Outside Resources for Inventory Management Save Time and Money
Rock Products, July 2000The field conveyor breaks down, so you run to the storeroom but can't find a take-up bearing to get it back up and running. Parts inventory is in such disarray that it could be improperly marked and buried in a corner. Or, there may be an empty shelf where the part should be waiting. Either way, the conveyor line stays down until you can order and receive the right part.
To avoid these situations, some aggregate facilities manage inventories externally, looking to a maintenance repair operations (MRO) distributor for assistance and expertise. Some distributors can improve storeroom management and automatically replenish critical parts and components. Working with such a distributor can improve inventory control, reduce operational costs, enhance productivity and increase cost-accounting accuracy.
One storeroom management system uses a combination of set reorder points, assigned bin locations, inventory tracking and automatic reporting. Every time an item is taken from a shelf, an employee removes a bar-coded tag on that component and drops it in a centrally placed basket. On their scheduled rounds, distributor representatives use a programmed hand scanner to scan each tag in the basket, instantly identifying and tracking all parts used since the last visit.
Parts that hit a predetermined quantity set point are automatically reordered, shipped and restocked to their specific shelf space by the distributor. The organization of the storeroom, carried out with the assistance of the distributor, helps employees find parts quickly, increasing employee productivity and minimizing production downtime.
A good automatic-replenishment system also supplies users with regular, custom reports, indicating inventory supply points and various activity levels. Such reports can call attention to excessive replacement of a component, pinpointing a failing or inefficient production process. Subsequent repairs to the process can result in significant additional savings in both time and money.
At the same time, by tracking inventory levels, an automatic replenishment system can signal potential over-stocking situations. The goals here are reducing inventory and its related carrying costs, decreasing redundancy and waste, and managing storeroom personnel resources. Such a system can provide greater fiscal control over inventory and procurement costs.
Working closely with a distributor on storeroom management can yield significant savings: a typical aggregate plant can achieve first-year savings of at least $25,000.
Even in a well-ordered and maintained storeroom, regular replenishment is a significant operating cost. A storeroom manager who spends two hours a day finding part information, ordering those parts and restocking those that are delivered, averages 480 hours on these activities during one year. At staff costs of $30 per hour, that totals $14,400 per year.
Automatic inventory-level tracking and regular reporting keeps storeroom managers and maintenance supervisors up-to-date on the quantity currently in stock, the dollar value of those parts and parts on order. This significantly reduces the need for quarterly inventory counts. Typically, a storeroom manager logging eight hours each quarter on inventory counts, at $30 per hour, spends $960 per year in time just counting components.
By reducing the number of parts on hand, an automatic replenishment and inventory-tracking system can achieve additional savings. For instance, a storeroom manager carrying an average of $100,000 worth of parts and equipment can reduce waste, better use existing inventory and reduce inflated stocking by relying on the distributor for warehousing-equaling an average 10% reduction, or $10,000.
These savings are only averages. Producers may save more or less, depending on variables, such as size of operation and existing storeroom organization and efficiency.
Ask your MRO distributor if there is such a system available. If not, shop around. A little teamwork with an outside source just might keep internal operations running more efficiently and cost effectively.
