What it really takes to control inventory

Inventory control plays a critical role in manufacturing facilities; Proper spare parts management conducted with the help of a computerized maintenance management system (CMMS) can reduce downtime, and increase profit margins.

By Ken Staller February 15, 2024
Courtesy: Chris Vavra, CFE Media and Technology

CMMS insights

  • A lack of spare parts can halt production as significantly as major supply chain disruptions, underlining the importance of efficient spare parts inventory management.
  • Computerized Maintenance Management Systems (CMMS) play a pivotal role in maintaining inventory accuracy, especially for spare parts, essential for minimizing downtime in manufacturing processes.
  • Implementing rigorous procedures, continuous training and dedicated staffing for storerooms are vital strategies for achieving near-perfect inventory accuracy, thereby reducing substantial financial losses due to unplanned downtime.

Various types of facilities expend enormous amounts of energy making sure that a full array of goods are at their disposal to allow the manufacturing of products in a timely manner. As more companies adopt Just-in-Time and progressive/continuous manufacturing practices, the need for the proper materials at the right time is imperative. If facilities don’t have the goods, the machines stop and every second of downtime is pure profit loss. To prevent losses, they try to improve their purchasing, quality control, inventory control and in-house handling practices and procedures.

Challenges beyond planning and inventory management

However, the failure to plan deliveries and manage inventory are not the only reasons the machines will stop. Power outages and natural disasters can’t be totally controlled. Am even more common issue? The lack of one small spare part can shut down production as quicky as missing one entire shipment of manufacturing goods or materials. Having spare parts for machines and being able to find them quickly when needed is key.

Supply chain issues have delayed machine spare parts delivery as much as they have slowed receipt of manufacturing goods. The good news: better vendor and customer contracts up and down the chain have us almost back to normal supply lead times. The bad news: in-house spare parts storeroom inventory control practices and procedures are, in most companies, not up to par with inventory practices for manufacturing goods. Less focus in this area results in inaccurate inventories. We don’t have the parts we want when we need them and/or we can’t find them, which extends machine downtime and bleeds profit.

A growing number of companies are using computerized maintenance management systems (CMMS) to assist them in maintenance operations. One module of the CMMS is designed for spare parts inventory. If used correctly, this module can make a huge impact in maintaining a high level of inventory accuracy and control.

Four procedures for maximizing inventory accuracy

Besides maximizing the capabilities of your CMMS, these procedures can help your facility achieve and maintain nearly 100% inventory accuracy.

  1. All the parts coming into the storeroom must be inspected for damage. Make sure they match the purchase orders (PO’s), and are perfectly received into the CMMS inventory module.

  2. All items must be placed in their proper storage locations and be recorded in the CMMS.

  3. Ensure that items are not moved from one location to another without the new location being recorded in the CMMS.

  4. All items being removed from the storeroom must be recorded in the CMMS.

All the above tasks require good and precise procedures and processes. However, the one deciding factor is always the people that carry them out.

If all the above tasks are followed to the letter, we can expect a high inventory accuracy number.

The financial impacts of downtime and the role of storeroom management

To achieve an inventory accuracy near or at 100%, lock your storerooms. Assign parts control people to each storeroom 24/7 (or as long as maintenance people are in the building). The cost for total storeroom coverage is often offset by the savings to be attained by having higher inventory accuracy. For example, a modest storeroom inventory may be worth $3 million. If the plant has a 95% inventory accuracy rate, they are losing $150,000 per year in inventory. Storerooms that guard high tech and automated items may carry in excess of $5 to $10 million of inventory or more.

In today’s manufacturing world, unplanned downtime can cost over $100,000 per hour and/or cause complete losses of batch manufactured goods. A locked and always-staffed storeroom will enable you to have and quickly locate the parts when you need them and keep unplanned downtime to a bare minimum.

A word of caution: warm bodies in the storeroom all the time does not guarantee success. What does? Precise instructions that are easily taught, learned and performed. Transparency for all inventory transactions. Someone to oversee and manage these transactions. Timely restock purchasing, and more.

The investment in money, procedural rigor and training that your company makes to accurately control inventory can easily pay for the cost of prolonged unplanned downtime events every year.

Ken Staller, senior consultant, Daniel Penn Associates. Edited by David Miller, content manager, Control Engineering, CFE Media and Technology, dmiller@cfemedia.com.


Keywords: CMMS, Spare parts


How can your facility further refine its inventory management practices?

Author Bio: Ken Staller is a senior consultant at Daniel Penn Associates (DPA). Contact DPA at (860) 232-8577 or info@danielpennassociates.com