Want to start reducing wasteful processes? Focus on supply chain

May 7, 2021
For smaller maintenance teams, better supplier relationships can lead to quick cost savings and improved reliability.

If you’re like the 42% of American manufacturing workers in small plants, Maintenance probably seems less like a department and more of a small business (except you’re connected at the hip to your only customer – Operations). Nowhere is this more apparent than in the supply chain. In small plants, Purchasing, Procurement, and Shipping/Receiving either do not exist or explicitly do not support Maintenance. And if they do exist, chances are there’s a management-level employee overseeing department activities. Meanwhile, Maintenance may have (at best!) a single clerk handling sourcing, purchasing, invoicing, receiving, inventory, and your storeroom.

As far as the reliability industry is concerned, the supply chain typically begins in the storeroom. For example, SMRP has a few tips on organizing your parts cage, calculating storage costs, and managing inventory quantities. However, the process and cost associated with supply chain starts long before a part hits the shelf. Where there is cost there is waste, and lapses anywhere in the supply chain process leads to expedite charges, stock outs and overstocking, or double paying invoices. These costs can have a bigger impact on the business bottom line than traditional reliability “bad actors'' like half-baked RCAs or misidentifying your spot on the P-F curve.

For example, take the process of sourcing vendors. This process costs significant staff labor hours, and failure to source vendors effectively leads to waste in the form of overpayment and excess lead times. Suppliers you’ve depended on for a long time probably know it and may not be giving you their best price. Or, as often happens, poor service is accepted as the unavoidable cost of doing business. The good news is that we’re all adequately trained as effective consumers in our own private lives to get started on enhancements in this area. You can improve sourcing by reaching out to different vendors, talking to industry contacts, or just jumping on your favorite search engine. Look for new vendors and keep at least two options for all of your items so that you know you’re getting the best deal available.

Best practices in the areas of supply chain and, increasingly, reliability are redefining the relationship between vendor and client as collaborative rather than transactional. Several important implications stem from this change in reference. Suppliers have access to a wealth of information that can be of great benefit to a maintenance department. Many are extremely knowledgeable of their products, have the inside track with OEMs and access to global supply networks. Seek out vendors that can help troubleshoot equipment, identify advancements in technology, and propose solutions to plant problems. Such a proposition is a win-win for both sides: Maintenance gets real value added to their purchase, while vendors will see their sales revenue increase.
Another aspect of a collaborative relationship with vendors is the opportunity for increased visibility. Supply chains are complex networks where 80% of data resides outside of your organization. Further, ship dates, costs, transit status, etc. are extremely dynamic. Your purchasing data and your vendor’s data are stored separately and updated independently, but are effectively the same! That paves the road for waste in the form of bad information, duplicate processing, and unnecessary phone calls to “sync” everyone’s data.

All of these sources of waste can be reduced by increasing visibility. For example, use Sharepoint or even Google Docs to develop a shared spreadsheet for purchasing data with your vendors. For reference, think of how much time and money is saved with platforms such as Grainger and Amazon websites where you can instantaneously access shipping data, order history and status. While many vendors aren’t at that level yet with technology, the point is clear: greater visibility will net savings for your maintenance department.

That same concept of visibility should be applied to your internal teams and processes as well, and can reduce waste further. Managing POs and invoices for most maintenance departments means plodding through e-mail chains, endless phone tag, and metastasized spreadsheets rife with opportunities for waste. As a bare minimum, document PO data in a sortable electronic format. To most people, this means Excel, which is fine because of how easy the software is to use. However, for the more tech-savvy out there I would recommend Microsoft Access, although some outside training may be required. Access is software commonly included in the Office Suite that uses databases versus spreadsheets, which is the appropriate tool for the large complex data sets of the supply chain.

Microsoft Access will improve integration between procurement and storeroom processes, which is extremely useful in smaller plants that don’t have the resources for implementing and maintaining a high-end CMMS. For example, most barcode systems can interface easily with Access and cost less than $1000 to implement (excluding labor). Digitalizing inventory and associated transactions provides real-time storeroom visibility, which in turn enables automatization of supply chain processes such as identifying what parts to order and when. If your accounting folks are on board, you can even automatically generate orders against open POs with the click of a button. Close the loop by linking barcode printing with your inventory, and goods receiving gets a whole lot easier. For maintenance departments with limited human resources, improvements like these are invaluable.

In sum, as I mentioned in my previous blog post, the distinction between a department and a semi-autonomous business unit is a major gap unaddressed by the reliability body of knowledge. As a result, major drivers of overall cost like those associated with the maintenance supply chain are underdeveloped as far as best practices go. Gains can be made by recognizing that waste exists in these areas and applying familiar tools such as lean methodology. Like all reliability initiatives, improvement requires investment up front from your reliability professionals, and effective communication on ROI to justify the efforts. Supply chain processes can consume an inordinate amount of time and money, and ultimately affect the bottom line as much as any other reliability area of focus.

About the Author

Alex Ferrari

Alex Ferrari, CMRP, is a Maintenance Manager of a specialty cosmetics manufacturer in Charlotte, NC. He has worked in the chemical and nuclear industries both in the US and abroad in Argentina. As a blogger and as a maintenance professional, Alex aims to explore the challenges faced by small and mid-sized facilities without the budget for by-the-book reliability programs.

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