MRO buyers initiate storeroom clean up to cut downtime costs
Inventory management how to
By Susan Avery -- Purchasing, 10/15/2009 2:00:00 AM
It is a dirty job, but someone has to do it. And that someone, in this case, is MRO purchasing.
Before a company can reap the benefits of VMI (vendor managed inventory) or any other program that helps to reduce costs of holding inventory, purchasing needs to initiate a clean up of the storeroom where spare parts are held.
For once the storeroom is properly organized, workers will know exactly where parts are located, helping minimize costly equipment or even plant downtime. Cleaning up the storeroom also helps purchasing with efforts to consolidate the MRO supplier base. It could also eliminate the need for the company to expand into a larger facility, helping reduce real estate costs.
"Easily 99.8% of the storerooms I was in more resembled landfills rather than places where critical and expensive parts are stored," says Frank Murphy, president of Inventory Management Systems (IMS), an MRO spare parts modernizing company based in Greenville, S.C. "Many companies don't see this as a problem until they get burned." Murphy is referring to a time he worked as a CMMS (computerized maintenance management system) trainer for software company Datastream (now part of Infor). IMS evaluates spare part storerooms at manufacturing companies, tears them apart if necessary and sets up new shelving and storage bins. It also organizes inventory, inputs inventory data into a spreadsheet and provides a bar code asset tracking system.
Industrial distributors and integrated supply providers perform similar storeroom clean up and inventory organizing services.
While manning—and organizing—the storeroom typically is not the responsibility of purchasing, buyers are responsible for the costs of sourcing MRO items and that includes charges for air freight that can come from a supplier having to express ship a part because workers can't locate it when a machine is down and needs to be repaired.
"We had one company that had to have a case of parts flown in from Germany that cost them $55,000," says Murphy. "So, purchasing will take the initiative on this as they see the MRO parts budget becoming a black hole because the storeroom is note well organized or run efficiently." He adds that a company can't implement a VMI program if the storeroom is a mess "because you don't know what you own. You can't control something like that."
Evaluating a spare parts storeroom consists of such activities as determining whether the plant is using storage space effectively. Does the plant have the right fixtures and lighting? What is the condition of the flooring? Are the aisles wide enough? Are the temperature and humidity controlled? Is there cross ventilation?
"There are a lot of factors that go into keeping the storeroom operational," says Murphy, adding that accountability for items in inventory is another for buyers and maintenance professionals to consider.
Murphy says that there are also factors related to purchasing of MRO items that buyers and maintenance pros need to look at such as: How are purchase orders generated? Are they generated electronically? Are requisitions sent to purchase or directly to the supplier? Do they need approvals? What are arrangements for shipping and receiving? How are the items stocked?
IMS includes purchasing, shipping and receiving personnel and suppliers in its storeroom evaluation. When it is finished, the company is available for fine-tuning the new system.
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