Two years ago, our company, Marshall Institute, sat down to create a road map – a visual representation of what makes up a world-class storeroom. The genesis of this need was the simple fact that companies can’t build a clear route to a world-class storeroom without establishing where they are presently.
In Part 1 of this article, in Plant Services’ June issue, we focused on the sections of the map that include being effective at foundational and intermediate levels, as well as efficient at the foundational level. This month the focus will be on the remaining three areas: those moving us forward toward being efficient at an intermediate and advanced level and effective at an advanced level.
Let’s start Part 2 of this discussion with the section of the map that involves being efficient at an intermediate level.
The first grid is the intersection of intermediate-efficient.
The processes and practices within these coordinates are:
- Bills of materials (BOMs)
- Critical spares
- Open stock
- Reorder points/economic order quantity/min-max/order on request
- Parts standardization
- Repair or replace
- Materials scrap
- Disposal of scrap
- Salvage value
The center of the universe for all parties concerned in regard to MRO spares begins and ends with the bill of materials. The BOMs are the alpha and the omega.
To be clear, the demand for the BOMs from vendors and OEMs (original equipment manufacturers) should always be “as built” and not “as designed.” The difference is subtle: One reflects what we actually received, and one reflects what the OEM intended to build.
A BOM is a listing of all the components required to make the asset. Organizations are already experienced with the BOMs concepts and the processes by which we create and adhere to them. Consider the product or service that your company makes or delivers.
The significance of the BOMs to the storeroom is simple. The storeroom stocks only MRO items that appear on the BOMs for an asset, and a current asset in the plant, to be precise.
Here is an example to help you determine whether you have a BOM problem. Does this sound familiar?
Mechanic A: We need to replace the belts on the fan on the roof.
Maintenance supervisor: What size are the belts?
Mechanic A: I don’t know.
Maintenance supervisor: Go up to the roof and find out.
Some of those components on the BOM may eventually be classified as critical spares. A critical spare part is anything we say it is: The problem is that we never really say what it is, not in detail. Common attributes of a critical spare are:
- It is critical to production
- It has a high cost
- It has a long lead time
All of these are subjective. One attribute that critical spare parts almost always have is that they are parts we never want to use, ever! A part whose failure would cause catastrophic loss to production, has a replacement time to backfill stores of six months, and costs $150,000, should be undesirable to use.
There is also a much less-intensive category of parts commonly found in storerooms. These parts are often offered as open stock.
Open stock is 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 are rarely inventoried or tracked with any level of cycle counting.
The different types and issue patterns of stocked items require a careful examination of the best manner in which to order the stocked items.
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 (reorder point) is simply the point at which the reorder quantity is reordered. This point is often the “min” point in our system, but for safety stock, it could be a value higher than the minimum desired.