Engineering Magazine – June 2019

34 JUNE 2019 ENGINEERING

OPERATIONS AND MAINTENANCE

Inventory Innovations

Mark James on Laying the right foundations for efficient

operations and maintenance

W

hile efficient

manufacturing often

focuses on the latest IoT

solutions, going back to basics in

getting the foundations right when

procuring high volume, low value

components can make a significant

difference in creating an effective

operations and maintenance strategy,

which in turn will aid efficient

manufacturing.

Recent research shows professionals

responsible for indirect procurement

and MRO supplies face a range of

pressures both on a day-to-day basis

and at a strategic level. According to

research conducted by RS Components

in partnership with the Chartered

Institute of Procurement and Supply

(CIPS), the need to reduce operational

budgets and inventory costs are the

biggest pressures faced by procurement

professionals today, cited by 55 per

cent and 52 per cent (respectively) of

survey respondents. Vendor managed

services can provide a great solution,

but with the same research highlighting

that just 39 per cent of respondents

are employing these services as part

of their MRO strategy, there’s a

large percentage still overlooking the

importance of effectively managing

MRO procurement.

With teams being pushed harder than

ever to deliver savings, a coordinated

supplier strategy is essential.

Understanding some of the latest

strategies and solutions will help MRO

professionals streamline their processes

to bring infinite benefits.

There are a variety of pain points

facing MRO professionals in any

organisation that has a need for

industrial supplies, and many of these

directly result in profit losses for

businesses. Issues such as inventory

mismanagement can arise from a lack

of control or no clear ownership of

stores, and the result can be over

stocking, obsolescence or even

production downtime from product

unavailability. There can also be cases

where operations and engineering

staff ‘book out’ more than they

need for the task to create their

own ‘squirrel stock’, meaning total

inventory investment is much greater

than is required. This ties up the

working capital and creates a storage

requirement that is largely unnecessary.

It can also be hard to keep track

of business consumption when

organisations purely transact re-stocking

orders and fail to track who or what

the parts or consumables are used

for. Limited reporting means limited

knowledge of consumption – a great

inefficiency for the business.

The good news is that vendor

managed inventory solutions are

becoming far more sophisticated,

including spend control solutions for

putting buying in the hands of multiple

users, and managed inventory solutions

to reduce off-contract spend, control

pricing and reduce stock on site.

At RS, we developed ScanStock

to help MRO professionals

overcome their pain points. The

managed inventory service covers

the management and replenishing

of stock, effectively taking over

MRO procurement, consolidating

and simplifying the source-to-pay

process - while improving inventory

management. Within this service, we

help customers with everything from

advising on storage solutions, layout

and configurations, and provision

of barcoding software, to product

selection, stock level definition and

on-site product replenishment.

This helps the organisation improve

control and availability of low-value,

fast-moving items, which not only

drives down inventory carrying costs,

but frees up staff, reduces associated

ordering and invoicing paperwork,

and improves reporting.

We’ve worked with many

organisations to help them realise the

benefits of our managed inventory

services, including one business

for whom we managed to achieve

a saving of £11,672 over the year

(based on annualised savings over five

months) with total cost of ownership

savings representing 28 per cent of

total product spend. The proof is

in the pudding, as they say, and this

certainly proves the case for managed

inventory services.

Spend control solutions are also

an important part of the mix. The

Chartered Institute of Procurement

and Supply (CIPS) has calculated a cost

of £80 per purchase order, taking into

account the time spent researching and

checking product availability, negotiating

Mark James