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INVENTORY – THE GREAT DENIAL! |
– Steve
Brous, Sales Manager
Many MPulse customers are hesitant to use the inventory management
system. The most common reason given is that personnel resources are
not available for a complete inventory control and management system;
i.e. "The job is too big," "We are too small," or "We don't have any
inventory!"
For maintenance professionals, the most fundamental question asked
is "Do we repair or replace" a failing asset. World-class organizations
use data to make this decision instead of intuition, short-term memory,
or clairvoyance. Typically, the business case for replacement happens
when the cost of maintenance, over a period of time, exceeds the cost
of replacement. This decision has other factors, of course, including
things such as production schedules, tax depreciation, cash flow,
and amortization. Regardless of the criteria used, the repair cost
data for each asset must be accurate, available, and complete.
The data contained in your MPulse software program must meet these
standards when decision time comes.
It is not sufficient to only know the amount of labor expended to
fix a piece of equipment. Likewise, it is not sufficient to track
materials costs in aggregate by department, cost center, location,
or system. The data for a 'repair or replace' decision demands the
total cost of labor and materials by job and by asset.
So, how do you get from "the job (inventory management) is too big"
or "we are too small" to tracking the cost of inventory by job and
by asset? It is the same way you eat a big steak; one bite at a time!
Let's go back to basics and break inventory management into some smaller
bites:
- Part Usage - this is the base level. All parts entered
into inventory at this level are marked as 'Non Stock.' Track
only the significant parts, which are those that cost over a certain
value (such as greater than $100.00 each) or those which are specialty
parts. These will be entered as inventory items in MPulse.
Other items, that are less significant individually, can be lumped
into one part record, such as electrical and plumbing supplies,
paint, fasteners, lumber, plywood, sheet rock, etc. Enter a price
of $1.00 per unit. When you take some wire, wire nuts, a switch,
and two cover plates out of your truck, link electrical supplies
and estimate the cost to replace the items used. If you estimate
the replacement cost to be $25.00, link 25 units to the work order.
Tracking part usage this way allows you to account for costs by
work order and by asset. You are also tracking usage for each
item over a period of time. You can also use the linking inventory
to assets function in MPulse at this level. This method allows
you to get most of the benefits of a full inventory system, without
most of the headaches.
- Part Availability - Keeping track of part availability
is where the labor comes in. This function requires you label
parts as 'Stocked Item' and then to set up reorder points, target
quantities, and track those parts which are encumbered on work
orders, as well as those that are on order. Part availability
is very important to most process manufacturing plants. Critical
parts, or spares, have to be available to minimize downtime. Part
availability is less important for facility management organizations.
- Purchasing - You can incorporate purchasing with either
part usage and/or part availability. Integrating purchasing functions,
either as Purchase Requisitions or Purchase Orders, will allow
you to take advantage of things like the Re-order List, part purchase
history, supplier purchasing history, back order tracking, and
vendor management. You may want to link purchase requisitions
to work orders. This is handy when you purchase items (stock or
non-stock) specifically for a job you want to link both the work
order number and the purchase requisition number.
The most important thing is to not become bogged down in the details
- don't step over the dollars to pick up the dimes. If your
existing purchasing system is working now, don't break it. If you
are using a Vendor Managed Inventory (VMI) system for your supplies,
and it is working, don't break it. Focus on those things that are
not working.
Too many inventory management systems get abandoned because someone
is trying to enter every nut and bolt into the database. Think BIG
PICTURE.
Give me a call (800-944-1796 x1465) if you would like to discuss your
inventory management needs. |
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