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Introduction to World Class Inventory Managment

  
  
  
  

Welcome and thanks for visiting! This is the first edition in a 12-month series of blog entries, designed to discuss and explain high level storeroom performance. It should also help create a compelling case for change at your plant or location.


I’ll be writing a blog every month covering key challenges and discussions around Storeroom and Materials Management.  I welcome you to review the material and to comment below and let us know your experiences, thoughts, and points of view. Let’s have a conversation and some robust dialogue on this very important subject.

What does World Class mean?

As a reliability consultant, I use the term “World Class” often, and if you’ve had consultants in your facility or gone to any outside training, you’ve no doubt heard this phrase. It’s likely that our earliest exposure to the term came from the world of sports, as Olympians are said to be world class athletes. The Olympic motto “Citius, Altius, Fortius” convinces us that the participants are those among us who are “Faster, Higher, Stronger.”


An Ideal Storeroom
"Your storeroom should look like this, and function how you think
this storeroom functions-at a very high level.  Not only looking good,
but working very well"


But it isn’t only the gold medal winner that is considered to be world class: it’s anyone that can consistently perform at a high level. There are two very important terms in the last sentence that I want you to understand before we move on: consistently and high level. We don’t reward one-time success. Just reaching a goal isn’t good enough. Sustained and consistent behavior and performance gets the prize. High level should be a rhetorical point. The high level, or to be among the best of the best, is the target we hope to achieve.
What we’re going to discuss throughout this blog series is how to move your storeroom from the current state to a world class state.


I’ll start with the core metrics and calculation formulas that I will be referencing throughout this blog series.  

Inventory Accuracy 98%

Number of line items counted with a correct inventory count

Number of line items counted (total) X 100 = ?

This is a ‘lagging indicator’ which tells us whether our processes are working or not.  The processes we want to use as ‘leading indicators’ are cycle counting, issuing and receiving.  We’ll be discussing these later.  

 

Inventory Service Level  97%

This is sometimes categorized as ‘stock outs’.


  Number of requested items ‘needed’ and successfully issued at the time of request

Number of requested items (total) X 100 =?



This is tabulated daily, and a running total percentage is calculated.  There are, however, a few caveats to this.  Firstly, the requested item has to be ‘needed’ and not simply ‘wanted’...Not having the part requested should not count against the storeroom, if the part is not truly ‘needed’.  Secondly, the item must be a normally stocked part that has been previously established in the storeroom inventory, and in enough quantity to satisfy a reasonable request. 


This is also a ‘lagging indicator’.  The ‘leading indicators’ we want to use are receiving, issuing, and some work order planning metrics (a work order should list the items that are ‘needed’ for the job, as well as some kitting metrics).  We’ll be discussing those later as well. 

Inventory Turn Rate

2.3–3.2 if you have a poor or mediocre Preventive/Predictive Maintenance program and a poor or mediocre Planning & Scheduling program

Dollar value of inventoried items issued out (per month, quarter, year)

Dollar value of total inventory – dollar value of critical spare parts


This is tabulated monthly, and a running total is calculated. This is a ratio, no need to multiply it by 100. 


A few caveats here as well.  Firstly, only count stocked inventory that is issued.  Items that come in direct (direct ordered, non-inventoried items) are not counted.  Secondly, subtract the value of critical spare parts so we are not penalized in the tabulation. (We never want to use a critical spare part: we’ll learn more about that in the coming months). 


I aim for a Turn Rate of 1.4 for companies that have exceptionally high performing PM/PdM and Planning & Scheduling programs.  Don’t aim for that goal until your maintenance process is world class.    These programs are part of Maintenance Excellence and I won’t go into too much detail on those, other than to say they can really help or mess up your storeroom. 
Inventory Turn Rate is also a ‘lagging indicator’. Leading indicators we will be tracking and discussing include issuing, receiving, and kitting. 

KPIs vs Metrics


Here is the difference between metrics and KPIs: All KPIs are metrics, but not all metrics are KPIs.  Metrics are waypoints along the journey to let you know where you are on the continuum.  KPIs are a type of metric.  Unlike ordinary metrics (waypoint measurements), KPIs are intended to be major benchmarks of performance, and failure to reach a KPI would normally cause immediate actions to get back on track because they are essential to the process These are rough definitions, but they’ll be considered working terms for what we are going to be discussing over the course of the year.


