Significant ROI
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IHS Intermat Solutions' parts optimization tools and services deliver tangible and sustainable cost benefits. The payback period on our customer's parts optimization projects, in many cases, is three to six months from project completion. In addition, our customers have realized strong internal rates of return (IRR) during the first year of their project, ranging from 80% to 350+%. Intermat Solutions' forte is providing customers with immediate tangible benefits, as well as creating a sustainable environment to continue to capitalize on these benefits.
The following table represents the cost benefits realized for a typical project within the Oil & Gas and Utilities industries:
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Year 1
Realized Cost Benefits |
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KPI |
Potential |
Typical |
Oil & Gas |
Utilities |
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Inventory Reduction |
5-20% |
8% |
$1,778,700 |
$2,695,000 |
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Strategic Procurement |
2-7% |
4% |
$660,660 |
$1,001,750 |
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False Stock Outs |
1-3% |
2% |
$363,300 |
$550,550 |
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Carrying Cost Reduction |
10-17% |
12% |
$302,148 |
$457,800 |
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Total |
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$3,104,808 |
$4,705,100 |
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Payback Period / Project |
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3.8 months |
2.9 months |
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IRR / Project : Year 1 |
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214% |
309% |
Assumptions: SKUs per plant: 35K O&G; 50K Utilities. Industry value/SKU: $550 O&G; $700 Utilities. Inventory turn rate: .9 WAVG. Obsolete material recovery: 10%. Storeroom service rate: 90%. Expedited order premium: 10%. Average Intermat project cost: $990K O&G; $1,150K Utilities. Average plants/project: 6 O&G, 5 Utilities. Average project duration: 6-9 months. Payback period calculations use project completion date. IRR calculations use project start date.