Is Your MRO Storeroom Poorly Run?

By Wally Wilson, CMRP, CPIM, Life Cycle Engineering

The first indication that an MRO storeroom isn’t run well is the response you get from the maintenance technicians when you ask their opinion of how the storeroom is performing. The comments are usually “we can’t depend on our storeroom for the right parts” or “they never have the parts I need to make the needed repairs.” These comments reflect a storeroom that is in trouble and costing the business money in excessive production downtime, low equipment reliability and low utilization of technical resources.

Not having the right part or not having the parts when they are needed are also symptoms of other internal issues in the storeroom. Not having the right part is a primary indication that the Equipment Bill of Material (EBOM) isn’t accurate and the wrong parts are being stocked in the storeroom. The EBOM is used by the storeroom to determine which parts are to be stocked on site and other parts that can be purchased as needed to reduce dollars invested in inventory.

An inventory that doesn’t have the parts when needed is an indication that the stocking levels are not adequate to support the maintenance requirements to perform the needed repairs. Conducting an annual review of the item stocking level to evaluate the reorder point, minimum and maximum stocking levels, safety stock requirements and annual item usage provides insight into future stocking requirements to prevent item stock outs. Reviewing stocking levels and monitoring inventory usage reports also identifies obsolete and excess inventory that consumes inventory dollars and robs valuable space in the storeroom.  

Transforming a storeroom from a business liability to a business asset that has the right parts when requested requires the implementation of basic MRO storeroom best practices.

What are MRO storeroom best practices? A storeroom applying best practices includes:

• A storeroom layout that effectively reduces waste and increases storeroom staff utilization
• Documented work processes and an auditing procedure to promote value added continuous improvement activities
• An inventory locator system that organizes inventory by commodity grouping of spare parts. Commodity grouping of inventory locates motors with motors, pumps with pumps, bearings with bearings.
• A storeroom security policy that restricts access to approved employees  
• A storeroom staff that is trained in storeroom operation, safe working habits, stores performance measures and inventory management practices
• Data management of item description, manufacturer and item number. Corrupted data increases search time, causes duplicate entry of items, increases the time to generate an accurate purchase request, and causes errors in inventory orders.
• Key performance measures reported weekly or monthly. The basic key performance measures are inventory value, inventory activity, inventory receipts/issues, requisition fill rate, inventory turns, inventory accuracy and cycle account adjustments to inventory.

According to data collected from organizations that have implemented MRO storeroom best practices, these organizations were able to:

• Increase maintenance technician utilization by 12 to 15%
• Reduce MRO material costs by 20 to 30%
• Reduce equipment unplanned downtime by 3 to 7%

The MRO storeroom has several partners that support and advise the storeroom supervisor on what to stock and the suggested minimum and maximum stocking levels. The decision to stock a part starts with the Reliability Engineer, the Maintenance Planner, Procurement/Buyer, and ultimately the Maintenance Technician. The Reliability Engineer’s role is to define the part criticality and suggest if the part should be stocked on site or purchased as needed. The Maintenance Planner and Maintenance Technicians have a good understanding of the equipment and have the practical knowledge of what parts or components will have an immediate impact on safety, the environment or production if they were to fail. The Buyer’s role is to define the order lead time and part availability from the supplier. The order lead time has several definitions within an organization. The order lead time that should be used is defined by the supplier and is the time from when the purchase order enters the suppliers order log until the shipment leaves the suppliers shipping dock.

All too often, the storeroom is operating without the support of these partners, which leads to the wrong parts being stocked in inventory, obsolete items not removed from the inventory and parts for equipment modification not updated in the Equipment Bill of Material. These are all key activities to maintaining a valid MRO inventory and an efficiently run storeroom.

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.

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