Here is a good rule to follow for metrics and KPIs:  Don’t post metrics or KPIs that you can’t explain the meaning of or the relevance of to your associates. Be able to instruct everyone on what they can individually do in order to improve a metric.  Otherwise it’s all white noise. 


In this first blog, I’d like to challenge each reader to calculate their KPIs based on the formulas provided and their understanding of how the metrics were defined.  That will be our starting point. 


A word of caution:  we have to be totally honest in calculating these numbers.  It doesn’t help to round up or adjust the numbers.  I liken it to stepping on a bathroom scale. If you don’t like the number you see, you can adjust the dial on the scale. Don’t do that. 


Next month we are going to begin our concentrated discussion on building a world class storeroom.  We’ll start with the processes and practices that make a storeroom effective, and then we’ll focus on making our storeroom more efficient. 
 


describe the image 

John Ross
Senior Consultant 

Looking for Materials Management Training? 

Maintenance organizations need the right material, in the proper quantity, at the right time. If these basic conditions are not met, your maintenance effort will be ineffective. In this era of downsized industrial operations, careless material accountability is not an option. Companies typically have several hundred to several million dollars worth of parts in a maintenance storeroom, "just in case". This is clearly a very costly practice.


Maintenance Planning & Scheduling Training: 3-steps to maximize your learning

  
  
  
  

 

In return for the ten minutes you will invest in reading this blog post, I promise that you will be able to make all future maintenance planning and scheduling training more meaningful and effective.  Sound like a great deal? 

So, why is this important,  you ask? After all, training is just training, right? Not for me, it isn’t. Training is a two way exchange in which you get what you give.  With these tips, what you give to training will significantly improve what you get from training.  I am not talking about meager gains here; I am talking about potential life-altering transformation.  Let’s get started.

The three areas you can maximize your learning Return On Investment (ROI) are:


  1. Pre-training Preparation
  2. In-training Engagement
  3. Post-training Action

 

1. Pre-training Preparation

Planning and Scheduling TrainingPre-training preparation boils down to increasing readiness; readiness for yourself and for your company.  Personal readiness is about truly understanding the value you will gain from participating in the event.  We all tune in to WII FM – What’s In It For Me – so the more you know about how YOU will benefit from the training, the more you will value it.

To understand the value of training, you can review the agenda and highlight important
 topics, you should also write down a few learning goals.  To help identify your learning goals, think about the improvement opportunities in your current planning and scheduling process, and any gaps in your own knowledge and skills. In addition to growing your appreciation for the learning opportunity ahead, this preparation exercise allows you to focus your efforts and attention during the training to the sections that will best meet your learning goals.  

I recommend you share your learning goals with your instructor at the beginning of the event. Your instructor will be able to emphasize the sections that speak to your goals.

Company readiness is about preparing your company for the change that will come after the training. Your focus here is about laying the ground work for gaining buy-in and support after the training event.   As you know well, improvements and change don’t happen in a vacuum. Growing awareness and support from your colleagues is vital.  You most likely will have to build a business case for the improvements you want to make.

Marshall Institute’s experienced instructors, Glenn Smith and Hank Bardel, have provided some examples of how to build readiness.

Glenn suggests you should, “understand your current state, or as-is state. This includes understanding your maintenance planning and scheduling process, collecting key performance indicators and metrics data, figuring out “what’s eating your lunch” (i.e. what your biggest opportunities for improvement are), and understanding the effectiveness of your support systems; such as, your work order system, PM program, materials management, CMMS, etc.”

To gain an understanding of current effectiveness, Hank suggests collecting the following metrics:maintenance cost as a % of ERV (estimated replacement value), hourly cost of downtime, percentage of emergency work, mean time to repair, and schedule compliance”. 

Knowing your current performance allows you to compare against world class processes and measures.  This is really powerful for gaining support and buy-in from management for improvement efforts. 
 

In summary: pre-training preparation comes down to the planning you do for yourself and your company.  Examples of preparation are: understanding the value of the training and understanding the current performance of your maintenance planning and scheduling function.

 

2. In-training Engagement
Mazimize ROI on Planning and Scheduling Training

Now, we’re going to address what you can do during the event to maximize your learning ROI.  A great list of seminar best practices is covered Marshall Institute’s instructors at the beginning of our public seminars. 

