January 11, 2010
In today’s business climate, everyone is scouring their balance sheets for chunks of assets to be liquidated for cash. One easy target is the maintenance spare-parts warehouse. There begins the struggle between what maintenance says it needs and what accounting says it should spend.
So, what is the right amount of inventory to have on hand and how can a processing plant be assured it’s not tying up valuable capital in unnecessary spare parts?
In this case, Lean manufacturing principles are a useful tool in the maintenance department. Start with the basics by applying ‘5S’ to the parts room. The very first step in the 5S is Sort. This can prove to be the most difficult part of the process based on the sheer volume of parts to be considered.
A good Computerized Maintenance Management System (CMMS) can give you a head start in this process. There are a couple schools of thought on this sorting process. One says to start with the equipment list verifying that every piece of equipment on the parts list is still in service. If a piece of equipment has been removed from service, determine all the spare parts on hand that are specific to that piece of equipment and pull them out of inventory.
The other school of thought says to start by using CMMS to obtain a list of all parts currently in stock that have not been used in more than 12 months. Keep in mind, just because a part has not been used in more than 12 months does not automatically qualify it for removal from stock. There are a lot of other factors to take into consideration, such as whether or not the equipment exists in which this part is used. One common example is gear boxes for critical equipment like chillers or drive motors for the shackle line. While no one ever wants to have to use them, when they are required, there had better be one ready or the entire operation will sit idle. This brings us to lead times.
As the saying goes, there are exceptions to every rule. While it is necessary to have one or two of those high-dollar, slow-moving parts on hand, in larger operations you can sometimes “cheat the system” by sharing the cost of these items with sister plants. This is why it is so important for plant and corporate engineering departments to look beyond the walls of a single plant and build in standardization when designing plant expansions. There will be more about this topic below.
Set in order
The next ‘S’ is to straighten or set in order. Again, moving commonly-used items closer to the front of the parts room and having shadow boxes for frequently-used items brings order to a normally-chaotic environment. This is also where processors can utilize a Lean manufacturing tool, Kanban. Kanban is a very simple process of identifying a reorder point, to ensure parts are reordered in a timely manner. This should be as simple as attaching a card to be turned in to purchasing when removing the last (some or predetermined number of parts) from a bin.
For example, if a facility has equipment where items are used in sets of eight, and it is necessary to have three sets on hand at all times, an employee should place a Kanban card before the last 24 parts in the bin. When someone pulls that 25th part, they will take the card to the purchasing department, which will place an order for more parts. There are ways to accomplish this electronically in a CMMS, but there is nothing as reliable as a tangible card handed to purchasing.
Shining the stock room is the next step in the process. This includes having the correct amount of lighting so that part numbers and stock locations can be easily and quickly read. Does the lighting cast a shadow into parts bins or is there appropriate task lighting in areas where parts are set back from the shelves? Shining also requires a minimum level of expected cleanliness. Just like in production areas and mechanical rooms, clean surfaces quickly reveal leaking equipment. It is possible to have a gear box slowly drain oil while sitting on the shelf only to be grabbed off the shelf in a rush and put into service where it will fail shortly after installation.
The fourth ‘S’, standardization, can take a couple different routes when applied to the maintenance spare parts warehouse. The broader application is standardizing parts. This means limiting the types and brands of equipment allowed into the plant. This is why airline companies do not buy multiple models of planes from different airplane manufactures. It keeps them from having to stock all kinds of different parts for all the different planes.
The same theory should hold true inside the plant. If a facility has three or four different brands of bagging systems it means there has to be three to four times the spares parts for each of those systems. Again, this application really impacts the bottom line when you begin to apply it to multiple facilities. It may cost slightly more to stay with the same brand or vendor for some equipment, but there will not have the cost of stocking another entire set of spare parts for equipment (not to mention the additional training).
The second application of standardization is standardizing the locations of parts. Consider, for example, whether it makes more sense to place all electric motors together and all belts together or if it makes more sense to stock parts in the warehouse by piece of equipment. Decide on a method and make it the standard.
Sustain the new system
Finally, there must be a process in place to sustain the new system. This requires discipline and accountability to maintain the new system put in place. When this is done, begin to manage by exceptions to avoid having to micro-manage every detail. This is accomplished by the use of housekeeping check lists and following up on those “exceptions.” Investigate root causes for stock outages. Was the part not on the shelf? Was it the wrong part in the wrong bin? After finding the root cause, implement long-term solutions that balance the cost of simply upping reorder points or reorder quantities with risk of being out of stock for a given item.
Being proactive in taking control of the parts room helps ensure a plant will run smoothly. And when your facility runs smoothly, you are much less likely to be the first place accounting looks for buckets of cash when times get tough. •
Mark Eystad is the owner of Mark 1045, Inc. ( www.mark1045.com
), Marietta, Ga. Mark has been improving the financial performance of companies for over 12 years. For more information e-mail: firstname.lastname@example.org