Growing Your Efficient Storeroom
From foundational to intermediate
By far, the largest of the six divisions of a world class storeroom is the Intermediate-Efficient section. Within this section, we begin to sharpen our processes and practices and create the activities that really enhance our entire storeroom operation.
Due to the enormity of the Intermediate-Efficient section, we are going to divide it up into 4 blogs for discussion.
For this month, June, we will discuss some of the Strategic Practices, those items identified in ‘yellow’ blocks:
- Critical Spares Evaluation
- ROP/EOQ, MIN-MAX, OOR
- Problem Solving
- Open Stock
- Lighting Survey
For July, we will discuss the remaining Strategic Practices, again, those items identified in ‘yellow’ blocks:
- Special Tools
- Safety Items
- Materials Scrap
- Disposal of Scrap
- Salvage Value
For August, we will discuss the Tactical Processes, those items identified in ‘blue’ blocks:
- Parts Standardization
- Requisition of Materials
- Receiving Purchased Items from Stores
- Repair or Replace
For September, we will discuss the Organizational Items, in the “salmon colored” block, and the KPI, in the ‘grey’ block:
- Optimize Physical Layout
- Last Used Report
The roadmap for the Efficient-Foundational level looks like this:
Figure 1: Intermediate-Efficient
Ask almost anyone, in any plant, what the definition of a critical spare part is and they’re almost certain to answer, “Anything that will shut down production.” I can’t disagree with that, but I believe further debate is needed.
Ultimately, a critical spare part is anything we say it is; the problem is that we never really say what it is, not in detail. True, a critical spare is a component, without which we’d suffer some impact to production, and/or some danger with environmental requirements, and/or some safety impasse. There is almost always an operational impact. But how big of an impact are we suggesting? What is the scale?
Also, a critical spare part is often regarded as a replacement part with a long lead time. In this instance, how long is ‘long’? If you’re holding your breath until the part arrives, I’d suggest that 35 seconds is a long time. Seriously, we have to weight lead times and determine how long is long.
Critical spares are also graded based on their costs. It is very common to have long lead items also cost a lot of money. As with lead time, and disruption to production, what’s the weighted value? Is $10,000 a high cost, or is it $5,000?
One attribute that critical spare parts almost always have in common is that they are parts we never want to use, ever! Think about it: if I have a part whose failure would cause catastrophic loss to production, the replacement to back fill stores is 6 months out, at a cost of $150,000, why would I ever want to use that part?
Create a formula, a flow chart of sorts, to evaluate your parts against, to determine which ones are truly ‘critical’.
EOQ (Economic Order Quantity)/Min-Max/OOR (Order on Request) are three different methods to manage stocked items. For items that have a stable history of issues, an EOQ process is recommended. This provides the best quantity and time frame for getting the most value for the company’s money. Items with a sporadic issue history are subject to Min-Max management, as their nature does not allow for much predictability. OOR is ideal for those items that are very predictable, and whose supply line is well established and guaranteed. In this instance, the part is ordered in advance of the need; the part is not kept in stock, but it does have a stock number.
ROP (Re-Order Point) is simply the point at which the re-order quantity is re-ordered. This point is often the ‘Min’ point in our system, but for safety stock, could be a value higher than the ‘Min’ desired.
Problem Solving in general, is often misunderstood. In a production/maintenance environment, most organizations wait until a failure to perform a Root Cause Analysis. An analysis after a failure is a RCFA (Root Cause Failure Analysis) and indeed ‘problem solving’ can be and should be performed whenever something is trending unfavorably.
For storeroom problem solving, the Stores Stock Committee, and all those engaged in the operations and performance of the storeroom should agree what characteristics and deliverables are important and determine at what point poor execution hits the ‘radar’ and requires some study and solutions.
Low inventory accuracy, poor service level, and issuing parts without documentation would all be concerns that require formal and comprehensive problem solving.
In the evolution of MRO practices, ‘free stock’ or ‘free issue’ begot ‘bench stock’ begot ‘open stock’. Truly, nothing in life is free, so ‘free anything’ just didn’t work as a term. Bench stock morphed into other types of consumables, beyond nuts/bolts, pipe fittings, pipe nipples, etc. Open stock is now a universally recognized term to indicate those items kept near (sometimes in) stores meant for general consumption. These items have many uses and are generally overseen by stores, but not necessarily inventoried or tracked with any level of cycle counting.
Open stock has come to represent much of the material that is serviced by vendor managed inventory and or/issued out to G/L account encompassing general expenses, or, perhaps the costs are shared among the many departments in an organization.
Open stock is not meant to be inventoried, or cycle counted. Consider items that don’t require careful fiscal tracking, or careful measures of consumption as ‘open stock’ items. It is strongly encouraged that these types of material items are not to be stored within the actual walls/fence/gate of the storeroom.
Consideration should be given, and discussion should be had as to how to assemble these items when kitting for a planned job. For example, is there value added for a technician to retrieve his/her box of kitted parts from stores, and then go to the nuts and bolts bin to collect the hardware needed for the job?
Rounding out this month’s blog is a brief discussion on a lighting survey. Ideally, the Stores Stock Committee will request and authorize a store room lighting survey, annually, to ensure that proper illumination is being afforded to those working in the storeroom. Of course prior to this, thought must be given as to what ‘proper illumination’ means at your location.
When establishing criteria for the lighting survey, give consideration to the fact that stores personnel are dealing with a tremendous amount of data, often in small font, often on documents and containers that have been weather and travel beaten. The lighting aspect is meant to give our people the best chance to literally ‘see’ what’s going on.
Next month we will continue our discussion on the Strategic Practices that enhance the efficiency of the storeroom.