  1. Enter into discussion enthusiastically
  2. Ask questions
  3. Take notes
  4. Share your knowledge and experiences with the group
  5. Listen alertly and respectfully to other participants
  6. Value and appreciate each other’s experience and point of view
  7. Build an action plan capturing quick wins
  8. Have fun

Ultimately, what this list boils down to is making sure you have the right mindset and attitude for learning.   

Bullet seven is bolded because it is arguably the most important best practice. Throughout the training you should be capturing process best practices, improvement recommendations, and tips to build your action plan.  

Marshall Institute’s goal is to provide you with knowledge and skills to support positive change in your workplace.  Your goal is to be as prepared as possible to learn and capture important improvement actions.

In summary: To gain the most from training, ensure you are as engaged as possible. Share your learning objective with the instructor and be razor focused on meeting that learning objective during the event. Be ready to contribute and engage with the other participants. And most important of all, capture improvement recommendations and best practices to build your action plan.

 

3. Post-training action

IAC 032The training has finished, now what?  As Glenn Smith says,the training ain’t over until you say it is”.  This means that it’s up to you to make improvements and positive change with your new learnings and action plan.  Here are a few suggestions from Hank and Glenn on how to internalize the learning, and initiate positive change.

  • Read your notes as soon and often as you can to reinforce key points
  • Schedule an awareness session to share your new learning with your colleagues. There’s no better way to retain knowledge than by repeating and teaching it.
    • To support your awareness efforts, Marshall Institute provides access to an E-Learning Lab. This is a recorded summary presentation of the training that you can share with colleagues and watch as often as you want.
  • Build a business case
  • Follow through on the action plan

Glenn suggests you consider the two items below as part of your action plan. He believes you can gain strong momentum by attacking this “low hanging fruit”:

  1. Set up a planning and scheduling focus team
  2. Develop a kitting process

In summary: reinforce your learning by reading your notes and by presenting to your colleagues, and implement the low hanging fruit from your action plan.

 

Conclusion

My promise at the beginning of this blog post was to make your future maintenance planning and scheduling training more meaningful and effective.  I believe we have achieved that goal. But even more than that, I hope these tips help to make training and learning more fun and enjoyable. Learning enriches our lives and can give us more meaning and purpose. 

Although the tips covered in this blog refer mainly to public seminars, many of them can be applied to other training formats.  If you currently view training as a boondoggle or vacation, you are missing out.  The learning experience is what you make it. So go forth and maximize your learning ROI.  And remember, have fun! 

 


Tom photo

Tom Furnival
Director of Training Services 

Planning and Scheduling Training

 

Why do a Gemba Walk?

  
  
  
  


Gemba WalkMany organizations struggle with the problem of constantly functioning in a reactive mode in dealing with process issues. Often, leaders are the last to hear of concerns and wonder how the problem escalated so far and
so fast before being consulted. One very good solution to this problem is a Gemba Walk.

Gemba is a Japanese word meaning “the real place”. In maintenance, we might call it “the workplace” or the place where value is added and the work of the business is done. A Gemba Walk is designed to encourage leaders to leave their day- to- day tasks and walk the workplace. This allows them to observe machinery conditions, ask about the practiced standards, gain knowledge about work status and build relationships with employees. It is a common sense, low cost approach to management. This affords management a reliable, simple, and easy means of supporting the organization and encourages workplace standardization. Employees’ sense of accomplishment and feelings of contribution increase when leadership is visible and takes interest in the concerns of their employees. Although a Gemba Walk is commonly implemented in a production environment, it can also be used wherever work is being done. A Gemba Walk is an excellent method of ensuring potential problems are addressed in the quickest possible time and at the lowest possible level.

A Gemba Walk implementation begins with good planning and requires support from leadership and employees. In order to do this, here are some helpful hints:

• Start the effort and sustain it. If you don’t, it can result in loss of employee confidence
• Establish a consistent schedule and visit route plan
• Inform employees of their training requirements, which may include a team or area        leader being asked to present data on his/her area
• Be brief, but thorough with observations and questions. Remember, a Gemba walk is      not an in-depth area assessment

A Gemba Walk is a valuable opportunity for leadership to engage with their workforce to offer support, resolve issues, ensure objectives are being met and, most importantly, to observe and listen.

