Nuts and Bolts of MRO Inventory
When Scott Peterson became senior VP of Rotobrush, he was put in charge of inventory management, and he knew there was a better way to get the job done.
In addition to easing the financial burden of overstocks and emergency buys, he wanted to create a system that ensured parts would be available when and where they were needed. Like Scott, more and more business executives are realizing that the next frontier in managing time and costs begins by creating healthier Maintenance, Repair and Operating (MRO) inventory management systems. Vendor–managed programs may be just what the supply chain demands.
Headquartered in Grapevine, Texas, Rotobrush is the leading manufacturer of portable air duct cleaning equipment, parts and accessories. As manufacturing has steadily increased, so has its inventory. Clearly, it was time to take the next step.
“Previously, if supplies were running low, you’d find a screw taped to your computer monitor with a note attached. Or people would plan to catch you and tell you it was time to reorder,” Scott recalls. “But something would come up and they’d forget.”
As a relatively low expense category, MRO inventory can make a big budget impact. In fact, according to a recent report in the online magazine Online, some companies report spending 80 percent of their time sourcing items that only account for 20 percent of the overall budget.
Scott knew a vendor–managed inventory system was the way to go. He used it at a previous organization and saw significant savings and operating improvements. However, finding the right partner wasn’t easy. Scott was looking for a system that would allow him to manage inventory according to his objectives. The first supply company he used wasn’t able to offer the results he was looking for. Then Scott turned to the Grainger KeepStock® Inventory Management Solution, which he has been using for over several years.
Everything in Its Place
A Grainger services manager came, in scanned SKUs, cataloged items, and organized Rotobrush’s stockrooms. With direction from Scott, optimal stock levels were established and this data was entered into the KeepStock Inventory Management system so reorders would not go over the maximum level. Today, a service manager makes weekly visits to verify supply levels and to order and replenish inventory. Scott receives detailed procurement reports. “We know exactly what we have, and inventory is smooth and steady so we don’t ever have to do catch up,” Scott says. “That keeps production on track.” Scott is so happy with the program that he added cleaning and food service products to the list of managed inventory. “This program also saves us the time and manpower it takes to manage inventory,” he notes.
James Brooks, Purchasing Manager for Amcor PET Packaging in Fort Worth, Texas, credits vendor-managed inventory with producing cost savings along with smoother operations and fewer corporate headaches. With more than 50 locations worldwide, Amcor is a leading packaging company that produces polyethylene terephthalate containers for food and beverage applications, including carbonated soft drinks, bottled waters, juices and dressings. For Amcor, having quick and easy access to MRO inventory is key. “We make more than 2 million bottles a day, so the production lines have to keep running,” he says. “There’s a big bottom-line effect if we have to stop because we’re missing a washer. Fasteners, nuts, bolts, screws and replacement parts for machinery can keep the wheels of a global operation turning or bring them to a grinding halt.”
When James joined the company, inventory was disorganized and the company spent a lot of money housing thousands of unneeded items. Dead inventory took up valuable space, and products often became obsolete before they were put in use. James set out to create a more orderly system, streamline the process and relieve some of the workload on purchasing.
Amcor has been using KeepStock Inventory Management Solution for a while now. The system manages more than 800 SKUs, including mainstay chemicals, fasteners, filters and spray lubricant.
“Now we receive great service and experience few outages. Not only do the service managers manage and stock inventory, they straighten up and organize parts so it’s easier for staff to locate them,” says James. “This is definitely a value–added service.” James also reports a dramatic cut in expenses to expedite shipping vital supplies that are out of stock. As efficiencies have increased, paperwork has decreased. Previously, James had to take time to complete a 30–line request, put it into the database and create a purchase order. Now, he only needs to key in one line of data.
Managing Hospitality Inventory
In the hospitality industry, well-managed inventory means better business. No one knows that better than Rich Miller, Senior Buyer for Harrah’s Lake Tahoe in Stateline, Nevada.
“Customer service is very important to us,” says Rich. “If a dishwasher is not running or lighting doesn’t work, we need to get it fixed as soon as possible.”
But it’s no small task to manage the three Lake Tahoe properties with multiple restaurants, casinos, convention facilities and hotel towers – all open 24 hours a day, 365 days a year. Planning is essential. Because the facilities are in a mountainous region, it’s not practical to hop in a car to get needed items. The closest supplier source may be two hours away.
Another common pitfall that Harrah’s faced was stockpiling of consumable or repair items. “In the past, if our people needed glue, they would hoard the product because they didn’t know when they’d see it again,” says Rich. “We needed a program that allows us to order easily and lets us know when and where we’re out of something.
Before, there was no focus to the inventory program,” he says. “We didn’t have a process in place.” Since using the KeepStock Inventory Management program, Rich reports substantial savings from discounts through bulk ordering and fewer rush orders. On-staff facility engineers manage things from the top down, and tool cribs must be set up to handle HVAC and construction needs to nuts and bolts.
To improve accessibility, inventory is now kept in five cribs located in three locations on the properties: two for housekeeping, two for lighting and one as a central stockroom. Also, employees are no longer hoarding consumable items. “People know the product is going to be there,” Rich says. KeepStock Inventory Management Solution was the right choice for us.”
A Better Bottom Line
With growing pressure to add value to the bottom line, a smart inventory management solution gives many businesses a competitive edge. Not only does it promise accurate and timely supply and new efficiencies, it can curb out-of-control costs, overstocks and waste. That means stronger service and added security for the supply chain.