Up Your Parts Management Game
EP Editorial Staff | February 20, 2019
Plant reliability and work efficiency are at risk when the ‘rights’ of parts aren’t protected.
By Drew Troyer, CRE, and Mark Rigdon, T.A. Cook Consultants Inc.
Excellence in maintenance is a critical aspect of equipment-asset management. It’s a simple formula: Good Parts + Good Workmanship = Effective Maintenance. For parts, we require the right items, at the right time, in the right condition, and in the right kit. If we don’t tick all of the boxes, reliability and/or work efficiency suffer.
There’s nothing worse than planning and scheduling a maintenance job only to discover that the right parts aren’t on hand. Such occurrences can lead to cancellation of jobs, force-fitting of parts that will work but aren’t ideal, and/or expediting deliveries. Canceling a job wastes valuable time and effort to plan, schedule, assign, and start the work. When suboptimal parts are used in a pinch, the stage is set for the next failure.
If a job is critical and simply must be done, the parts must be expedited, which can involve a cost premium, as well as delay the restart of the asset. A job should not be classified as available to schedule until availability of the required parts has been verified and they are kitted, taken out of inventory, and assigned to the job.
The overhead annual cost to hold inventory is about 22% of the total average inventory value. This burden includes the cost of money, cost for space, pilferage cost, shelf-degradation, software systems, obsolescence, and parts-management labor, among other things. So, if your inventory is $1 million, it’s a $220K hit to your bottom line—every year. That’s why it’s important to keep your inventory lean.
LEAN AND CLEAN
The presence of obsolete inventory is a common problem in storerooms. It takes up space, adds to the Net Operating Asset in Place (NOAP) cost, which reduces your Return on Net Assets (RONA), and degrades to the point of being useless. Identify obsolete inventory and sell it or scrap it. It’s of no use to you.
The Toyota Production System (TPS), which is often referred to as lean manufacturing, uses 5S as a tool for warehouse management. As follows, the original Japanese words were translated into five English words that capture the essence of the workplace-management system.
Sort. In the MRO warehouse, sort means getting rid of unnecessary material and clutter to ensure that the right quantity of necessary inventory is on hand. For consumption items, such as nuts and bolts, bin-level reorder-point methods work great. For repair items, mathematical economic order quantity (EOQ) models work well. Critical spares require risk-based analysis (see “Get Smart With Critical Spares” p. 48, in the Nov. 2018 issue). We want the right quantity of the right material on hand. This requires some analysis.
For some expensive critical spares, often called “insurance spares,” community ownership may offer an appropriate option. For jobs that are routinely performed in the plant, it might make sense to pre-kit some appropriate number of job packs, assign a part number to the kit and polybag or stage as appropriate. Keeping the right parts on hand in the right quantities becomes easier to determine when there is a strong maintenance focus on proactive—reliability-driven maintenance activities versus reactive corrective activities. Getting this balance right supports bestpractice inventory management.
Set-in-order. It’s important to ensure a place for everything and keep everything in its place. Store frequently used items near the work area and those used less frequently in more remote locations. Decide if you wish to employ a man-to-part material-handling system, where the person picks the parts required for job kits, or a part-to-man system, where robots pick parts, complete the kit, and deliver them for pick up. You also need to employ a first-in, first-out (FIFO) inventory system, not a last-in, first-out (LIFO) system. At all costs, avoid the first-in, still here (FISH) approach.
Think about your warehouse layout too. It’s desirable to minimize unnecessary movement, hand-offs, and paperwork. Consider the physical layout and the check-in, check-out (CICO) system. Bar codes and RFID tags are real time savers. RFID tags offer the additional benefit of identifying who has entered or exited the storeroom and what parts have come in or gone out with them. These systems help to keep the actual physical inventory synchronized with whatever enterprise resource planning (ERP) system is used by your organization. This analysis will dictate what shelves and bins are required, what parts-fetching equipment is required, and the required parts and inventory-management systems necessary for proper control.
Shine. A clean storeroom is a happy storeroom. Parts degrade over time, even in storage. Water, dust, chemical, and other contaminants rob equipment of life. It’s also important to eliminate vibration in the area and, if possible, maintain a relatively cool temperature. Constant exposure to vibration, even if it’s low amplitude, leads to fretting wear, i.e., false brinelling, a common cause of shelf-degradation for items, primarily bearings and gears. Heat is the enemy of chemicals, including lubricants, as well as belts, elastomeric seals, and other components. An increase of just 18-deg. F (10-deg. C) cuts the life of such material in half.
Another important environmental element is lighting. You can’t inspect and evaluate what you can’t see. Moreover, in many cases, part numbers can be very similar. Personnel have to be able see the labels to make sure they’re selecting the correct part.