Do you or your organization perform a Gemba Walk routinely? 

 

Vincent Quarles
Consultant

Mark Jolley, Marshall Institute

 

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SMRP 2014 Conference Review

  
  
  
  


2014 SMRP ConferenceI had the privilege of attending the 2014 SMRP conference (Society of Maintenance and Reliability Professionals) in Orlando a few weeks ago. I always look forward to this annual conference. I enjoy spending time at the Marshall Institute Booth with co-workers. It’s always great catching up with colleagues whom I don’t see too often as we all travel so much. Marshall Institute typically works with 30+ clients at any given time. One of the things I love most about my job is that it never gets old. Each client has their own set of goals and opportunities. We help them identify these opportunities, put a strategic plan together as to how to address these opportunities and help them achieve success through training, consulting, and coaching.

There was a great turnout at SMRP this year. We had a lot of visitors at our Marshall Institute booth. In the 3 days we were in Orlando, we had lots of opportunity to speak with new prospective clients as well as current and former clients. It’s always great to hear from clients that we have worked with in the past and learn that they are still benefiting for our services. There were a good number of attendees whom have completed our Maintenance and Reliability Management (MRM) course through NC State University. MRM is a 3 week course that affords the attendee a diploma in Maintenance and Reliability Management from NCSU and an opportunity to take the CMRP test proctored by Marshall Institute. Many of our graduates are SMRP members and were in attendance at the Orlando conference.


SMRP Marshall Institute BoothThe SMRP conference offered many presentations from some of the leaders in our industry. I attended several sessions and was impressed with both the quality of the speakers; most presentations were attended by 70 -100 enthused practitioners.

Greg Folts (President, Marshall Institute) and Chuck Jarrell (Powerhouse Leader, Campbell Soup Supply Company L.L.C.) presented on The Art of Good Leadership (article published by Plant Services). There were 80+people in attendance and they were all interested in the active question and answer session.

If you work in the Maintenance and Reliability world, I highly recommend you consider attending next years SMRP conference in Cincinnati, OH. It will afford you the opportunity to meet some of the greatest teachers, trainers, and authors in our industry. It’s also a great place to expand your network with fellow practitioners, but also with services providers such as consultancies, and product and tool manufacturers. I can assure you that your attendance and participation at the 2015 SMRP conference will be time and money well spent.  I hope to see you there.
 

Mark Jolley, Marshall Institute

Mark Jolley
Manager of 
Consulting
Services 

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Get CMRP Exam Ready: 5 Tips to eliminate exam nerves

  
  
  
  


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Your accumulated experience in the field of maintenance reliability is, hands down, the best preparation you have for the CMRP Exam.  Study alone, without experience, is not enough to ensure a passing score.  Here are some ideas from maintenance reliability experts who took and passed the CMRP.

1. Try to Answer the Question, “How Ready Am I Really?

Assess your current understanding of exam concepts by reviewing the CMRP Exam Body of Knowledge and Certification Guidelines.  Take SMRP’s sample test (www.smrp.org) to see how prepared you are.  From there, you can develop a list of gaps to better target your study.  

2. Delve Into Industry Books

Consider studying this list of recommended books—they are listed in order of priority:

  • Maintenance and Reliability Best Practices, Second Edition, by Ramesh Gulati—this author helped write the CMRP Exam
  • Reliability-Centered Maintenance, Second Edition by John Moubray—while this book does not cover all aspects of the CMRP Body of Knowledge, it is a comprehensive resource that explains, in detail, the overall methodology of maintenance reliability concepts
  • Making Common Sense, Common Practice:  Models for Manufacturing Excellence by Ron Moore
  • Visit SMRP's website for other recommended study resources: http://www.smrp.org/i4a/pages/index.cfm?pageid=3581

3. Reach Out for Help

During each of North Caroline State University and Marshall Institute’s Maintenance and Reliability Management modules, we encourage participants to talk with our CMRP instructors.  While they can’t provide content information, they can provide general test-taking guidance and tips.

