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Integrate inventory management with your processes

Lean strategies harvest the low-hanging fruit of maintenance savings.

By Jeff Pomerantz, Tofino Software

Lean processes, while being widely deployed in manufacturing, are only now gaining the recognition they deserve in plant and facilities maintenance. Regardless of the systems in place, the visibility and management of critical spares and MRO procurement represents in many cases the low-hanging fruit and most easily accessible savings opportunities.

More Visibility + More Information = Better Decisions

Employees thrive on information. Tablets and easy access to computers or workstations provide the opportunity to empower employees like never before. Technicians can receive notifications that work orders are pending, access and interact with work orders on mobile devices, view manuals, diagrams schematics and images all at point-of-use and all in real-time.

Equally important, employees can check on-hand inventories and view entire OEM parts lists and supplier databases. Affordable communication solutions supporting point-of-use information access is one of the most easily implemented solutions for saving substantial time in the work place.

Immediate savings can be realized by minimizing or eliminating time spent waiting for required items to be pulled or staged from supply room inventories. The next opportunity of savings includes eliminating travel time by deploying a runner to bring required items to the point-of-use, rather than having the employee travel to the supply room. Both examples include an assumption of cost for the software to manage remote requisitions. Typically, software that supports requisitions will also support inventory management and most if not all of the normal procurement functionality.

The model

In the example below we are modeling a facility with 20 employees, each making two trips to the supply room per day with wait-time of only 3 minutes. The shop rate for the employee is $40/hr. The software in this example has an all-in monthly cost of $650. The net savings to the enterprise is $1,070/month.

The same scenario including a new employee at $15/hr who acts as a runner will save the enterprise $1,930/month. If an existing employee were used as a runner, the monthly savings increase to $4,510/month (Table 1).

                   
               
 
Monthly Cost Monthly Net Savings  
Monthly Wait Time Only Cost vs. Savings $1,720.00 $1,070.00 Savings Net of Application Cost
Monthly Wait Time Plus Travel Time Cost vs. Savings $5,160.00 $1,930.00 Net Cost of Runner and Application. There is no factoring for lost productivity as the result of start/stop and work not done while in transit/waiting.
Table 1. Neither example takes into consideration lost productivity, multiple shifts, or efficiencies garnered by creating fast accurate data electronically.

Neither example takes into consideration lost productivity, multiple shifts, or efficiencies garnered by creating fast accurate data electronically.

Point-of-Use Solutions = Immediate Savings

  • Without ever leaving point-of-use, technicians, on- or off-premise, can view critical spares and storeroom inventories across the entire enterprise, as well as OEM and supplier databases (Figure 1).
lean1
Figure 1. Technicians can view critical spares and storeroom inventories across the entire enterprise.
  • Electronic requisitions can be created on any Web-enabled device and converted with one click to barcoded pick lists or internal packing lists.
  • Items can be staged or delivered to the point-of-use saving travel time and wait time.

Savings example

Assumptions:
Number of employees        20
Number of trips per day    2 trips
Wait Time            3 minutes
Round Trip Travel Time    6 minutes
Days worked per Week    5 days
Hours worked per Day    8 hours
Shop/Labor Rate per Hour    $40.00
Runner's Rate per Hour    $15.00
Monthly Application Cost    $650.00

Keep it simple

Items that aren’t in stock in your crib need to be ordered. That sounds simple enough, and it should be. That same requisition that also included items in inventory is converted to an order or as required a request for quote (RFQ). This can be a one-click process depending on the approval rules in place (Figure 2).

lean2
Figure 2. Items that aren’t in stock in your crib need to be ordered.  That same requisition is converted to an order or request for quote.

With the tools available today, there exists the visibility to manage the process. Along the way there are checks and balances, audits, and logs to ensure that processes and accountability are maintained.

With an integrated solution where all the different components are always talking to each other, steps are automated and results optimized.

What features do we want?

There are fundamental components that will make our processes lean, will make our workflow efficient, and will minimize or eliminate wasted time. It’s not only about the managed items in our storeroom; it’s about the other 60% of purchases that we make. What we need is inventory visibility; easy search by machine, manufacturer, job, assembly, and what we consider important; 360° supplier visibility; requisitions that can be converted with one-click to a purchase order or an RFQ; and one-click punch-out from supplier and OEM databases to create an order, create an RFQ, add items to inventory, or create min/max and bin locations from historical or new purchases.

But why stop there? Efficiencies can be extended through the entire purchasing process. For example, there are often questions when parts are ordered. Can you confirm that the parts required were actually ordered? Did my supplier get the order? Where are my parts? How do I know when my parts have arrived?

Today’s cloud solutions can close the loop with automated purchase order confirmation. Real-time supplier confirmation status can be viewed. Purchase order confirmations can be date- and time-stamped. Requisitioner can receive real-time notification when parts are ordered and be notified when items are received.

The user can make better decisions, leveraging an environment where key elements, including CMMS/EAM, procurement, inventory management, and asset tracking are all integrated.

To ERP or not to ERP

ERP systems that are utilized to manage maintenance, critical spares, and MRO inventories have built-in processes that are complex, restrictive, and far less than user-friendly. Accessing data and relevant reporting can be daunting. The modules for asset management are expensive, and deployment can be a lengthy consuming process.

Integrating a lean, comprehensive application with an existing ERP can be faster, more economical, and more efficient than turning on or acquiring and perfecting those same modules within the ERP.

Connect it all together

lead jeff pomerantzJeff Pomerantz is founder and vice president at Tofino Software. Contact him at jeffp@tofinosoftware.com.

Transparency between maintenance, manufacturing, inventory and procurement, when prioritized, provides cross-system insights that enable an organization to maximize productivity and is ultimately the key to proactive risk avoidance and resilience. Further, the ability to join internal and external data and insights into an accessible platform provides the foundation to launch and maintain successful strategic initiatives.

Implementation and training have to be intuitive. You want an application that can import and export data from spreadsheets. You want an application that has an intuitive workflow that requires minimal time training and maximum time being productive. Of significant importance is an affordable application suite that makes good employees better while supporting the business goals and objectives of the enterprise.

Lean integrated processes and solutions and 360° program visibility may not prevent all risk scenarios, but they will reduce cost while elevating the organization’s resilience to risk.

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