View on Web »
September 2015
 
In This Issue
Reliability Tip
MRO Inventory Stock Optimization Powered by WebRUSL®3.1
Upcoming Events
  White Paper: Supply Chain Optimization

Maintenance Repair and Operations (MRO) supply chain, when given serious consideration at all, is frequently seen as a challenge—a high-cost, but necessary evil to ensure the availability of parts that support equipment reliability. Among the challenges are integrating end-to-end planning, increasing reliability/availability of physical assets, optimizing inventory, and realizing effective spend management. Firms that have met these challenges have found MRO supply chain to be an opportunity to dramatically reduce costs while improving asset reliability. This paper provides an overview of some common challenges and effective solutions.

Download Whitepaper

 
 
 
 
   

Reliability Tip:

Right-Sizing MRO Inventory

Many plants are under pressure to reduce storeroom inventory, and with good reason. Inventory represents working capital that is not producing anything, and the cost to carry that inventory is high. However, many organizations reduce inventory based on usage – if the part has not been used in a while, it is eliminated. This is the wrong approach!

To understand how to reduce inventory levels and associated costs, we need to understand the purpose of MRO Inventory. That purpose is to mitigate risk of an asset’s failure and the time it will take to get that asset back in service. Having the correct parts and in the correct quantities without over-stocking is always the challenge. One tool in determining what parts to stock is determining criticality of the asset and therefore the associated MRO parts. The higher the asset criticality, the more likely the parts should be stocked. Unfortunately, in a highly-reactive maintenance environment the criticality is often unknown or only known to the maintenance personnel as tribal knowledge. For this reason, highly-reactive maintenance environments require over-stocking of almost every conceivable MRO part as a mitigation strategy against failure.

The road from reactive to proactive maintenance has many steps. One of those steps is managing the MRO Inventory which may actually include increasing select parts in inventory while reducing other parts. This is known as “right-sizing”. Right-sizing is a continuous improvement program and does not end with the implementation of an enterprise-wide reliability program.

Sustainable inventory reductions, while supporting maintenance reliability goals and ultimately the company’s bottom line will take a great deal of strategic planning. As mentioned, defining criticality of the production assets and therefore the MRO parts is a step in right-sizing direction but there are many prerequisite steps before criticality is viable. To name only but a few:

  1. Enterprise adoption of how materials will be managed and classified.
  2. MRO Data Standardization – a normalizing of naming conventions and descriptions.
  3. De-duplication of Inventory – the process of removing duplicate parts and standardizing the descriptions.
  4. Remove Obsolete Parts – Obsolescence has several definitions. Obsolete from the manufacturer, obsolete at a particular plant or obsolete from the entire organization. Proper definitions and reductions should be considered at the SKU.
  5. Centralized control of the Material Master with trained and dedicated resources.
  6. Re-evaluation of purchasing history, usage history and lead times.
  7. Align metrics with organizational goals.

There are many steps in this continuous improvement process and right-sizing inventory is just one of those steps. There is no finish line.

back to top
 
 
 
 
 
 
MRO Inventory Stock Optimization Powered by WebRUSL®3.1

WebRUSL 3.1 is an improved platform with new productivity tools. It is an easy-to-use, low cost service proven to eliminate unnecessary expenditures for MRO inventory. To properly maintain operations and protect availability it is imperative to identify and stock the right number of spare parts.

Included with WebRUSL:

  • Prevent Needless Expenditures
    WebRUSL identifies those items that have a high probability that you already have more than enough on-hand to meet availability requirements and a high probability that they will come up for replenishment during the next year.
  • “What if” Analysis
    Gain extra confidence in your stocking decisions with our “what if” analysis. Process as many items as you like with varying lead times and criticalities to see how the changes effect reorder levels.
  • First Time Buys for New Equipment
    Our New Spares analysis determines the optimum stock level for items with little or no usage history. Independent studies show that up to 40% of all excess inventory originates from first time buys for new equipment. Use WebRUSL to eliminate excess inventory before it begins to accumulate in your storeroom.
  • What Changed the Inventory
    Even when your total inventory investment remains the same changes are taking place within your MRO inventory. Find out how quantity, price, additions, and deletions affected your bottom line.
 
 
 
back to top
 
 
 
UPCOMING EVENTS
IADC Asset Integrity & Reliability Conference
Sept 16-17, Houston, TX

Attend our presentation: ‘An Introduction to ISO 55000’!

Best Practices for Oil & Gas
Sept 22-24, Houston, TX

Visit us at our booth!

Emerson Exchange
Oct 12-16 Denver, CO

Visit our booth and attend our various presentations, training courses,
and roadmap sessions!

SMRP
Oct 12-15 Cincinnati, OH

Visit our booth and attend our presentions and workshops!

back to top
 
 
 

Your Local Connection

Learn more about local reliability community activities and local access to Emerson’s expertise and accelerators. Click here to connect.

back to top
 
 
 

Emerson Process Management
©2015 Emerson Process Management. All rights reserved.

If you haven't subscribed to ReliabilityConnection, click here to recieve our newsletter.
Missed our previous newsletters? Check all past Reliability Connection issues here.
To unsubscribe from our communications, click here.