4. Don’t Get Bogged Down in the Mire 

Form an effective test taking strategy AHEAD of time.Test Taking, CMRP  You have two and a half hours to answer 110 questions, or about 1 minute per question, so it is imperative that you pace yourself and not get stuck on one question.  Consider implementing this technique: 

  • Read through each question and answer choice, answer it, and then mark it according to these criteria:
  • If you are sure you answered the question correctly, don't mark it.
  • If you are NOT sure you got the question correct, mark it with one check mark, which means to come back and answer it first when you are done answering all the questions on the exam.
  • If the question is hard and you know you got it wrong, mark it with two check marks, which means to come back to it AFTER you review the ones you think you got correct.

5. Celebrate!

The fact that you are even taking the CMRP Exam says a lot of where you are professionally.  You are clearly desiring to stretch and grow yourself in the industry and your line of work.  Taking and passing the CMRP Exam is a big accomplishment, that is worth celebrating.  Congratulations.

 


Greg Folts

Greg Folts
President


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Process Safety Management Webinar

  
  
  
  

On February 13th, 2014 Marshall Institute conducted a 1-hour free webinar on the topic of Process Safety Management (PSM).   The webinar, presented by senior consultant John Ross, covers the elements of PSM as it relates to both companies that handle highly hazardous chemicals and those who do not but would benefit from adopting some key practices and behaviors of PSM.   John emphasizes the importance of PSM as an organization-wide focus.  

This webinar is valuable for both current PSM practitioners and newbies. The recorded webinar is now available.  Click on the image below to begin the recording.   If you have questions or feedback following from watching the recording please leave messages in the comment boxes below. 

 

 


Greg Folts

Tom Furnival

Business Development Manager

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How PSM-NEP applies to non-chemical plants

  
  
  
  

 

reccomendedreading   It is recommend that you read John Ross' article  "Making Sense of Proces Safety" posted by Plant Engineering before reading this blog post. 


Process Safety Management, specifically the National Emphasis Program (PSM-NEP) might be terms and acronyms that don’t make any sense unless you are in a facility that works with or around highly hazardous chemicals (HHCs).  It would be a very big mistake to think that this OSHA initiative doesn’t apply to you.  Many of the activities that maintenance and engineering perform each day are applicable to PSM and Non-PSM plants.  The only real difference would be in the level and degree of documentation required.  Although it wouldn’t be a bad practice to document your activities as if you were under the watchful eyes of OSHA through a PSM program.

There is a significant chance that although your facility is not PSM mandated, you do follow some national or international quality initiative such as ISO or several of the other professional doctrines.  All of which require extensive and ‘auditable’ documentation.

There is little doubt that many maintenance organizations are very good at ‘doing’ and not so good at ‘documenting’.  Unfortunately, if it isn’t documented, in many cases, it didn’t happen.

OSHA even made it part of the official record in one of their Instructions that “employers may have an extensive written process safety management program, but insufficient program implementation.” In other words, we don’t do what we say we do.  This probably doesn’t just happen with PSM processes.

Check back next week as we talk about getting started with a PSM-NEP awareness and readiness at your facility. 

 


Greg Folts

John L. Ross

Senior Consultant

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The History and Purpose of PSM-NEP

  
  
  
  

 

 

reccomendedreading   It is recommend that you read John Ross' article      "Making Sense of Proces Safety" posted by Plant Engineering before reading this blog post. 

Process Safety Management was initiated by OSHA in 1992 as a way to respond with government oversight of industries using Highly Hazardous Chemicals (HHCs).  Events prior to that date, involving the infrequent release of HHCs had sometimes resulted in catastrophic damage, injuries, and even death.  Clearly, unchecked processes added to a volatile situation sometimes make things worse; much worse.

In September 1994, OSHA issued Instruction CPL 02-02-045, Process Safety Management of Highly Hazardous Chemicals-Compliance Guidelines and Enforcement Procedures.  This instruction ceded that the Program Quality Verification (PQV) inspections required great resources and limited the number of inspections that could be accomplished.  This was a program that didn’t have the effect that was desired.

Even with OSHA’s good intent, catastrophic incidents were still happening, especially in the petroleum industry:

  • 2004: Gallup, NM, 6 injured
  • 2005: Texas City, TX, 15 killed, 170 injured
  • 2005: Bakersfield, CA, 1 killed
  • 2007: Dumas, TX, HHC release and fire
  • 2008: Big Spring, TX, LPG release and explosion

 In 2007, OSHA initiated the Refinery National Emphasis Program (NEP) to zero in on the factors that most affected process safety in refineries.  By all standards the program was successful.  There were certainly still incidents in the refinery industry, but the nature and the resulting damage were greatly decreased.  Still more work and inspections would need to be done.

