Put Efficiency in MRO Storerooms

3/2/2021 Put Efficiency In MRO Storerooms - Efficient Plant
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Asset Management | Management | MRO
Put Efficiency In MRO Storerooms

EP Editorial Staff | August 9, 2016
Outdated designs, work processes, and technologies keep

many of today’s storeroom operations from adequately
meeting the needs of the maintenance efforts they’re
expected to support.
https://www.efficientplantmag.com/2016/08/put-efficiency-mro-storerooms/ 1/12
While bar-code technology has been around for decades, only a few storerooms have fully implemented
it to track and manage their MRO inventory.
By Wally Wilson, CMRP, CPIM, Life Cycle Engineering
Regardless of organization size, many storerooms are still operated as they were when the
plants first began operating—which could have been decades ago. They still have light-duty
metal shelving that wastes substantial vertical-storage space and heavy-duty pallet racking
with extra-wide aisles to accommodate large components. For many sites, changes that make
MRO (maintenance, repair, and operations) storerooms more efficient are long overdue.
Why a storeroom deserves TLC

An MRO storeroom is a business within a business that’s expected to have available items to
maintain a site’s operating equipment. While the maintenance department may be its primary
customer, it serves many areas of an organization. Its main role is to manage the inventory
investment and provide the needed parts and components for equipment repairs and support
the overall objectives and goals of the business.
The culture of the maintenance organization directly affects how a storeroom functions. If the
expectation is to provide repair parts quickly for equipment breakdowns, the storeroom will
be forced to operate with a large inventory investment—and in a very reactive mode. If
maintenance personnel are conducting reliability-centered maintenance (RCM) and planning
and scheduling their work, the storeroom operates in a more efficient and proactive manner,
and with less inventory.
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Note that how inventory is managed affects the outcome of equipment reliability. Take, for
example, the fact that a harsh storeroom environment can damage parts. Dust, dirt, heat, cold,
vibration, and static electricity can affect the quality and performance of some parts when put
in service.
Service life can also be affected

Services  by how itemsare physically
Workforce COVID-19 handled and stored.
Coverage  Think about
the impact of an electric motor that’s dropped or had its shaft struck by a lift truck.
Mishandling of parts can cause concealed damage that does more than adversely affect the
life of the components themselves. It also can cause collateral damage to other equipment
with which those items are installed.
Here are some recommendations for bringing your storerooms up to date in terms of location,
storage equipment, work processes, technology, layout, inventory-stocking decisions, and
kitting approaches for planned work.
Changes that make their MRO storerooms more efficient are long overdue for many sites, starting with
elimination of substantial space-wasting, light-weight vertical shelving.
Update location
Past thinking was that the storeroom needed to be centrally located for easy access from
anywhere on the site. This philosophy was driven by the role of the storeroom and the need
of the employees to have access to everything from office supplies and consumables to repair
parts for equipment maintenance.
Current thinking is that the storeroom should be located on the perimeter of a site for
increased security. Placing a storeroom there also reduces delivery traffic that can cause a
safety hazard for employees and delivery-vehicle operators.
Locating the storeroom on the site’s perimeter increases the need to plan and schedule the
preventive and routine maintenance work. To support the planning and scheduling of this
work, parts need to be kitted and delivered to a staging area or specific job site. Ensuring that
needed parts and services

Servicesare
 available beforea jobCOVID-19
Workforce is scheduledCoverage
is critical—and
 directly
supports proactive maintenance and MRO-storeroom operations.
Update storage
equipment
Regardless of a storeroom’s
location, how space is used
determines whether it operates
efficiently. Assessing the vertical
space, along with the square
footage, helps define which
storage equipment will be best
suited to effectively manage
inventoried items. Most MRO
storerooms contain about 70%
small items, with larger
components and sub-assemblies
making up the balance.
The smaller items should be

stored in high-density cabinets,
that, compared with metal If a storeroom isn’t staffed 24/7, grouping inventory by
shelving, dramatically increase commodity helps off-shift personnel find parts they need
space utilization. Cabinets can without searching throughout the storeroom.
reduce the footprint of metal
shelving in a storeroom by two-thirds. These types of cabinets also provide protection from
environmental hazards (dirt and contaminates) that can damage parts.
If square footage is limited, but ample vertical space is available, vertical carousel units are a
good option. These units combine the high-density cabinet capability with a small footprint
for storing large numbers of parts. Keep in mind, however, that such units are not limited to
small-item storage.
Most vertical-carousel units have a maximum weight capacity of 300 to 400 lb./tray. These
units can be configured in varying heights from 16- to more than 30-ft. to maximize use of
available vertical space. Implementing vertical carousels significantly increases the use of
available square footage and reduces the required footprint even more than high-density
cabinets. A limiting factor is usually the cost, which can range from $150,000 to $250,000
per unit.
Update work processes

