It is one of life's toughest questions. We live our lives in continuous improvement mode trying to get a little better in every aspect of daily living. We want to be better parents. We want to be better employees. We want to be better bosses. We simply strive to be better overall. But, how do we know when we have reached our goal, and more importantly, how do we know if we were successful?
When it comes to managing MRO inventory, the answer to that same question about success can be elusive. Just as managing tool and MRO inventory is sometimes forgotten during the pace of every day business, measuring what makes a successful tool and MRO management program can also be left undone. We often go down the road of improving our MRO management because we simply know we aren't doing a very good job. We forget to benchmark, set measurement tactics and we lack an understanding of all the areas of possible impact. If we start without this understanding and an overall lack of measurable information, how can we measure success?
I'd like to take a few moments to point out areas you may or may not have thought about but are clear indicators of a successful MRO management program. Some of these are obvious and some are not...so here we go.
Spend
Obviously, if you are spending less on tool and MRO inventory you have found success. This is one of the most apparent areas where improvement is measured. When determining the success of a good management program, reduced inventory spend is a great black and white result. If you spend less, you are probably doing something better and more efficient.
On-hand Inventory Reduction
Okay, this is another one that is really obvious. If you are spending more, you should have less on-hand inventory which means less carrying cost and greater efficiency. There is a little more to this one than meets the eye. If you have an on-hand inventory reduction, it may also mean you may have identified surplus inventories and have relieved yourself of the burden of managing that inventory, floor space to store that inventory, labor time taking bi-annual inventory of that material and so on. So, carrying less is a direct correlation with buying less but can also reach beyond the inventory that is commonly on your MRO purchase orders. Carrying less inventory is a direct result of an effective MRO inventory management program and is a solid measure of success.
Reduced Walk Time
A good MRO inventory management program takes into consideration all aspects of inventory flow around your facility. Not only is success measured by reduced spend or less carrying cost, it is measured by improved process flow. Every piece of indirect material used in your operation has a trail. Maybe it is received at your shipping dock, sent to your main supply room and then out to each tool crib. Maybe it is brought in by a supplier and taken directly to the tool crib. Maybe it is simply a mystery on how and where you receive some of these supplies. Therefore, a real hard look at this overall process from receiving to distribution on the shop floor should be analyzed. There are some serious costs to be associated with process inefficiencies and when shortening and streamlining the distribution of MRO inventory you can have dramatic success. Do you know how much time your employees wait in line at the tool crib for a tool or a pair of gloves? Do you know how many times a day they make that trip? Do you know how long it takes each person to walk to the tool crib? Think about the cost factors involved with a trip to the tool crib. You have labor costs. Is that really what you are paying that employee for? You have reduced production because while walking and waiting nothing is being produced. A walk study may open your eyes to a substantial area of possible success with you MRO inventory management.
Reduced Search Time
Joe said he had it last on rolling mill 5. Karen is over on that machine and she says she hasn’t seen it. Fred says he thought Gerald had it on the screw stud machine…and so on…and so on. What an incredible waste of time and money. Amazingly, most facilities will tell you this kind of scenario is quite common. So how long does it take to finally find it? Sometimes the answer is never. Another tool is delivered overnight to satisfy demand and then a week later the case of the missing drill is solved. Reduce this scenario from taking place and you have yourself another successful venture.
Increased Production
All of these common inefficiencies when managing tool and MRO inventory means less time doing what you are in business to do…make product. When implementing a tool and MRO management plan, a real gauge for measuring success is often measured by your ability to increase production. Locate inventory closer to where your production workers can retrieve it quickly. Make it easy for them to retrieve yet make them accountable,so you can stop inventory from floating and people from searching. You will see that this can have a significant impact on your production numbers. This is a real measure of success with your tool and MRO inventory management program.
I have outlined a few ways you can measure success with MRO inventory management. I personally have seen companies save millions in the first year when rolling out an effective program. It takes some investment in technology and possibly in change management programs but the ROI is mind blowing. Very few times have I seen the ROI for implementing a successful program longer than 18 months and many times it is well under 12 months. So, if you are in that continuous improvement mode trying to get a little better in every aspect of daily living, you should put a little focus on your MRO. I hope I’ve helped you determine how you can be successful. The better parent, employee or boss thing…you’re on your own but I’m sure you’ll keep up the effort like most of us will.
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