Due to the success of the NEP in the refinery industry, OSHA initiated a pilot program in the other facilities that dealt with HHCs.  This pilot program became official, nationwide in 2011 through OSHA Instruction CPL 03-00-14, PSM Covered Chemical Facilities National Emphasis Program; CHEMNEP for short.

The refinery NEP and the CHEM NEP are two different programs, but each involves a closer look and scrutiny of 14 major elements:

  1. Employee Participation
  2. Process Safety Information
  3. Process Hazard Analysis
  4. Operating Procedures
  5. Training
  6. Contractors
  7. Pre-Start Up Review
  8. Mechanical Integrity
  9. Hot Work Permit
  10. Management of Change
  11. Incident Investigation
  12. Emergency Planning and Response
  13. Compliance Audits
  14. Trade Secrets 

In the following blog posts I will go in to more detail in all of the 14 elements.  If you have experience with NEP and/or CHEM NEP let me know what you think of your PSM program and how you've improved your safety and process of HHC.


Greg Folts

John L. Ross

Senior Consultant

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PM Optimization as a Routine

  
  
  
  

Anyone that has ever tended or raised livestock , be it rabbits, chickens, goats or cattle, knows that routines are important.  Without routines, you run the risk of causing   undue suffering on the part of your animals or end up with a monumental mess to clean up.

Unfortunately, when Preventive Maintenance Optimization (PMO) is considered, most people immediately revert, in their mind, to the concept of a workshop.  However, the fact is that the most effective form of PMO is that which takes place incrementally, over time, via routines and feedback.

One of the  routines  involves regularly scheduling a planned PM.  Planned, meaning that the conduct and materials involved in the PM are well laid out and itemized.  Scheduled, meaning that this work was known, at least 72 hours in advance.

Another routine that optimizes the PM is the routine of feedback. The feedback of your maintenance personnel is the most valuable form of intelligence reinforcing the continuous improvement of your maintenance systems.

Using the livestock example: if you were new to  tending animals,   over time, you would change the way you did things to limit trauma to your stock, increase the efficiency of the process and leave yourself as little a mess to clean up, after the fact, as possible.

In the same light, your maintenance personnel will have valuable input to the planning and scheduling of any given PM task after having to put tools to the equipment.  They will have a better sense of the order of tasks, frequency, efficacy of the lubrication process, effectiveness and discipline of the basic equipment care standards (autonomous maintenance), necessity or obsolescence of certain checks, frequency of replacement, and the quality of parts/storeroom supplies.

This knowledge often goes to waste for the organization as a whole, because there is no routine in place to take advantage of this information in association with the closeout of the PM.  This is the most powerful and effective form of PMO and it is also the most neglected.  Remember, things that you do as a form of common sense in your personal life require standardization in business because there is more than one person involved in the activity.  Your team members can’t read your mind.

There are times where priority and time make the PMO workshop the best option, but establishment of effective routines equate to a culture change.  Positive culture changes will always outdistance the benefit of periodic workshops over time.

The more effectively you capture the wisdom and experience of your people, the better the optimization of your PM program.

 


Greg Folts

G. Keith Diepstra

Consultant

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Where to Start? Building a World Class MRO Process

  
  
  
  

Make your Storeroom World ClassIn practice, it’s easier to ‘build’ a world class MRO process from one that is mature and functioning, rather than from scratch.  Consider your process that has been inefficiently working for years; delivery both poor service and great inconvenience.  This is truly a more enviable position than starting with an empty warehouse.

Why?  Think of all the great examples you already have of “how not to do something”.  Thomas Edison so cleverly stated that he didn’t have thousands of failed experiments when creating a light bulb; he just learned 10,000 ways not to do it.

We’ll save you 9,991 attempts by giving you a 9 step outline to use in building a world class MRO process.   It’s like flipping a switch; after all, what could be easier?

Step 1:  Conduct a parts needs analysis

How do parts end up in the storeroom?  That’s a rhetorical question; the most likely scenario is “we really don’t know”.  Technically, when the equipment was first commissioned, the OEM should have provided a suggested spare parts list.  From that initial offering, and after years of use, the maintenance/engineering departments add to (and theoretically subtract from) the MRO materials stocked for that specific machine.  After a long disconnected relationship between the storeroom and maintenance, we end up with having lots of parts, but never the right part.

