Introduction
In many organizations, parts warehouses and inventories often do not receive the attention they deserve to ensure their efficient operation and accuracy. This oversight can be attributed to the perception that parts departments do not generate income for the company and that managing parts should be straightforward. However, this mindset, coupled with a lack of systematic management and the absence of warehouse inventory best practices, can lead to significant problems.
When the focus finally shifts to rectifying these issues, it can be a daunting and potentially painful process. The good news is that there are strategies that can help prevent these problems, ensuring a smooth operation of your parts warehouse. An accurate parts inventory system allows the parts department to be more proactive and responsive to the plant’s needs. Companies can save significant resources by avoiding the need to expedite a part that is, in fact, already on-site in the warehouse.
This article will explore best practices for managing parts inventory more effectively.
- Introduction
- 1. Systematically Identify All Parts
- 2. Utilize and Manage the Bill of Materials (BOM)
- 3. Streamline the Work Order Process
- 4. Adopt Security Measures
- 5. Centralize and Consolidate Parts
- 6. Utilize an Inventory Control System
- 7. Assign Every Part a Stock Location
- 8. Regularly Review and Adjust Inventory Levels
- 9. Implement a Cycle Counting Program
- 10. Train Your Staff
- 11. Use Predictive Analytics
- 12. Establish a Good Relationship with Suppliers
- 13. Continuously Improve Your Spare Parts Inventory Management Practices
- Final Thoughts
1. Systematically Identify All Parts
When equipment is scheduled for a major overhaul, several items may be purchased for one-time use. Some of these parts may not be a stocked item and not created as a part record in the inventory control system. Once the machinery overhaul is completed, there may be unused parts which have future use and should be inventoried. Other equipment in the plant may be able to use these unused parts. Rather than maintenance storing these parts in a box, workbench, or cabinet somewhere, the items should be added to the inventory control system and placed into parts inventory.
2. Utilize and Manage the Bill of Materials (BOM)
BOMs can simplify the process of ordering parts and placing work orders. However, it’s crucial to keep your BOMs up to date. Inventory inaccuracies can quickly occur if a part is not added, changed, or removed from a BOM. Accurate BOMs will also assist with scheduled preventive maintenance (PM) needed on a given piece of equipment. In some systems, the PM schedule will generate a work order with the scheduled date of the PM.
3. Streamline the Work Order Process
Improving spare part efficiency can be achieved by having a robust but simple work order process that everyone can follow. Work orders need to be created for all parts issuance so that inventory remains accurate. Develop a work order process that is not overly complicated but ensures that all necessary information is passed along. If it is too complicated or there are ways to get parts without a work order, you will find employees not using the desired process, and inventory inaccuracies begin to occur.
Non-emergency work orders should be placed in advance. Work orders requested in advance can be pulled and staged for pickup or delivered to the requesting department. This will reduce the maintenance department’s wait time at the parts warehouse for their work order to be fulfilled.
4. Adopt Security Measures
Effective security measures are essential in the parts warehouse. Several critical practices should be considered. Limiting access to the parts warehouse inventory is crucial to maintaining inventory accuracy. Adopt a policy that parts inventories are “off limits” and only parts department employees have access.
Physical security measures such as parts counters that prevent employees from entering inventory stock locations and pulling parts required can be adopted. Allowing everyone to have access can quickly make parts inventories inaccurate.
The second practice to help assist in this objective is to install security camera systems and begin utilizing badge access to entry and exit points. Additionally, equipment such as vertical lift modules for spare parts provide strict security.
5. Centralize and Consolidate Parts
Where possible, centralize and consolidate satellite parts inventory into your main parts warehouse. Having all your parts centralized and consolidated can make security easier but also makes this potentially large asset easier to control and maintain inventory accuracy.
6. Utilize an Inventory Control System
By utilizing your ERP’s warehouse functionality or a warehouse management system (WMS) — and not spreadsheets — to manage your parts inventory will ensure accuracy and ease of managing your parts warehouse. Also, utilizing barcodes and scanning functionality in conjunction with the system will greatly enhance the efficiency of the processes in the parts warehouse and improve on inventory accuracy.
7. Assign Every Part a Stock Location
Ensure that stock locations are created at the lowest detail (typically a bin and slot location for each SKU) allowed by your systems. It can be difficult for employees to locate a part if the location identifier is a shelf where many other parts are in a shared location.
By implementing the above recommendations, you will be able to have better control over your parts inventory and provide faster and accurate fulfillment of work orders and other parts requests.
In conclusion, spare parts inventory management is a critical aspect of any business that relies heavily on machinery and equipment. By adopting these best practices, businesses can ensure that their spare parts inventory is managed effectively, leading to improved operational efficiency and cost savings.
8. Regularly Review and Adjust Inventory Levels
Inventory levels should be reviewed regularly to ensure that they are in line with the current needs of the business. This includes both the minimum and maximum levels of each part. The minimum level is the point at which a reorder should be triggered, while the maximum level is the most stock you should have on hand at any given time. These levels should be adjusted based on usage patterns, lead times, and changes in business operations.
9. Implement a Cycle Counting Program
Instead of conducting a full physical inventory count, which can be disruptive and time-consuming, consider implementing a cycle counting program. Cycle counting involves counting a small subset of inventory in a specific location on a specified day. This approach allows for more frequent checks on inventory accuracy and can identify issues more quickly than a full inventory count.
10. Train Your Staff
Proper training is essential for maintaining an effective spare parts inventory management system. Staff should be trained on the importance of accurate inventory management and the role it plays in the overall operation of the business. They should also be trained on the use of any inventory management software and equipment, such as barcode scanners.
11. Use Predictive Analytics
Predictive analytics can be used to forecast future demand for spare parts based on historical data and trends. This can help businesses to optimize their inventory levels and reduce the risk of stockouts or excess inventory. Predictive analytics can also help to identify patterns in equipment failure, allowing for more proactive maintenance and spare parts management.
12. Establish a Good Relationship with Suppliers
A good relationship with suppliers can help to ensure a reliable supply of spare parts. This includes understanding their lead times, reliability, and communication processes. A good supplier relationship can also help in negotiating better prices, delivery times, and terms.
13. Continuously Improve Your Spare Parts Inventory Management Practices
Spare parts inventory management is not a one-time activity but a continuous process. Businesses should regularly review their practices and look for ways to improve. This could involve adopting new technologies, changing processes, or investing in staff training. Regular reviews and improvements can help to ensure that the spare parts inventory management system remains effective and efficient.
Final Thoughts
In conclusion, effective spare parts inventory management is crucial for businesses that rely on machinery and equipment. By adopting these best practices, businesses can ensure that they have the right parts available when they are needed, reducing downtime and improving operational efficiency. At the same time, these practices can help to reduce the costs associated with holding and managing inventory, contributing to the bottom line.
Remember, the key to successful spare parts inventory management is to have the right parts, in the right quantity, at the right time, and at the right place. With careful planning, regular reviews, and continuous improvement, businesses can achieve this goal and reap the benefits of effective spare parts inventory management.
