All too often, MRO inventory doesn’t work hard enough due to poor inventory management. In many instances, spare machine parts, pipe fittings, gaskets, bolts, and other common indirect materials simply sit around doing nothing while sponging up valuable resources.
Benefits of a SLOB-free Warehouse
As with most freeloaders, getting rid of SLOB – slow-moving and obsolete MRO inventory – can generate instant and ongoing benefits:
- More space – Less unproductive inventory frees floor area that can be adapted to accommodate another production line, break room, manager’s office, quality control station, etc.
- Lower carrying costs – Eliminating slow-moving inventory reduces the chance of parts becoming outmoded, keeps consumables from spoiling and cuts down on the amount of hoarding and pilfering. Reducing the value of inventory also lowers taxes and insurance premiums.
- Increased working capital – The money saved by eliminating unneeded materials can be held in reserve or used to finance expansion, upgrades, modernization and other investments in efficiency and productivity.
- Instant revenue – The business can return new, unused parts to vendors for credit or realize significant cash flow by selling them to another company.
What’s SLOB, Anyway?
To identify slow-moving or obsolete parts, list items that have not been used in the last year and last few years. Assign the items to their appropriate divisions – production, maintenance, packaging, distribution, etc. Each department should determine whether the item is truly obsolete. If the department experts determine a SKU is not obsolete, the part should receive a unique identifier and be cataloged into a master list.
Much of the cost and space savings will be found during this process. Duplicate items will be filed under multiple part numbers, years’ worth of consumables will be found moldering away while new shipments arrive quarterly. Eliminating redundancies, cancelling standing orders, returning, selling, or writing off obsolete supplies may not be the most exciting job. But once a company cleans its data and standardizes its part numbers and descriptions, it sets the stage for real, annual savings.
The SLOB-proof Storeroom
Anyone who has gone through the process of purging storerooms of MRO SLOB inventory will do whatever it takes to avoid doing it again. Keep your warehouse SLOB-free by instituting these policies:
Divide materials into appropriate categories – critical spare parts, repairables, fast-moving, slow-moving active inventory, slow-moving reserves, seasonal supply, etc. – and establish optimal quantities for each.
Use the appropriate demand forecasting tool for each segment, and implement an automatic requisition when the minimum quantity is reached.
- Place tight controls on who and under what circumstances they can order new stock items.
- Tag all spare parts to their corresponding machines. Purge the parts when the machine is removed from the floor.
- Work with engineering designers to commission new or retrofit existing equipment to work with the same parts – especially if you have several stockpiled.
- Partner with an MRO solutions expert that can lend its technical expertise on automated reordering, usage transparency, compatible parts substitutes, re-engineering and OEM conversions, equipment standardization, vendor-managed inventory, etc.
SDI’s MRO supply chain evaluation includes our Best-in-Class storeroom assessment and identifies inefficiencies that can lead to excess slow-moving and obsolete inventory. We offer a range of solutions that highlight usage patterns, implement foolproof reordering, slash carrying costs and streamline operations.