Answered August 13 2019
Techniques to manage inventory can vary depending on the type of inventory being kept and the nature of the business. For example, a retail organization keeping stock to sell would manage inventory differently than a maintenance, repair, and operations (MRO) department stocking up on spares.
Some of the most important metrics to prioritize in terms of maintenance inventory management are the following:
Inventory turns, also known as inventory turnover, is a measure of how quickly stock is being used. It is measured by taking the value of stock purchased over a period of time, divided by the current value of the stock on hand. This gives an estimate of how much stock is being replenished, therefore giving insights on how fast inventory is flowing through.
Best practice values can range from 1.0 when considering the total inventory, to 3.0 when considering inventory without critical spares.
It is important to accurately monitor that the current value of stock in the warehouse. If actual, physical stock is not accurately represented in analysis reports, planning efforts are put to waste.
The most obvious way to check inventory accuracy is through tediously performing inventory counts. Though effective, this method is extremely inefficient. To ensure inventory accuracy while significantly reducing the effort required, an efficient tagging procedure such as a barcode system can be used to track the physical movement of stock.
Having spares in stock makes way for seamless maintenance procedures. Depending on a spare’s criticality, a stock-out occurrence can cause you serious downtime. Remember that not all spares can be bought off the shelf. Therefore, some spares have the potential to hold up operations for long periods of time.
Tracking the occurrences of stock-outs can give the team insights on the amount of time they can save by improving inventory management. Best practices for inventory stock-outs is less than 2% of total inventory requests.
It makes sense to keep track of stock not only based on quantities but also on monetary value. By maximizing the features of your computerized maintenance management system (CMMS), the value of inventory on hand can be more easily tracked and calculated.
Inventory value can be compared to the estimated plant replacement value (PRV) to put the costs in context and have a feel for whether you are holding too much or too little. SMRP best practices suggest the inventory value to be less than 1.5% of the PRV.
As an extension of keeping track of your inventory value, it is important to also know how much of it is becoming obsolete. Obsolete inventory includes products that a company had purchased that can no longer be used or sold. Spares that are obsolete incur costs without providing useful value.
Latest Maintenance Articles
Manufacturers’ Guide to Packaging Materials During COVID-19
How to Create a Thermographic Inspection SOP
How to Create a PLC Maintenance Checklist
Everything You Always Wanted to Know About CMRP Certification
What Are the Risks and Benefits of Using a PLC?
Comprehensive Guide to Building a Maintenance Excellence Team (Part 1: Crawl)
Fleet Management and GPS
Oil & Gas
Purchase order tracking, also called PO tracking, is the step-by-step process of tracking a purchase order from conception to the final delivery.
In the time it takes your average person to manually type a couple letters or numbers, you can scan a single barcode containing numerous characters at once.
Logistics management plays a key role in any company that orders materials or ships products, impacting a company’s bottom line.
Inventory management makes much of our world today progress in an orderly fashion. Here are some of the most interesting facts about inventory management.
Poorly optimized inventory management can cause higher carrying costs, losses from overbuying, and missing items and stockouts.
In some facilities, inventory management tends to become a collection of practices that one generation hands down to the next.
Enterprise Resource Planning (ERP) software helps companies store, access, and use data to help them run their processes more efficiently
Supply chain management is the process that directs how goods, services, information, and money move from initial order of a profuct to its final delivery.
The best way to organize your warehouse will depend on your business, inventory, growth projectile, time and budget limitations, and many other factors.
The best ways to organize your warehouse involve wise layout design, management software, and labeling systems.
Warehouse racking is the system of shelves, configuration, and location of the physical structure required to hold your inventory items.
Assets should be tagged by a unique identification number or barcode and categorized by a method that’s compatible with your accounting system.
Leak detection and repair (LDAR) refers to U.S. Environmental Protection Agency regulations designed to help reduce volatile organic compounds (VOC) and volatile hazardous air pollutants (VHAP).
The top supply chain management degrees are usually majors, concentrations, or degrees in supply chain management, operations, or logistics.
A 2D barcode is a set of small geometric shapes organized within a square or rectangle to store information.
The term 3pl refers to third-party logistics, which means that an outside company takes over the receiving, storing, picking, and shipping of your products.
A piping and instrumentation diagram (P&ID) is a picture of the piping, instruments and controls for equipment in the process industry.
Supply chain logistics is the management of all the companies, transportation, warehouses, and distributors needed to deliver a final product.
Barcode types can be categorized into three main groups: numeric, alpha-numeric, and two-dimensional.
Asset tracking - using asset tags or barcodes - is the means by which businesses keep tabs on their critical equipment as well as their inventory.
An asset tag is an identification label that is connected to a company’s physical equipment or property. Assets come in various forms - some fixed and some movable!
The main differences between QR codes and UPC labels are the how much information they can hold, how they appear, and the type of equipment required.
Barcoding is an identification method used by a wide variety of companies to track, identify, and manage items in places such as grocery or retail stores.
Choose a barcode scanner by thinking about what you will use it for, how often you’ll need it, and what kind of technology must be integrated with it.
Top quartile facilities typically calculate their MRO inventory value as a percent of RAV. They aim to keep this number at to 1.5 percent or lower.
Here we define and answer the question, “What is inventory control?” Inventory control refers to managing items from ordering, throughout their storage, movement, and usage to their final destination.
Warehouse automation includes all the software, people, and processes that are required to automate warehouse tasks to improve efficiency and accuracy.
Warehouse logistics involve all the people, processes, and programs required to keep your items moving in, around, and through your warehouse.
UID stands for unique identification and is a required asset identification program established by the United States Department of Defense.
An inventory management system keeps track of items that an organization purchases to manufacture or deliver its final product or service to its customers.
Radio frequency identification (RFID) tags are an advanced barcoding system used by facilities to track assets.
Inventory management systems include complete and detailed records of materials and items so that they can be tracked and used efficiently.