Finally, exercise good housekeeping: Eliminate clutter, debris, and dust and promptly clean up spills. Be sure to spray shaft extensions with rust-and-corrosion inhibitors and/or wrap them for protection. A vapor-phase rust-and-corrosion inhibitor makes sense for components such as gearboxes. Also, don’t forget to rotate stored shafts every few months to prevent fretting.
Standardize. Management of warehouse and stores is no place for free-wheeling. It should be highly controlled, highly repeatable, and highly reproducible. Repeatability refers to the consistency with which one person performs a task every time. Reproducibility refers to the consistency with which two or more people execute the same task. Standards enable repeatability and reproducibility. Effective warehouse- and stores-management requires standardization for the following processes:
• required stock-on-hand quantities, including bin level, EOQ, critical-spares analysis
• parts ordering
• parts check-in and check-out
• stocking practices (FIFO)
• parts picking and kitting
• data input and management
• physical inventory practices.
While it’s not the direct responsibility of the warehouse-and-stores-management team, standardizing parts across assets greatly simplifies warehouse-management practices and can significantly reduce the amount of MRO inventory that’s required.
Sustain. Once the first three 5S elements are stabilized and the process is standardized, its time to focus on sustaining desirable warehouse and MRO-inventory practices. Sustainability requires that we permanently change the culture. When a poor practice is observed and one inquires why it was performed that way, the response is often “that’s the way we’ve always done it.” We want the same response when we inquire about best-in-class practices. To sustain what’s been defined in the first three of the 5S elements and then standardized in the fourth, do the following:
Educate and train on warehouse- and MRO-inventory-management best practices. Education teaches people why they’re being asked to function in a particular way. Training teaches them how to do so. It’s not a one-and-out process. We need to continuously reinforce basic training with single-point lessons and teachable moments. Additionally, it’s necessary to provide additional education and training in support of continuous improvements as a part of the management-of-change process.
Create metrics and key performance indicators for warehouse and MRO inventory-management best practices. What gets measured gets done. Metrics provide the team with a scorecard and enable managers and supervisors to drive the desired behaviors. Table I summarizes a set of metrics and some general recommended goals. They should provide you with a good head start. Adopt, adapt, and modify them to meet your requirements.
Perform regular audits. First and foremost, you must perform routine physical inventories. Don’t view this process as simply an accounting activity. It’s an opportunity for you to evaluate the effectiveness of your warehouse and inventory-management practices. Perform root-cause analysis on discrepancies—this is your opportunity to improve.
Reward desirable behaviors. Previously, we suggested that what gets measured, gets done. In truth, what gets rewarded gets done. However, metrics provide the scorecard by which performance is measured. It’s essential to create intrinsic and extrinsic rewards that drive desirable warehouse and MRO inventory-management behaviors. Remember, 80% of what goes wrong in the plant is human factors. Rewards that are tied to desirable metrics are essential in the recipe for reducing human errors.
INCLUDE THE SHOP
Extend the same 5S principles used in MRO-parts-warehouse management to shop operations. It’s surprising how often a rebuild shop is located a great distance from the storeroom. This creates unnecessary waste in the manpower time and equipment required for transfer.
Figure 1 illustrates failed parts handling, equipment rebuild, and MRO-parts-warehouse management as a single process. It starts with a receiving room taking in failed parts from the plant—the dirty side of the rebuild process. There, it’s important to quickly decide if the component is going to be rebuilt or discarded. If it’s to be rebuilt, it must be determined if the work will be outsourced or performed on site. If the rebuild is to be done on site, the item must be cleaned, prioritized, scheduled, and staged for transfer to the rebuild shop—the clean side of the rebuild process. The receiving room and rebuild shop should be located near one another.
The rebuild shop should be a clean-room environment, or as close to one as possible, to avoid built-in contaminants that cause wear and corrosion and, in turn, lead to early failure. Pick and kit the parts from the warehouse that are required for the rebuild, then transfer them and stage them in the clean-room rebuild shop so that your rebuild craftspeople, who are often the plant’s most senior (and highest paid) craftspeople, don’t waste time chasing parts. Again, minimize the distance between the MRO parts warehouse and the clean rebuild shop to minimize material handling.
Focus on cleanliness in all phases of the rebuild, and conduct a final cleaning and, if required, a flush. Once components are repaired and tested, return them to inventory in the warehouse for deployment. Ideally, the entire process of handling failed components, repairing them, and then ultimately placing them in inventory can be accomplished with a minimal amount of unnecessary handling, transport, or actions.
For most plants, MRO parts represent about half of the total maintenance spend. Problems such as stock-outs, wrong parts, force-fit parts, and shelf-degraded parts rob your sites of valuable reliability.
A sound MRO inventory-management system is critical to plant reliability, a smooth and effective maintenance-work-management process, and achieving cost-control objectives. Make sure you manage your MRO inventory, warehouse, and internal rebuild shops proactively. EP