Inventory Insights - A Year of Tips from 2010

Wow, where did 2010 go? We are well into December and it seems like just yesterday that I was writing the January edition of Inventory insights. In case you missed any of this year’s newsletters, here is a summary.

• January – Put the spare into tranSPAREncy (get it?). More correctly, put some transparency into your spare parts management program.
• February: Materials and spare parts rarely follow the classic theoretical inventory profile.
• March: Do not rely on software to recalculate your inventory holdings if you do not understand the algorithm used and its relevance to the particular inventory item
• April: Stocktakes, including cycle counts, are fundamental to understanding the effectiveness of your inventory management.
• May: There are three key steps for executing a stocktake – preparation, physical count, and finalization – do not overlook any of them.
• June: Delayed action costs as much or more than any other waste.
• July: The cash benefits of inventory reduction are real and include; the cost of money, fixed costs, variable costs, and the obsolescence time bomb.
• August: Correct timing of purchases can save you thousands of dollars.
• September: Work on developing a stocking policy first
• October: To manage rotable and repairable spare parts you must; track the status, define your rules for repair or repurchase, and let the accountants worry about cost allocations.
• November: Manual systems are best for generating a stock out report.

I trust that in among those eleven tips you found something to help make your inventory management better today than it was in January!

 

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If you thought that list was useful then you will love our new initiative for 2011!

 

Coming Soon: The Warehouse, an exciting new website that will provide a single portal for access to Phillip Slater’s extensive Materials and Spare Parts Management Knowledge Base, including the entire back catalogue of article and newsletters, new articles, instructional video tutorials, video and PowerPoint case studies, storage guidelines, a library of eBooks, and much, much more!

 

For more information visit http://www.initiateaction.com/Inventory_Articles.htm

 

A Quick and Easy Way to Generate a Stock-Out Report

A couple of weeks ago I attended the International Maintenance Conference in Bonita Springs, Florida. If maintenance and reliability are your concern then you should seriously consider attending this conference in 2011. It is run professionally and they are selective about the speakers they present, plus they have a whole stream devoted to coaching on specific subjects.

Having said that, at the conference I presented a paper, Spare Parts Management Best Practice (available soon as an on demand webinar at our new website, The Warehouse) and conducted the spare parts management coaching session. At the coaching session the issue of measuring stock outs was raised and this is what I am addressing in this blog.

What is a stock out? A stock out occurs when there is demand for an item but there is insufficient stock to meet that demand. This may be a maintenance and reliability engineer’s worst nightmare!

There are essentially two causes of stock outs. The holding parameters may have been incorrectly set for the demand that is experienced, or at least are not correct for the current level of demand. Or, there is some delay in the demand or supply chain, including the internal processes associated with purchasing. When measuring stock outs it important to differentiate between these different causes. This is because adjusting your stock levels (usually upwards) to account for a temporary supply event may not be the best course of action.

So, how do you quickly and easily collect a record of stock outs and enable follow up to root cause? At the IMC coaching session we decided that the best approach is to go retro and use some old fashioned technology – a clipboard! At most locations the stock out rate is unlikely to be so high that it would need any automated solutions to collect data (and in any case how do you automate not having something?), so a good old fashioned clip board works well.

All you need is a form with headings such as part no., description, date, person requesting the part, and likely cause of the stock out and you will instantly create a record and get a real time report. The form acts as the report – talk about a quick and easy way to generate a stock out report.