All MRO material in the storeroom should be in active support of current plant equipment.  If the spare components do not meet this threshold, remove them.  Establish a priority of equipment to consider for and MRO review.  Determine what you have in stock, in support of that equipment, review previous work order history and interview the skilled trades and get a sense of what should be stocked and in what quantity. 

Use a methodology like an ABC classification to break down your MRO material in terms of its criticality.  Also, create the critical spare parts formula to carefully consider and stock these most valuable items.

And, most importantly, make sure your MRO material on hand is in perfect alignment with your maintenance strategy.  This is the oft forgotten step.

Step 2:  Setup/Layout

Nothing sets the tone for service and convenience like the layout of the area itself.  Another ABC type of classification could be applied to establish a logical layout.  A very effective layout might include an open stock area, one that might have been referred to as ‘free stock’ in the past.  Behind the counter, MRO items are stocked so that the ‘A’ category items are closest to the window.  Items considered to be ‘A’ items follow that classic Pareto-80/20 rule.  ‘A’ items are those items that make up 80% of the issues.  Further from the window are ‘B’ then ‘C’ items.  Large, bulk items are further back still, and then critical spare parts.

Step 3:  Staffing

Company attempts and insistence on keeping overhead low has really affected MRO staffing levels.  This can negatively affect both service levels and security/control of stock as well.  At a minimum, store room staffing should be consistent with plant operations; 24x7 or 8x5.  Also, consider all the functions of store room personnel:  receiving, reconciling, kitting, issuing, etc.   There is a limit to line-items per store room clerk.

Step 4:  Control 

If it is impossible to staff the storeroom 24/7, access has got to be limited and controlled.  There is no gray area in this mandate.  All receipts and issues are entered into the CMMS, and all items issued from stores are assigned to a work order; again, no gray area. 

The ‘control’ aspect of a world class storeroom also includes low-level authority to handle inventory adjustments with slow moving, idle, or obsolete parts.

Step 5:  Managing the process

At some point, in fact, a requirement to be truly world class, all the processes performed in the storeroom have to be reduced to processes IN WRITING.  How can we possibly expect to have our procedures followed if they aren’t written down?  Write down the process, train people to the process.  Modify the process as necessary.

A common prescription for most companies is to charter and launch as Stores Stock Committee.  This high level oversight committed guides and supports the tactical work performed by those in the storeroom.

Step 6:  Service

Window issues should be prompt and efficient.  The written process steps indicating the correct method to use should clearly identify how the service is prompt and efficient.  Keep it simple; the idea is to develop process steps that are easy to repeat.  Practice doesn’t make perfect as much as practice makes permanent.

Storeroom kitting for enhanced planning and scheduling are processes within the storeroom sphere of responsibility that have to be considered when developing a service definition.

Step 7:  Procedures

The list of procedures is far too long to list in a blog.  Suffice to say, the list is divided into tactical and strategic.  The strategic concerns are big, fiscally critical ‘decisions’ such as reorder point and economic order quantities.  Parts standardization and critical spares evaluations are other high level strategic considerations.

The tactical sphere provides attention to the more dynamic and personal aspects of an MRO operation:  cycle counting, receiving, purchasing, etc.

Step 8:  Options

Some world class storerooms also participate in classic storeroom activities; they just do them at a very high level of performance.  These include tool management, managing a project spare parts laydown area, and chemical/flammable storage.

Step 9:  Supplier Involvement

A high performing storeroom and MRO operation tends to be very effective at establishing strategic sourcing relationships.  The true world class processes can handle expanded open stock offerings, vendor managed inventory, and conduct supplier performance audits.

 

I'd like to hear from you about your experience in creating an effective MRO storeroom; what's gone really well, and where did you have problems? Of these 9 steps, where have you experienced the most problems, or had the most difficulty getting the process to 'stick'?

Leave me a comment below! 

 


Greg Folts

John L. Ross

Senior Consultant

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About Marshall Institute

Marshall Institute is an asset management consulting and training company dedicated to helping companies improve the maintenance contribution to their organizational performance. For over 35 years, Marshall Institute has provided world-class consulting and training services, led by experienced, knowledgeable consultants and training professionals producing tangible, measurable results for our clients.



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