Bar Coding in Your MRO Storeroom
By Doug Wallace, CPIM, Life Cycle Engineering
A few years ago, the Aberdeen Group conducted a research survey on the use of inventory management tools and techniques. The results revealed that storeroom processes and systems were (and one would suspect probably still are) being actively re-evaluated by most companies. Nearly 90% of the respondents indicated that within the prior six-month period they had made – or had been asked to make – recommendations on improving their warehouse operating processes, while more than two thirds of the respondents indicated that they had made – or had been asked to make – recommendations on improving their inventory management technology.
The study concluded that “Companies that do not use technology to enable their supply chain inventory initiatives will not achieve the same level of performance.” That may sound intuitively obvious. Whether it’s supply chain, finance, planning and scheduling, payroll, or almost any other critical business function, effective use of technology can make the job a lot faster and easier by increasing the productivity of employees and virtually eliminating errors associated with manual data entry.
But there are other reasons to use bar code systems in the storeroom. Inventory transactions can be recorded and the resulting balances updated in real time, making current on-hand information readily available to the entire workforce. Materials can be received as soon as they are scanned at the dock, increasing visibility to the inventory and minimizing processing and tracking times. Parts can be charged to a work order or cost center as soon as they are physically picked.
In spite of all these potential benefits, one supplier of inventory management systems estimates that “key supply chain inventory technologies are used by just 10% to 30% of companies today” and that “future adoption plans, if executed, would raise that to 50% or more.” Even in a best-case scenario, that still leaves as much as half the marketplace choosing to do business in a way that sub-optimizes its resources.
Why aren’t more MRO storerooms using bar coding? To answer that question, all we have to do is go back to the Aberdeen study and look at the two statistics referenced in the opening paragraph. Clearly there is interest in exploring the capabilities that are out there. The problem with a lot of MRO operations is that the essential support functions are not in place to make it a worthwhile endeavor. Barely one in 10 respondents said that they were satisfied with the current state of their warehouse processes. Whether they knew it or not, what they were really saying is that they were not ready to use technology effectively.
Before considering bar coding hardware and software, you need to have solid fundamental processes in place built around best practices. If your item descriptions are inconsistent or inadequate, just transferring the bad data to a bar code label won’t make it any better. If your storeroom employees don’t know the difference between pieces and pairs, or can’t tell a motor from a pump, a scanner won’t help them. If they can’t locate items in the storeroom and count them correctly, technology won’t improve the situation. Said another way, implementing a bar code system in conjunction with ineffective processes will simply speed up mistakes that are already inherent in your operation and introduce unnecessary delays. Nearly 90% of the respondents recognized the need to review their processes, which is encouraging. Hopefully they did that before they even thought about using bar coding or other technologies.
Having that foundation of effective work processes is an essential prerequisite to a successful implementation of bar coding, but there are other critical factors that need to be considered as well:
1. Have a good game plan.
We’ve seen storerooms with bar code labels attached to every bin, but no way to scan them; while others have scanners but had no bar code labels to use them on. We’ve been at places with only some of the inventory bins tagged, which meant that the storeroom personnel didn’t know whether or not they could use their scanners on particular items until they got there. We’ve seen projects initiated that were designed to use bar code technology for processing receipts on inbound shipments without first ensuring that vendors would cooperate by properly encoding the information on their packages and documentation. We’ve experienced first-hand how equipment sits idle because it is too cumbersome or too complicated for the warehouse personnel to use easily. And all too often we’ve seen bar code systems that were not properly interfaced with the local CMMS/EAMS and were rendered virtually useless because the systems didn’t communicate with each other. Before you do anything else, make sure you have a strategy that effectively integrates the people, the tools, and the technology throughout the entire warehouse and the full spectrum of processes. Make sure you know how the system will be implemented, managed and supported.
2. Embrace the technology.
Some people are simply techno-phobic, and are particularly intimidated by applications that aren’t easy to understand. But we live in an age where preschoolers and senior citizens can operate smart-phones, and almost everyone walks around with the equivalent of a micro-computer in their hand, pocket or briefcase. Bar coding has been around for half a century! Grocery stores have been using it for decades, and a large percentage of retail businesses depend on it for day-to-day inventory control, accounting and supply chain management. You don’t have to know how it works to use it effectively.
3. Don’t let the cost scare you.
Bar coding isn’t cheap. Prices range from maybe a couple hundred dollars for a simple scanner to $1500 or more for a mobile handheld computer. Bar code printers can run from $300 to $3500 apiece. Then there’s the software, installation, training, licensing, fees, and ongoing support, not to mention potential integration with other existing systems. It can add up in a hurry, especially for a large-scale operation. However, cost shouldn’t hold you back. Once you quantify the benefits, it’s not hard to build a business case that will justify the necessary funds.
4. Plan for an effective implementation
Make sure you are using all the capabilities of the system. Get good training, on both the hardware and the software. If you are using a third-party implementer and/or trainer to help, don’t let them get away until you have successfully tested all the functionality and are comfortable with it. Most importantly, get feedback from the warehouse personnel. After all, they are the ones who will be using it the most, and have the biggest stake in achieving the expected benefits.
5. Look for ways to make it better.
Don’t be satisfied with just having good solid processes and functional technology in place. What works today won’t work tomorrow. If it did, then we’d still be using stock ledger cards to keep track of inventory and adding machines to calculate investment. Effective processes enable the successful implementation of technology, but don’t guarantee it. The processes (and the technology used to support them) must continually be reviewed and improved as circumstances change.
Bar coding can provide tremendous benefits to your MRO storeroom operation, but it will only work as well as the processes that support it, and the people that use it.
Doug Wallace, CPIM, has more than 30 years of combined experience in supply chain operations and management consulting, specializing in the areas of global enterprise planning, production and inventory control, and materials management. As a Materials Management Subject Matter Expert for Life Cycle Engineering), his primary focus is on implementing best practices in procurement, warehouse operations, inventory optimization, and utilization of associated business and information systems. He can be reached at dwallace@LCE.com.
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