Key points
Best practice in managing the supply of maintenance, repair and overhaul (MRO) spares, tools and safety products can be one of the most effective ways for manufacturers to reduce costs, improve cash flow and prevent unnecessary downtime.
It can contribute to improved plant productivity and help to optimise health and safety at manufacturing sites. But could industrial vending be the answer to achieve these benefits without prohibitive start-up costs or a significant investment in time and resource?
MRO spans a wide spectrum of products and services and accounts for a considerable proportion of total costs of supply¹. It is essential to retain sufficient product on site that is easily accessible, but keeping large amounts of poorly managed stocks in case of emergencies ties up cash.
Furthermore, products are often bought in large batch quantities to negate the possibility of a stock-out or to achieve a supplier discount. This stock can, over time, become obsolete. Conversely, failing to stock the right items can result in unplanned downtime with a major impact across the manufacturing process and supply chain – on both cost and customer service.
Traditionally, many manufacturing sites operate with a single central stores facility. Workers in individual production areas who need to access tools, personal protective equipment (PPE) or MRO items walk to the stores, and then experience a further wait to be served by a stores operative.
The time taken to visit stores immediately impacts on productivity in their area. It can also cause knock-on effects in the overall manufacturing process with delays in subsequent stages of production. After requesting items, workers have to wait for the products to be picked. Meanwhile, stores staff are responsible for logging the transaction, re-and then putting away new stock on delivery.
However, in some facilities the central stores may only be open for set hours each day, even in factories operating 24/7 shift systems. This means key MRO items are not always available from the stores when needed. As a result, workers may end up requesting more of a particular item than they actually need, storing the remainder for easy access at their own work station.
This “squirrel stock” cuts down on the time workers waste in making multiple visits to stores. However, it can result in over-procurement of high-volume items, reduced traceability of usage, and yet more cash tied up in MRO stock. The products held in these “rogue” inventories are also subject to a greater risk of damage, loss, misuse or theft.
The problems of open access bin systems
One way to address this problem has been to use open access bin systems at the point of use. Unfortunately, this can create its own problems in terms of control, monitoring and cavalier product usage – and the possibility of stock-outs of production essential items outside stores opening hours still remains.
Figures from Fastenal, a US-based company who have been pioneers in MRO vending, suggest that the cost of direct and indirect labour may be reduced – but that uncontrolled consumption typically results in product usage increasing by 15 to 30 per cent, creating a further disincentive to this approach.
Moreover, within the stores themselves, the tracking and tracing of inventory, processing of multiple orders and budget management consumes time which could be better spent on value-adding activity.
Meanwhile, failure to actively monitor the supply and use of PPE or health and safety items can potentially leave a company open to legal action in the event of a workplace accident or fatality.
If an employee requires a particular type of PPE for certain tasks and is subsequently injured at work, it can be difficult for employers to prove that they took the necessary steps to protect their staff. The correct product might have been held in stores, but did the employee have access to it? Did they receive the approved PPE items for the task? Or did they decide not to wear PPE despite having been issued the required items?
Taking all this into account, it is easy to see how a more streamlined approach to MRO spares management, based on detailed monitoring of availability and usage, can deliver real operational and bottom line benefits.
Key initiative to help the transition towards a ‘leaner’ process
A key initiative to help the transition toward a ‘leaner’ process is the use of industrial vending machines to hold and control the dispensing of fast-moving industrial consumables. Typically, items that are small, fast-moving, high-value or can easily go astray – such as abrasives, tools, PPE, cleaning products, adhesives, lubricants and greases – are particularly suited to vending.
Industrial vending takes a bite out of consumer services….
Industrial vending takes technology previously only utilised for consumer goods, such as drinks and snacks, and applies it to MRO product supply. Machines are situated in convenient locations around the manufacturing facility – meaning they are accessible at any time, even when the main stores may be closed – and configured to stock the items needed most commonly at each location.
They use an internet connection to flag up the need for re-stocking, as well as providing real time management information on usage by user and cost centre. An initial evaluation by a supply partner will help to reveal which products need to be stocked in which areas and in what volume. This allows machines to dispense the most appropriate products to each individual or team and negates the need for an individual to leave their work station to go to the stores.
With industrial vending, manufacturers can identify which products are suitable for a given production area and restrict access to those spares to approved employees. Machines are typically operated by a customer’s employees using a personalised barcode or individual numerical code, allowing full control and visibility of usage.
Using access-controlled vending machines ensures employees are more likely to take only what they really need. They have a shorter journey to the dispensing point – reducing the need to keep large stocks at their station to save time – while the machines can be configured to only dispense one product type at a time.
Knowing that products can be traced back to them also causes employees to think more carefully about their consumption of MRO spares. This makes them more accountable and careful with their usage whilst reducing the risk of product loss.
Beyond this, the availability of real time reporting on usage means companies can assess their working practices. For example, where an employee is found to be requesting an unusually high number of items, managers can determine if the correct methods and products are being used and whether that employee could benefit from, for example, extra training.
The implementation of industrial vending invariably means that companies are working with a single MRO supplier for a higher proportion of the product lines being vended, which may previously have been bought from multiple suppliers.
This plays a key role in reducing the amount of time spent by stores staff in ordering, receiving goods and putting away stock. It also lowers the costs associated with raising and processing multiple purchase orders and invoices, reducing the transactional costs associated with indirect labour. This allows stores staff to focus on larger or more critical spares management, as well as maintenance and value adding activity.
Figures provided by Fastenal, using this approach in the US, put the saving range for procurement at between 10 to 50 per cent per individual item stocked, while overall inventory levels have been seen to be reduced by around 30 to 50 per cent.
Industrial vending certainly has the potential to drive continuous improvement in line with modern manufacturing strategies such as lean manufacturing and total productive maintenance (TPM), adding significant value in virtually any manufacturing or operational environment.
Switching to this system for fast moving MRO consumables and PPE products can significantly reduce product consumption and lower inventory costs. Also, a significant number of working hours can be reclaimed by removing the necessity for workers to make long trips to stores. Time is saved within stores themselves as the need to process, receive and replenish products is drastically reduced.
Upfront cost is met by the vender
However, the issue of cost also needs to be considered. For a company to purchase its own vending machines and software represents a significant upfront capital investment for a company, to say nothing of ongoing servicing and maintenance costs.
Some MRO suppliers have attempted to make industrial vending more attractive to customers by renting equipment to them. However, the cost of the initial batch of consumables still has to be borne by the customer at start-up.
Furthermore, in many cases, the monthly running costs charged by these suppliers can significantly reduce any potential savings achieved in terms of, for example, reduced product consumption.
The implementation of industrial vending has, until now, been accessible to only the largest companies, who are able to commit substantial capital investment and in-house resources in order to reap the productivity and cost-saving benefits.
An answer to this problem now exists in the form of Invend™, a fully managed industrial vending service. Invend™ effectively removes these financial barriers and makes the benefits of vending available to manufacturers of all sizes.
The complete upfront cost of the industrial vending equipment and software is met by Brammer, with customers paying only for the items they use. All that is needed to install the equipment is a power supply and internet connection.
For manufacturers of all sizes seeking to enjoy the numerous benefits of industrial vending, Invend™ makes the service truly accessible – by negating the need for upfront investment by the customer while managing everything from initial installation to ongoing replenishment and support.
References:
1. Cost management across firm boundaries – a case study of MRO procurement, Anna Dubois and Lars-Erik Gadde
