By Wally Wilson, CMRP, CPIM, Life Cycle Engineering
As appeared in the September 2012 Edition of RxToday
If you are a storeroom manager you must manage the storeroom; you can’t let the storeroom manage you! This seems like common sense but all too often the storeroom is on autopilot and as long as the parts are available, everyone is happy. Basic storeroom management consists of two areas: inventory management and standard storeroom operation.
An effective inventory management program ensures the correct parts are in inventory and they are in service-ready condition. A structured preventive maintenance program for selected items and rotating spares provides additional assurance that these spare units are maintained in a service-ready condition while in storage. An inventory cycle counting process identifies discrepancies in inventory levels and corrects inventory quantities before those items are requisitioned for an equipment repair. The target for an MRO storeroom should be to have an overall inventory accuracy of 95% of total cycle counts.
One area of inventory management that is often overlooked is placing consumable items at the point of use. Stocking consumable items at or near the point of use increases craft utilization by reducing travel time to the storeroom for a pair of gloves, safety glasses or batteries, just to name a few items that could be on the list. One study found that trips to the storeroom by employees were projected to cost them over $75,000 annually for AA batteries alone.
Storeroom employees can process inventory transactions much faster now than in years past due to the advanced software applications available today. An advanced software package alone doesn’t make the storeroom employees or the storeroom operation more efficient. Developing standard work processes, understanding material flow through the storeroom and efficient inventory reporting are keys to effectively managing the storeroom and increasing the efficiency of the storeroom staff.
The goal of documenting storeroom work processes is to streamline the steps to receive and manage the inventory. Physical layout of the storeroom by commodity grouping of inventory increases storeroom space utilization and makes inventory cycle counting, stocking and pulling inventory orders more efficient. The measure of how effectively the storeroom is operating is determined by standard inventory reporting and a defined set of Key Performance Indicators (KPIs). Some key metrics I would suggest are:
• MRO inventory value (monthly)
• Inventory turns (monthly/annual)
• Cycle count accuracy (weekly/monthly)
• Inventory adjustments (weekly/monthly)
• Kit accuracy for planned maintenance jobs (monthly)
• Receipt transactions (daily/weekly)
• Issue transactions (daily/weekly)
• Scheduled Preventive Maintenance (PM) compliance (monthly)
• Inventory requisition fill rate (weekly/monthly)
These key KPI metrics are the basic measurements to gauge the performance of your storeroom. Using this data to make strategic decisions allows the store’s manager to position the storeroom team to work toward best practice performance goals.
Improving the storeroom operation will benefit all areas of the business. Creating structure around storeroom operation and defining the expectations of performance are essential keys to continuous improvement of the storeroom function. To sustain the improvements in the storeroom a defined set of metrics ensures the gains in performance will be sustained long-term as new performance goals are identified.
Wally Wilson CMRP, CPIM, is a Senior Subject Matter Expert in Materials Management with Life Cycle Engineering, Charleston, South Carolina Wally has more than 25 years’ experience in plant management with three Fortune 500 corporations and has helped both domestic and international clients realize multi-million dollar savings through lean inventory management practices and Supply Chain optimization. You can contact him at wwilson@LCE.com.
© 2012 Life Cycle Engineering, Inc.