Proactive organizations recognize that one of the critical success factors in achieving a best practices reliability program is developing a sound maintenance, repair and operations (MRO) spare parts program. That notion is quickly followed by the realization that there are potentially hundreds of improvement opportunities that typically could be associated with a materials management effort. As such, it becomes overwhelming to determine where to start.
This article addresses the practical and methodical process of identifying and pursuing the Top 10 areas to focus your materials management improvement efforts. It shares insights into executing a successful MRO overhaul at your facility by pursuing the following key items:
1. ASSESSMENT: Assessing the current spare parts program and determining the improvement areas on which to focus is the first order of business. Although a typical maintenance storeroom can benefit by a number of different improvements, the magic lies in identifying which MRO improvements to make and in which order to pursue them.
2. METRICS: In order to measure the effectiveness of your MRO materials management program, it is imperative that key performance indicators (KPIs) are in place. By identifying and utilizing both leading and lagging indicators, you will be equipped to objectively and accurately measure the current level of program effectiveness and ensure that deficient areas are trending in a positive direction.
When establishing the method and distribution list for communicating storeroom metrics, be sure to share the information in a timely and visible manner. Above all else, ensure that something is done with the insights from this information. Nothing kills the credibility of an information gathering initiative faster than not reviewing, analyzing, or doing anything with the information. Lastly, be sure to celebrate success along the journey. Recognizing individual and team accomplishments can go a long way in fueling positive morale, especially in the midst of a long and arduous improvement effort.
3. STANDARD OPERATING PROCEDURES: It is important to identify the standard operating procedures (SOPs) by which the materials management program will be carried out. Pace setting organizations develop visual process flow maps that illustrate the steps in the various MRO processes, as well as the associated narrative documentation in which to train and provide support.
Items to address include:
- Position Descriptions, Functional Roles and Responsibilities;
- Processes, such as:
- Add to stock request and approval;
- Non-stock parts request, approval and purchasing;
- Receiving, stocking and notifications;
- Stock request;
- Issuing and withdrawal;
- Stockout notification;
- Returns and reservations;
- Bill of materials (BOMs);
- Inventory level establishment and adjustment;
- Standardization and change control;
- Cycle counting and inventory variances;
- Obsolescence identification and disposal.
It is important to communicate and train all pertinent personnel on the MRO processes and procedures. This includes both departmental staff and “customers” of the storeroom.
As with many improvement initiatives, a critical success factor is ensuring that it is dynamic. Be sure to periodically review and update required process and procedural improvements. This step aids in meeting the current needs of the organization and avoids the pitfall of following old, out-of-date SOPs, which is frustrating for all involved.
4. DATA: In the scramble to load parts data prior to the go live deadline for the computerized maintenance management system (CMMS), many organizations admit that the quality and accuracy of their parts data is quite inferior to what it should be. Although there are many attributes to what constitutes good spare parts data, this short list captures the primary items:
- Utilizing a standardized taxonomy of naming and numbering conventions;
- Ensuring all pertinent stock and non-stock parts are identified and loaded in the system;
- Identifying any duplications that need to be removed from the system;
- Capturing key attribute data, such as manufacturer, model number, supplier, price, lead time, where used, etc.
5. INVENTORY MANAGEMENT: One of the key elements in the MRO storeroom contributing to plant reliability is having the right part available at the right time. The science of continuously reviewing and adjusting min/max levels and reorder points is a key discipline and one that many organizations struggle with. The practice of frequently reviewing inventory turns and modeling the optimal inventory levels requires time and commitment to the process.
Whether you utilize your CMMS or a third-party tool to analyze usage and optimize inventory levels, be sure to factor in item lead time and criticality and impact to the process and organization. This should be an ongoing effort. Lastly, resist the temptation of removing the item from inventory just because of inactivity. Remember, as your maintenance effort improves, equipment reliability increases, therefore, the frequency of failure and need to replace critical spares decreases.
