What it Really Takes to Control Inventory
Inventory control plays a critical role in manufacturing facilities. Proper spare parts management can reduce downtime, and increase profit margins.
By Ken Staller
Various types of facilities expend enormous amounts of energy, making sure that a full array of goods are at their disposal and allowing the manufacturing of products in a timely manner. As more companies adopt Just-in-Time and progressive/continuous manufacturing practices, the need for the proper materials at the right time is imperative. If facilities don’t have the goods, the machines stop, and every second of downtime is pure profit loss. To prevent losses, they try to improve their purchasing, quality control, inventory control, and in-house handling practices and procedures.
Challenges beyond planning and inventory management
However, the failure to plan deliveries and manage inventory are not the only reasons the machines will stop. Power outages and natural disasters can’t be totally controlled. An even more common issue? The lack of one small spare part can shut down production as quicky as missing one entire shipment of manufacturing goods or materials. Having spare parts for machines and being able to find them quickly when needed is key.
Supply chain issues have delayed machine spare parts delivery as much as they have slowed receipt of manufacturing goods. The good news: better vendor and customer contracts up and down the chain have us almost back to normal supply lead times. The bad news: in-house spare parts storeroom inventory control practices and procedures are, in most companies, not up to par with inventory practices for manufacturing goods. Less focus on this area results in inaccurate inventories. We don’t have the parts we want when we need them and/or we can’t find them, which extends machine downtime and bleeds profit.
A growing number of companies are using computerized maintenance management systems (CMMS) to assist them in maintenance operations. One module of the CMMS is designed for spare parts inventory. If used correctly, this module can make a huge impact in maintaining a high level of inventory accuracy and control.
Four procedures for maximizing inventory accuracy
Besides maximizing the capabilities of your CMMS, these procedures can help your facility achieve and maintain nearly 100% inventory accuracy.
- All the parts coming into the storeroom must be inspected for damage. Make sure they match the purchase orders (PO’s), and are perfectly received into the CMMS inventory module.
- All items must be placed in their proper storage locations and be recorded in the CMMS.
- Ensure that items are not moved from one location to another without the new location being recorded in the CMMS.
- All items being removed from the storeroom must be recorded in the CMMS.
All the above tasks require good and precise procedures and processes. However, the one deciding factor is always the people that carry them out. If all the above tasks are followed to the letter, we can expect a high inventory accuracy number.
The financial impacts of downtime and the role of storeroom management
To achieve inventory accuracy near or at 100%, lock your storerooms. Assign parts control people to each storeroom 24/7 (or as long as maintenance people are in the building). The cost for total storeroom coverage is often offset by the savings to be attained by having higher inventory accuracy. For example, a modest storeroom inventory may be worth $3 million. If the plant has a 95% inventory accuracy rate, they are losing $150,000 per year in inventory. Storerooms that guard high-tech and automated items may carry in excess of $5 to $10 million of inventory or more.
In today’s manufacturing world, unplanned downtime can cost over $100,000 per hour and/or cause complete losses of batch-manufactured goods. A locked and always-staffed storeroom will enable you to have and quickly locate the parts when you need them and keep unplanned downtime to a bare minimum.
A word of caution: warm bodies in the storeroom all the time does not guarantee success. What does? Precise instructions that are easily taught, learned and performed. Transparency for all inventory transactions. Someone to oversee and manage these transactions. Timely restock purchasing and more.
The investment in money, procedural rigor and training that your company makes to accurately control inventory can easily pay for the cost of prolonged unplanned downtime events every year.
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About the Author
Ken Staller is a senior consultant at Daniel Penn Associates. Ken has more than 30 years of experience in project engineering, project management, and maintenance management in machine manufacturing, pulp and paper, pharmaceutical, and automotive industries. This article was edited by David Miller, content manager, Control Engineering, CFE Media and Technology.
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