diameter, pressure capacity and length of a pipe. No relations between these characteristics and the usage are found; therefore no forecasts based on these specifications can be made. Nonetheless we find four pressure stages and five diameters that are used more often than others. We conclude usage forecasts on item basis cannot be made, but we do know how long an item is already in storage without any usage. This leads to two recommendations: 1. Refresh the warehouse inventory continuously, using the so-called knapsack principle. Every time a new pipe must be stored, storage space must be created by removing another pipe. An model is developed in Excel to decide what item must be removed, based on the replacement value, the number of weeks the pipe is unused in storage, and the number of square metres a pipe needs. 2. Manufacture new pipes according to the standards defined in this report, such that the pipes can be used in many situations. We recommend four standard pressure stages (out of the nine pressure stages currently in the warehouse) and five standard diameters (out of the 19 diameters currently in the warehouse). Furthermore we propose to use standardised pipe lengths: using a pre-defined set of lengths all required distances can be created from a few pipes. Obtained advantages of the knapsack principle are:  Due to the knapsack principle the warehouse capacity is fixed from now on, eliminating the everlasting growth of storage costs and resulting in predictable storage usage and costs.  To define the initial warehouse size lots of items are scrapped, saving 7,000 euros per year of external warehousing costs and clearing up some back-log in the internal warehouse.  The inventory will be up to date, items that are not used for all kind of unclear reasons are automatically removed and replaced by new items.  Implementation costs are negligible. Obtained advantages of the standardised test piping are:  Almost no need for new items anymore when all default pressure stage, diameter and length combinations are in stock  Easier test loop design due to standard measurements  Less items need to be stored  Saving of 135,000 euros per year after an initial investment of 360,000 euros. The standardisation of pipes requires an investment of 360,000 euros, in addition to the currently recurring costs. The earn-back period depends on the investment period, it depends on the number of loops that will be built per year in how many years the investment is completed and the earn-back will start. On average a saving of 135,000 euros per year is expected after five years. With some further research even larger savings are possible. Our main recommendation for further research concerns the use of retractable pipes. One retractable pipe can replace up to 30 standard length pipes a cost only three to four pipes, saving the purchases costs as well as the warehouse costs of these pipes. This system is currently in use in the Siemens plant in Duisburg, Germany, thus practical experience can be obtained from the German colleagues.
Item Type:Essay (Master)
Clients:
Siemens, Hengelo (O), the Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/63263
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