Posted at 18-Mar-2019

Save by Reducing Your Stores Costs

Paul Skade
By David Kington
Storeroom Solutions Manager

I joined ERIKS back in August 2018 as the Store Room Services Manager. Originally starting life out in the Royal Marines, I then spent the next 14 years in the co...

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When it comes to stockholding, there is often a ‘just in case’ mentality, with many engineers having the tendency to over-order parts.

 

The desire to protect the plant against costly downtime is commendable, but an engineer’s belief that stockpiling is the most efficient strategy is misguided and uninformed.

In one company ERIKS assisted, analysis showed that an enormous 70% of stored parts never moved, and that the true cost of this obsolete stock was a staggering £8 million.

Engineers generally order in all the machine manufacturer’s recommended spares instead of just the critical ones, and this leads to vast and very expensive stock holding that ties up cash flow and makes it difficult to source the crucial part required.

A far more efficient alternative is to work with the supply chain so that they can carry non-critical parts and identify standard alternatives that are easier to source than those on offers from OEMs. Even critical parts are sometimes better stored off-site – for example, if its takes six hours to strip down a machine, but your partner supplier is only half-an-hour away, why stock it yourself?

How can you increase your stores efficiency?

It’s incredible how much money can be tied up in engineering inventory, and when the stores operation is not controlled particularly well, it can quickly become an unusual dumping ground that engineers ignore, as it’s easier to just order again (Engineers Lost Time Blog).

There are obvious benefits to updating your processes, for example, setting firm KPIs for stores management such as price savings achieved, component availability and speed of which parts are sourced, but experience is critical to determining which KPIs will make a true difference.

Evaluating engineering stores management can provide significant savings, resulting in making stores smaller; likewise it may result in the same sized stores holding more components. It’s often noted by customers that storage space is limited, but in reality this is simply because they are holding 6,000 items when they only require 4,000.

Another common belief is that a good stock level already exists, but this stock isn’t profiled against any recent data – it’s largely drawn from historical spares lists and doesn’t match what’s currently required out on the factory floor.

Reducing stocking expenses

To reduce stocking costs and increase efficiency, the profile of the stock should be matched against the needs of production before product sourcing, in order to ensure the right stock is swiftly available, and in the right location.

There are many ways to replace ‘just in case’ expense with inventory optimisation, efficient profiling and MRO management truly viable options.

For more advice contact us or call 0121 508 6000 to speak with one of our highly trained personnel.

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