Several basic work processes need to be in place to effectively manage the storeroom and the
inventory. Some rely on areas of the business operation outside the storeroom to be
Reliability  Electrical
successful. Analysis
 internal
Processes Automation
to thestoreroom include: Equipment  Lubrication  Safety 
Receiving. Identifies
Servicestasks
 required for the
Workforce  storeroom clerkCoverage
COVID-19 to document and
 verify
receipt of a shipment.
Inventory-stocking. Activities required to locate and store items to ensure the parts are
properly stored.
Inventory-issue. Tasks required to allocate items from the storeroom inventory.
Inventory-cycle counting. Activities required to verify and correct on-hand quantity
discrepancies.
Inactive-inventory identification. Identifies non-critical, slow-moving items that are
candidates for revised stocking levels.
Obsolete-inventory identification. Activities required to identify parts that are not
attached to a current operating equipment asset.
Work processes that the storeroom supports include:
Incoming inspection. Inspections of incoming items that were fabricated or require

certification before receipt.Return-to-inventory. Activities that credit returned items to
a work order.
Return-to-supplier. Activities that address warranty, credit, or replacement of a
defective part.
Planned-work kitting. Activities that ensure all parts are on-site before the job is
scheduled for completion.
Repairable-component process. Activities that track and manage the rebuild of
selected components from removal from service to return to the MRO storeroom
inventory.
Update technology
Technological advancements can be valuable tools for dealing with MRO inventories. Many
organizations, though, have invested hundreds of thousands of dollars to purchase and install
a state-of-the-art inventory-management system, but failed to leverage all of its capabilities.
The sad fact is that employees often don’t receive adequate training on how to use the
software. Consequently, they continue to rely on spreadsheets and other workarounds to do
their jobs.
The business software is one of the most critical aspects in effective management of today’s
storerooms. While bar-code technology, which is supported by most of today’s available
software applications, has been around for decades, only a few storerooms have fully
implemented it to track and manage their MRO inventory. To maintain visibility of the
storeroom inventory, its receipt, management, usage, and re-stocking of materials has to be
streamlined and updated in real time.
If such software is managed properly, all authorized individuals have access to real-time
inventory reporting. Accurate, real-time inventory visibility is essential to your maintenance
planners. If they’re not confident the inventory is accurate, they will spend much of their
time doing physical checks to confirm the parts are actually on site.
Update layout
A storeroom should be laid out

with consideration for space
utilization and material flow.
Inventory analysis and
classification, using the A-B-C
identification system, lets the
storeroom manager establish a
cycle-count frequency and define
what items are critical, what
should be held in inventory as
stock, what should be non-stock
(order on demand), and what are
commodities that should be
vendor-managed in the shops.
Handling or moving inventory

items multiple times is a waste of
effort for the storeroom staff—
High-use items, such as personal protective equipment (PPE),
and increases the chance of
tools, filters, and leak-prevention solutions, can be dispensed
damaging parts and components.
using various types of vending machines.
When determining the space
needed for a specific commodity
group, a cushion of 15% of the space should be reserved for expansion. This approach
provides space for new parts stocked for equipment modifications or new equipment
installations.
Generally, inventory is best located and managed by commodity grouping items. The main
advantage for grouping by commodities is to reduce duplicate inventory. This minimizes
dollars invested in inventory and frees up valuable space. If a storeroom isn’t staffed 24/7,
having the inventory grouped by commodity helps off-shift maintenance personnel find parts
they need without wasting time searching throughout the storeroom.
Update stocking decisions

Inventory should be tied to an operating-equipment asset. Not all parts—even those deemed
critical—will be held in the storeroom inventory (nor should they be). The decision to stock a
part in inventory should consider these factors:
Order lead time. The understanding of order lead time often varies within an
organization. The order lead time typically starts when the order is received by the
vendor and ends when the order leaves their shipping dock.
Expected usage. Many parts could have multiple applications across the site and if the
MTBR (mean time between repair) is available, the stocking decision can be made more
Reliability accurately.
Electrical  Analysis  Automation  Equipment  Lubrication  Safety 
Vendor reliability.
ServicesWhen
 selecting vendors,
Workforce  consider pastCoverage
COVID-19 vendor performance
 and
issues that could affect their ability to provide the needed parts.
Impact on safety, production, and/or environment. Gauge the potential blow to these
areas if a needed part were not available for the equipment repair.
For consumable inventories, consider these options:
Vendor-managed inventories (VMI). Items in this category are high-use, low-dollar

items that can be stocked at a point-of-use location.
Vending machines. Many consumables, such as personal protective equipment (PPE),
tools, filters, leak-prevention solutions, and office supplies, can be dispensed using
various types of vending machines.
Update kitting approaches