6. BILLS OF MATERIALS: Capturing bills of materials (BOMs) is a labor-intensive and somewhat tedious task that many companies procrastinate performing. The value in pursuing BOMs identification for your critical equipment is the assurance your storeroom is carrying only the materials you need to support a highly reliable operation. It is common for some parts to be used in multiple locations, so it becomes necessary to identify where each part is used so adequate inventory levels can be realized.
Often, two types of BOMs exist. The first is the original equipment manufacturer (OEM) BOM, which is a more exhaustive list of all the parts associated with the component. The second is an MRO BOM, sometimes referred to as a planner BOM. This is a shorter, more practical list of wear items or known to fail items. This is the recommended BOM to pursue.
It is important to identify a BOM process that includes:
- Equipment Number;
- Inventory Item Number;
- Inventory Item Description;
- Quantity Required;
- Manufacturer, Vendor, Supplier;
- Manufacturer, Supplier Part Number;
- Material Class and Subclass;
- Item Lead Time.
7. STOREROOM MANAGEMENT: This is the ABC’s of materials management and although it includes many activities that are not as thrilling to pursue, they are the deal breakers of your materials management program. Some of these blocking and tackling items include:
- Storeroom Design, Organization and Layout;
- Lighting, Signage and Labeling;
- Shelving, Cabinetry and Dispensing Machines;
- Free Issue Areas;
- Bin Replenishment Programs;
- Developing Roles and Responsibilities;
- Screening, Interviewing, Hiring, Training, Coaching, Reviewing, Rewarding and Disciplining Storeroom Personnel.
8. KITTING: A real value-added function that the storeroom can provide is performing parts kitting for planned maintenance activities. By working with the maintenance planners, the required spare parts can be identified, reserved or ordered, pulled or received and staged. This productivity enhancement saves maintenance personnel time in obtaining the parts they need while ensuring parts are on-site and available when required.
A few nuances in establishing a maintenance spare parts kitting program include:
- Determining roles, for example, who is performing which tasks between stores and maintenance planning personnel;
- Utilizing the reservations feature within the materials management module of your CMMS;
- Identifying the optimal location(s) to stage the kitted parts;
- Developing a return process for unused items;
- Documenting the process and creating associated SOPs narratives;
- Communicating and training on the process.
9. OBSOLESCENCE: By developing and executing an active practice of identifying parts within your inventory that support plant equipment that is no longer in operation, you will free up valuable shelf space and untold dollars of your MRO inventory. Another benefit provided by an obsolescence effort is that your cycle count team only will be reviewing items that should be in inventory and not wasting time counting items that shouldn’t even be in stores.
Be sure to form a team of internal subject matter experts (SMEs) who are qualified to condemn the potential obsolete parts under review. Having a process that analytically and practically identifies and then confirms or denies whether items are actually obsolete is an important step. Without this step, it is common to witness companies dispose of a part just to have them scrambling to locate it a few months later!
It is important to recognize that you have several options when it comes to discarding condemned inventory. Far too often, the first inclination is to simply throw items in the dumpster. In reality, there are some financial and strategic benefits to pursuing other options first. Some of them include:
- TRANSFER the items to an on-site area that can use them;
- RETURN the items to the supplier or OEMs for cash;
- EXCHANGE the items with the supplier or OEMs for active items you purchase from them;
- RETURN them to the supplier or OEMs for credit on future purchases from them;
- TRANSFER to a sister company that can use the items;
- CONSIGN TO SELL by enlisting the supplier, OEM, or third-party to resell on your behalf;
- DIRECT SELL via eBay, Craigslist, or an auction site;
- DONATE to a charity, school, church, etc.;
- SCRAP by contacting a scrap yard to remove and pay for them;
- DISPOSE of them; Now, it’s dumpster time, but don’t forget to write them off!
10. REASSESSMENT: Last, but certainly not least, incorporate a step to review your MRO program and identify any deficiencies remaining in your materials management effort that need to be addressed. At this point, it is likely that considerable effort has been dedicated to improving some of these key MRO areas. But, effort alone does not ensure proficiency; therefore, it is a good practice to periodically reassess your program to measure how effective it is performing. It may be advisable to include external resources during this review to provide an objective evaluation.