The hardest stakeholders to impress with MRO Inventory Optimization is maintenance. Maintenance are the frontline soldiers when it comes to the battle of keeping plant running and producing, and in the perfect world they would desire an abundance of spares for any situation. We know that this simply isn’t possible so we need to find a way to put their mind at ease when discussing inventory.
Most commonly an inventory person will talk in stock codes; however maintenance talk in equipment and quantity of equipment installed. Experience has shown that an inventory item review with maintenance stakeholders without linked equipment references is far less likely to succeed than one with equipment references. Equipment BOM’s should be linked to stock codes with quantity installed to assist with making an educated decision. Identifying any complete matching components to go with the spares would be of assistance in gaining approval for reduction of stock holdings.
For example, a question that may be asked is: do you really need to hold all the spares to repair a pump if you have a spare complete pump in stock?
Another key for achieving the highest level of MRO Inventory Optimization is the ability to identify what stock codes are regularly issued in a “planned” manner. This means that the demand is planned for outside the lead time of the item and there is no unforeseen consumption to be considered. If an item is consumed entirely in a planned manner then there should be no need to stock it in the warehouse.
If you can demonstrate an ability to answer any questions as they arise such as “what does the stock item fit in?”, “is there unforeseen demand?” and “how many locations do we use it?”, you will be on your way to achieving the buy in from maintenance teams that successful optimisation requires.
Note: If you have limited BOM information, another option is to look at the issues to equipment and build you data out based on that.
- Increased protection against maintenance delays through unavailable inventory items
- Hold enough inventory to cover unforeseen/unplanned demand
- Hold enough inventory to reduce the requirement for long-term planning on long lead time items
- Don’t waste my time with convoluted processes with little benefit to me!
Although the finance department is not involved in grass roots reviewing of inventory items, they will want assurances that all is being done to ensure no un-necessary inventory is being held on the books. One solution to this is that quarterly meetings are held to discuss methodologies, logic of review, end user participation by work area, roadblocks that come up during the process and most importantly change to inventory value.
A baseline of inventory value should be taken at the start of the process with monthly measures of results reported. It is important to consider new inventory introduced since the baseline measurement and also any changes to rates of production from the plant. If we can achieve a solid reporting of outcomes to finance then we should have appealed to their motivators. It is important however that finance understand there will be a lag between implementing change and achieving the value change on the books.
- Reduction of capital tied up in inventory
- Reduction in overheads’ relation to purchase and storage of inventory
- Reduced need for write-off provisions of obsolete inventory
The supply chain team are integral to the outcome of reviews by actioning any outcomes and also monitoring the outcomes to ensure success. Initially there will be an increased effort required to implement some of the changes, however in the longer term as maintenance and finance motivators are achieved, they see the effect of the changes and experience a reduction in their workload, . Things like clearing away obsolete inventory are an extra effort but the space that it opens up in the warehouse and yards will mean safer means of storage for existing inventory, the ability to re-lay some of the storage space for better utilisation and less picking/packing effort etc.
MRO Supply Chain Motivators
- Management of storage space in warehouses and yards
- Reduced receipting effort in warehouse
- Provide optimal service level to customers
- Improved supplier delivery performance and total cost of ownership savings against performance based contracts
The world of MRO presents some very unique challenges and they can be very different, depending on your role.