Inventory management is among the most daunting issues facing maintenance and
engineering managers. The number of pieces of equipment in any given facility,
as well as the spare parts and tools needed to maintain them properly, create a
vast array of items that managers must track and monitor to ensure department
efficiency and to control costs.
In too many organizations, stock rooms
for spare parts, equipment and tools areas that are meant to serve as central
sources for essential elements of the maintenance mission have become black
holes that do little more than create confusion and collect
dust.
Consider it in another context. My father-in-law is a retired
mechanical engineer who can fix anything. One unintended consequence of his
repair expertise is that everything has value, so he never throws anything away.
His garage is packed from floor to ceiling with old lawn mower engines, repaired
tricycles, exploded diagrams of push reel mowers and owner's manuals. The
organization of his garage means every job is more time-consuming than it should
be.
Unfortunately, too many stock rooms in institutional and commercial
facilities are in the same condition, and the situation has much the same effect
on inspection and repair projects. Faced with this challenge, managers often
turn to a computerized maintenance management system (CMMS) for a solution. But
too often, they don't find one in a CMMS.
Bringing order to
chaos
Having performed a number of
CMMS implementations and storeroom optimizations, I am amazed by the number of
facilities that manage their inventory exactly the way my father-in-law
does.
If I could get my father-in-law to reorganize his garage, he would
have room to do wood work or park a car, he could make money from garage sale,
and so on. Projects would be easier to do, and he would spend less time looking
for parts he might have.
For maintenance and engineering managers, the
advantages of proper inventory management are hard to ignore. An inventory
management module is fairly standard in CMMS, and it is almost universally
underutilized. If someone picked a company at random, one could predict three
things with reasonable assurance:
- The company has a
CMMS with an inventory module.
- The module contains
information.
- The module's
information is out of date.
This situation is so
often true because facility inventory control processes are inherently difficult
to enforce. Technicians keep parts on hand outside the system, and many find
that it is easier to keep tools and equipment for two weeks than to check them
in and out. Also, the parts to repair emergency breakdowns generally are not
issued through the system.
This is the point at which a CMMS can help
if it is installed and used properly.
Essential
information
The secret to a successful
inventory control program is the quality of the inventory management process.
Most managers who oversee the implementation of a CMMS assume that managing
inventory is an automatic function of the software, so they implicitly trust the
system to bring order to these activities. But this belief is not true, nor will
it ever be. The best a CMMS can do is simplify and automate a process that
already is effective.
An inventory control system should fundamentally
provide the following information for each item: availability, location and
purpose.
The first two pieces of information are fairly
self-explanatory.
If an organization's inventory management process
ensures that a CMMS handles the receipt and issuance of all parts and tools,
then the on-hand amounts availability should stay accurate. A manager should
routinely require only a monthly, quarterly or annual physical count.
For
location, a standard identification by building, room, shelf or bin should be
sufficient to know where to find a part. If the inventory is accurate and
searchable through a CMMS, then technicians will be less likely to horde spare
parts in their own work areas outside of the inventory management
process.
The third item purpose is where a CMMS can really start to
shine. In a facilities stock room, the situation often is the same. Items
generally get removed as they are used. So, as equipment becomes obsolete and
removed from service, spare parts on hand to support that equipment remain in
stock but used and, therefore, stay in the storage area
forever.
Enforcing one simple storeroom rule nothing is issued without
a work order can solve this problem and 90 percent of all other storeroom
problems. Enforcing this rule requires two conditions. Equipment information
must be in the CMMS, and the spare, replacement and repair parts must be in the
CMMS.
The system: A closer look
One secret of effective
inventory management is that it is self-correcting. To understand how this
process is self-correcting, imagine a hypothetical situation in which an
organization has installed a CMMS with no information.
First, a piece of
equipment fails, and technicians need parts to repair it. To issue a work order,
equipment information is entered into the CMMS.
Second, the technician
takes the work order to the storeroom, where the stock room attendant finds the
part and notes both the part number and its location. He then enters both into
CMMS, along with the part description, and issues the part against the work
order.
Third, a shipment of parts comes in to the storeroom. The
storekeeper finds some parts already are in the CMMS, while others need to be
added. He adds the items into the CMMS as necessary, along with additional
information, including vendor, vendor part identification, vendor address,
manufacturer, manufacturer part identification, manufacturer address, and the
cost from the shipping invoice.
Finally, the attendant continues updating
the CMMS with storeroom data. Over the course of the next year or so, the CMMS
generates records of relationships between parts and equipment based upon usage a bill of materials for that equipment.
Now, managers can identify
parts that technicians use frequently, as well as parts they never use, and they
can match parts with pieces of equipment on which they are used. With a little
analysis, managers can establish maximum and minimum stock levels, reorder
points and criticality.
Fine-tuning
reports
Clearing out all of the
unused, obsolete, damaged and unidentified spare parts minimizes inventory,
frees up storeroom space and simplifies store keeping. For managers in the
market for a CMMS that improves a department's inventory control, the best
indication of its capabilities is its pre-defined inventory reports,
including:
- a where used
report and its converse, the orphan report
- a not used during
last X month report
- a stock movement
report
- a stockout
report
- a service level
report
- a vendor performance
report
- an ABC analysis
report.
An ABC analysis
assigns a value to each item in inventory to indicate its relative value in the
inventory, with A items being most important. The designation can be based on
the gross value of an item or on purchasing history, or on the criticality of
the part to the operation.
Physical inventory counts are based on ABC
analysis. Count all A items every month. Count all B items quarterly, spreading
the count out over the three-month period of the quarter. Count C items annually
during the normal annual physical count event.
Managers who want to fix
90 percent of their inventory management problems might consider this tactic:
Print out a list of all the spare parts linked to equipment, and throw away,
sell, donate or return the rest. This might sound extreme, but it is
effective.
Most states charge a storeroom inventory tax. One method to
minimize this inventory tax one that is not recommended is to maintain an
inaccurate record an organization's inventory. A second, and far more
legitimate, method is to keep accurate inventory records and store only
necessary items.
Establishing an inventory management and control process
and using a CMMS system with one rule nothing issued without a work order
can go a long way to sustaining an accurate, efficient storeroom.
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