We are often asked what happens a week or two after a storeroom assessment takes place. To answer this question, we need to back up a step or two – and this is very important – before we develop an action plan to manage the storeroom. First, we do our homework on what is in the storeroom and the data that we find.
Before we do the assessment
We collect as much data as possible about the storeroom inventory, relying on historical parts orders to determine which items are good candidates for a VMI system. This is essential for developing a storeroom management program. We then determine which items are in stock, or should be, and which items are on an order-as-needed (OAN) basis, and finally those items that should be classed as do not re-order (DNR). Examples of OAN items are sensors and other standard controls. Stocking those type items would be rare, except in storerooms that support OEM machine builders. Now that we have collected historical parts inventory data and classified it, we’re ready for the physical inventory.
Conducting the on-site assessment
Once we arrive onsite, our focus is to record what is on the shelves. While that seems straightforward, the underlying question is whether the storeroom has adequate business flow to justify a VMI? We see plenty of storerooms that are improperly stocked, which inevitably leads to unhappy management and assets being tied up that could be better deployed elsewhere. We have on occasion told customers NOT to create a VMI program where the business flow does not support it. Cost effective storerooms should include a VMI program for parts that turn over on a monthly, or frequent basis. Other, slower moving parts may be dealt with outside of the VMI. Following the onsite assessment, we categorize the inventory into high turnover items that are ideal for a VMI, OAN items as noted above and DNRs (do not reorder) items. In our experience, an ideal electrical storeroom should have fewer than 250 SKUs of high-turnover parts and 25-50 OAN parts. DNR parts inventory can vary widely depending on the health of the storeroom. Ultimately, many of these DNR parts will be removed from inventory.
A week or two later things begin to happen
At this point, an agreed-upon parts list is required to begin stocking the storeroom. Parts are divided into classes and we determine the shelving and bins needed to store VMI and OAN inventory items. .This also includes an assessment of physical access to the parts area, adding or removing parts storage racks and other storage as needed. We also ensure that every parts bin is labeled and barcoded for easy parts identification. Our goal is the right parts in the right place at the right price – and at the right time. A well-organized storeroom makes it easy to find the needed parts, quickly. At the current cost of labor, it is wise to minimize time spent looking for parts.
A few summary thoughts on what should happen next
In three to six months after startup, we typically review the inventory to ensure that there are no stock outs, excess inventory or emergency parts orders that occurred since the storeroom plan was developed initially. Remember, things change over time and the optimized storeroom always evolves with changes to the plant and equipment. One thing we have learned over the years is that customers do not always accurately estimate the amount of inventory needed when they set min/max levels.
Another common perception we run into is that organization is what matters most in the electrical storeroom. One of the things customers often express appreciation over is how clean and neat their storeroom is following an assessment. Everyone feels better after the storeroom is cleaned up. While there’s little doubt that disorganized spaces can add time to the task, the hard reality is that reporting is where the results are found. Reporting proves the value of the storeroom.
We will have more to say on storeroom performance reporting in upcoming articles that will deal with improved data collection and reporting.
Check out our electrical storeroom homepage for more information.
Download our electrical storeroom management overview to learn all the ways EECO can help maximize efficiency.
If you have questions or comments, contact us at ISTeam@eeco-net.com