Ensuring that all correct parts are available for a job provides a strong platform for a
proactive maintenance program.
A planned-work kitting program also helps the storeroom. The key benefit is the ability of
the storeroom to reduce the level of parts stocked and total dollars of inventory investment.
Reducing the inventory investment contributes to an organization’s ability to operate at
a lower cost.
Adding to the storeroom’s efforts to reduce inventory, the purchasing group can secure parts
as they are needed for repairs, thus reducing the need to expedite purchase orders for parts or
stock large quantities of many items.
For example, it costs $150 to $300 to generate and administer the average purchase order
from requisition to invoice payment. Using the auto-replenishment (material-resource-
planning) capabilities of an inventory-management system cuts the purchase-order cost to
$10 to $12 per transaction. If the kitting process is successful, much of the inventory can be
ordered as needed, staged for the job, and the work executed as scheduled.
Kitting provides a number of other benefits for a plant, including better maintenance-
technician utilization. In most organizations, that rate is about 25%. With a planned-work
kitting program, the rate increases because jobs, by definition, are well planned, and
technicians will not be wasting valuable time looking for the parts to complete them.
Start sooner than later

The common approach to revising storeroom operations is to turn to new technology to solve
all problems. The first step, however, should be to determine where you are now and what
barriers prevent you from having a functional storeroom that proactively supports your site’s
reliability and maintenance efforts. You’ll most likely discover some problems that haven’t
yet been addressed—perhaps because your site has never launched an initiative designed to
capture the opportunities they represent.
If, in fact, you findServices

that your
 MRO storeroomneedsCOVID-19
Workforce a makeover, start the process
Coverage  as soon as
possible to reap the associated operational and financial benefits. Innovation is driven by a
clear understanding of the problem, planning a strategy to facilitate the needed change,
identifying key activities to achieve the goals of the strategy, and measuring the performance
with lagging and leading indicators.
Having a strategy to execute an improvement plan puts a rudder on your storeroom ship.
Monitoring the progress of the initiative with key performance metrics will validate your
progress and drive the continuous-improvement effort forward. MT
Wally Wilson is a senior reliability consultant in materials management and work

management, planning, and scheduling for Life Cycle Engineering (LCE.com), Charleston,
SC. He can be contacted at wwilson@LCE.com.
Key Storeroom-Performance Metrics

Key performance indicators (KPIs) that report lagging storeroom performance can shape
strategies and action plans to drive long-term continuous improvement. Leading indicators
are the mid- and long-term performance goals and the strategy to trend the storeroom
performance toward the target goals. The strategy should include key activities and process
revisions to drive the expected performance.
The following KPIs are used to measure storeroom performance:
Inventory-turns ratio. The best-practice MRO inventory turns ratio is three to four
annually.
Inventory value. Best practice is 0.5% to 0.75% of the asset-replacement value.
Inventory issued. Indicates dollar value of inventory issued.
Inventory received. Indicates dollar value of inventory received.
Inventory transactions. Indicates the utilization of storeroom employees.
Incidence of inventory stock-outs. Best practice is less than 2% of total inventory
requests for unplanned jobs.
Identified obsolete inventory. Expressed in dollars, the best practice is less than 5%.
Excess inventory. Stocking overage, expressed in dollars.
Inventory accuracy. Best practice is 98% overall inventory accuracy.
Inventory adjustments. From inventory cycle-count activities.
“Mining Gold from 21st Century

Storerooms”
“Consolidating Assets Maximizes Performance”
“How to Reduce Storeroom Inventory Painlessly”

“Uptime: PDCA Drives Parts

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3/2/2021 Put Efficiency In MRO Storerooms - Efficient Plant

Magazine  Events Resources  Services

Reliability  Electrical  Analysis  Automation  Equipment  Lubrication  Safety 

Services  Workforce  COVID-19 Coverage 

Asset Management | Management | MRO

Outdated designs, work processes, and technologies keep

Reliability  Electrical  Analysis  Automation  Equipment  Lubrication  Safety 

Services  Workforce  COVID-19 Coverage 

By Wally Wilson, CMRP, CPIM, Life Cycle Engineering

Why a storeroom deserves TLC

Service life can also be affected

needed parts and services

The smaller items should be

Update work processes

Work processes that the storeroom supports include:

Incoming inspection. Inspections of incoming items that were fabricated or require

A storeroom should be laid out

Handling or moving inventory

Update stocking decisions

For consumable inventories, consider these options:

Vendor-managed inventories (VMI). Items in this category are high-use, low-dollar

Update kitting approaches

Start sooner than later

If, in fact, you findServices

Wally Wilson is a senior reliability consultant in materials management and work

Key Storeroom-Performance Metrics

The following KPIs are used to measure storeroom performance:

“Mining Gold from 21st Century

“Consolidating Assets Maximizes Performance”

“How to Reduce Storeroom Inventory Painlessly”

“Uptime: PDCA Drives Parts

Show More Videos

SHOW MORE VIDEOS

Reliability  Electrical  Analysis  Automation  Equipment  Lubrication  Safety 

Services  Workforce  COVID-19 Coverage 

Show More Videos

Asset Management • Automation • Column • Lean Manufacturing •

Equipment • Pneumatic-Hydraulic • Management • On The Floor

Column • Management Lean Manufacturing • Management •

Reliability  Electrical  Analysis  Automation  Equipment  Lubrication  Safety 

Services  Workforce  COVID-19 Coverage 

Asset Management • Automation • CMMS • Lean Manufacturing •

IIoT Maintenance • Management •

Sign up for insights, trends, & developments in

Maintenance & Reliability Solutions

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