Is Your MRO Storeroom a Productivity Trap?

By Doug Wallace, CPIM, Life Cycle Engineering

The key to any best-practice work process is to ensure that whatever activity is being performed is being accomplished as effectively, efficiently and safely as possible, preferably at the lowest possible total cost. In the Materials Management world, and specifically within the MRO storeroom environment, there are a number of best-practice work processes that are designed to manage and control the storeroom inventory (and associated investment) and other resources (people, equipment, information etc.) at their optimum levels, including:

• Add/Change/Delete process
• Cycle counting
• ABC analysis
• Purchasing and Expediting
• Incoming Inspection/Quality Assurance
• Receiving and Stocking
• Kitting and Delivery
• Repairable Spares Process
• Return to Stock/Vendor
• Obsolescence Review

Having (or not having) effective, efficient and safe processes and procedures in place for the above items (and others) will largely determine the potential capabilities of your storeroom organization. The mere existence of documented best practices provides a communication tool to ensure that the workforce has the appropriate level of knowledge and understanding of what the best practices are and how they relate to one another. Execution is critical as well. The extent to which these processes and procedures are implemented and followed will also impact the overall performance of your storeroom operation.   

But even with “world-class” processes and flawless execution, there are plenty of opportunities for things to happen within the storeroom that will impact productivity if the right fundamentals are not in place. For example:

• Inefficient layout and utilization of racks, shelving and bins, requiring additional time to stock, pick or move materials
• Inadequate software and system support for data maintenance and transaction tracking, resulting in loss of key information or tracking outside the system
• Stockouts and inventory errors causing a shortage of required materials, delays in completing maintenance work and/or lost production
• Narrowly assigned storekeeper duties and/or lack of cross-training that reduces resource utilization and impedes coverage for missing employees

Believe it or not, however, one of the biggest roadblocks to productivity lies in a sobering piece of data that we have found based on many years and several hundred examples of evaluating storeroom operations:

40% to 50% of all Maintenance departments have an “open” storeroom, where the “honor system” is in effect.

An open storeroom isn’t necessarily one with unlocked or missing doors, although we see plenty of those! It doesn’t even have to mean that the storeroom is unmanned. It does imply, however, that access is generally unrestricted, that there are limited controls (if any) in place, and that people who enter the storeroom are essentially free to roam unsupervised for as long as they like and take out whatever they want. Yes, they are supposed to record what they have withdrawn, hence the concept of the “honor system,” which typically is neither a system, nor completely honorable, and is hardly ever effective.

With the possible exception of a true emergency, even if the parts taken are properly checked out, the sheer amount of time spent by Mechanics travelling to and from the storeroom, window shopping for what they need, and completing the paperwork is largely unproductive. This is time that would be better spent by having the Mechanics working on equipment, which is what they are paid to do. Yet it’s not uncommon to find Maintenance organizations that claim to “need more people” while their Mechanics each spend an hour or more a day on these non-value-added activities.

What we also often see in this type of environment is that Maintenance purports to have a complete and total lack of confidence in “The Storeroom” to have what they need (or want) when they need it (or want it). What they don’t realize is that they are actually reflecting their own inability to follow the simple “honor system.” To get around this perceived barrier, they go to great lengths – often by circumventing established procedure – to ensure that there are adequate “Safety Stocks” of parts stored in lockers, desks, trailers, open spaces, etc.

Of course none of this material is tracked in the inventory control system, so very few people know where it is, or that it even exists. When a requirement arises, the item may not be in the storeroom, and no one knows it’s on site, so it gets bought again, usually on a rush basis with additional expediting fees and/or premium transportation charges tacked on. Oh, and while we’re at it, just to make sure this never happens again, if we need one, let’s get two and sock the extra one away!

It’s easy to recognize that this is inefficient and costly. What many people don’t comprehend, however, is that there are other secondary impacts, such as:

• Increase in receipt of incorrect or poor quality parts – usually due to rushing and/or having the wrong people making sourcing decisions
• Bloated inventories – both on and off the books
• Increased obsolescence – due to materials not being tracked properly

These all impede communication, coordination and cooperation, and further erode the trust relationship between Maintenance and “The Storeroom”.  

To fully optimize the productivity of the combined Maintenance and Stores operations, it is important to have the fundamental infrastructure (buildings, layouts, resources, etc.) in place, as well as best-practice work processes. But first and foremost is to establish the working relationship (dare I say “partnership?”) between the two groups that defines the roles and responsibilities of each individual. Allowing Mechanics to focus on equipment maintenance and reliability while having storeroom personnel manage the materials will not only optimize the productivity of the workforce, but it can also have other significant benefits:

• Decreased material requirements/spend due to fewer and less expensive repairs
• Decreased expediting costs due to fewer stock outs and rush orders
• Improved data accuracy
• Minimal obsolete inventory
• Reliable vendor service and quality levels
• Fewer injuries/accidents

If these things are important to you, and you are in the 40% - 50% group mentioned above, then close your storeroom, put the right people and processes in place, and get yourself out of the productivity trap.  
 
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.

© Life Cycle Engineering, Inc.

For More Information

843.744.7110 | info@LCE.com