Episode 5: How Managing Your Storeroom Can Save You Millions with Radar Huntsinger
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Here at UpKeep, we pride ourselves on our mobile-first CMMS. Our mission is to empower maintenance teams to revolutionize their businesses. UpKeep was recently named a front-runner by Gartner as a software. However, we want to change the future of maintenance beyond our product.
That’s why we’re turning to industry leaders to share their insights on our brand new podcast, Masterminds in Maintenance. Every week, UpKeep’s CEO, Ryan Chan, meets with a guest who has had an idea for how to shake things up in the maintenance and reliability industry. Sometimes, the idea failed, sometimes it made their businesses more successful, and other times their idea revolutionized entire industries.
Episode 5: How Managing Your Storeroom Can Save You Millions with Radar Huntsinger
On this week’s episode of Masterminds in Maintenance, Radar Huntsinger discusses the key elements of success in Maintenance Repair and Operations (MRO) and how MRO directly impacts reliability and overall efficiency of any organization.
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00:00 Ryan: Welcome to Masterminds in Maintenance, a podcast for those with new ideas in maintenance. I’m your host. I’m Ryan. I’m the CEO and founder of UpKeep. Each week, I’ll be meeting with a guest who’s had an idea for how to shape things up in the maintenance and reliability industry. Sometimes the idea failed. Sometimes it made their business more successful and other times their idea revolutionized an entire industry. Today I’m excited to welcome to our show, Donald Radar Huntsinger, MRO manager at Great Lakes Cheese. Welcome, Radar, to our show.
00:31 Radar Huntsinger: Hi Ryan, how are you doing? Hi everyone.
00:33 Ryan: I’m doing great, let’s jump right in. The first thing I’d love to talk about is you often talk about the hidden elephant in MRO. Tell us what that means, why it’s important, how you got started with this.
00:49 RH: Well, Ryan first and foremost, thank you so much for doing Masterminds of Maintenance. This is a great program and I am thoroughly enjoying this moment to be and speak with you and talk to everybody but the hidden elephant to me, as everyone knows, is basically a metaphorical expression, and it’s an obvious truth that’s either being ignored or going unaddressed. And for years we talk about maintenance and reliability and proactive maintenance and things of that nature, but the hidden elephant always circles back around to your MRO storeroom. So that’s why I wrote years ago The Hidden Elephant because looking at the massive amount of money that is being spent on MRO just in the United States alone, not worldwide, but just in the United States alone, is just absolutely phenomenal. And you would want to believe that people would wanna manage this correctly, but unfortunately it’s just not that case, people just seem to think that the storeroom is basically a broom closet, and that’s unfortunate. So that’s why I wrote The Hidden Elephant.
01:55 Ryan: All right, so how did you get into this industry, Radar?
02:00 RH: Actually, my journey has been long. It started out in the ’70s, late ’70s. My mother actually owned a very large company down in South Florida, and I was a young man, boy, actually. Started doing organizational of their facilities, the shops and things of that nature, and I really had a hand at it, and then whenever I went through college, I ended up becoming a certified chef, and I was utilizing what we call now Lean techniques, first-in, first-out, the elimination of waste in the culinary field, and I worked through the American Culinary Federation and things of that nature and did test kitchens and all that, but I’ve always had a need for understanding technology and maintenance. So through the ’80s and ’90s, I got into Lean manufacturing and I got into Lean coordination of working with people like Jim Womack, who did Lean thinking and others, and I saw that there was a trend, no matter what business that we are in, whether it is in manufacturing, producing products, even down into your local kitchens, there’s standardization that is there, and it’s all about inventory, and if you don’t have the inventory you cannot produce the results that your customers want. So that’s why I got into MRO over the past 30 plus years.
03:24 Ryan: Amazing, amazing. And you’ve been in this industry for 30 plus years? Tell us, what are some of the biggest mistakes you see people making in this industry for managing their inventory?
03:40 RH: I believe the very, the core mistake of it is, is not understanding the value that managing your MRO appropriately and properly, is so advantageous to the bottom line. That’s what I truly believe. And to do that, the biggest mistake that I’ve seen is undertrained personnel in your MRO and it’s not their fault, it’s just that we will send maintenance technicians or we will give our people other than our MRO storeroom people a plethora of training options. MRO is, basically, people are basically on their own to do whatever they want. And to me, that’s the largest mistake and that’s where the gap that we need to fill is utilizing our storeroom people’s skills and enhancing those skills to achieve better results.
04:35 Ryan: Absolutely, and you mentioned how MRO can make a significant impact on the business. Can you tell us a story, some examples of when you’ve seen that go really really well and maybe or maybe a story where it didn’t go as well?
04:54 RH: Oh, absolutely, there are so many examples, but one that actually comes to my mind is… In my previous life, I’ll say, I worked for a company that our MRO specialist was really on the ball, they were highly trained, they were involved in root cause analysis with our maintenance technicians. But they were utilizing the data out of the CMMS system to understand that this one particular part, the cost, I think the cost was about $10,000, they saw an issuance of this part over and over again, that everything funneled down to the storeroom, so the storeroom got to see this issuance occurrence happening over and over, so they started to do a root cause analysis of why this was happening, and go to find out because of the storeroom person actually taking it upon their own time to work out the details by utilizing the CMMS system, saw that we had issues with installation and issues like that, so they brought it to the attention of the maintenance team who were all working separately.
06:01 RH: So if this person did this particular part, they may not communicate over here to this person or sector on the plant, so the MRO person actually communicated to all of them, and instead of replacing these $10,000 items over and over again, they got to the root cause with the help of our MRO person because everything funneled down to the MRO storeroom. And that’s the cool thing about having an MRO storeroom. If you have people that are highly trained, and highly skilled, and compensated for that skill, then they can actually be very advantageous to our maintenance, overall maintenance, reliability program. So this one particular incidence, Ryan, I gotta tell you, it actually, instead of the company spending close to a million dollars a year just over replacing, replacing, replacing, because of what the storeroom person actually accomplished, they didn’t have to replace at all that year. So just one incident, they saved this company over a million dollars just by utilizing the CMMS system appropriately.
07:07 Ryan: That’s huge, that’s absolutely huge. [chuckle]
07:10 RH: Yeah, it is, and that’s why I say core training, core compensation for our MRO storeroom because it’s not like MRO… Just to give you some backstory, everybody thinks MRO is Maintenance Repair and Operations. But actually storerooms have been around for thousands of years. The ancient Egyptians, they had storerooms, they had grain, they had things of that nature. You fast forward it into the 20th century where we in the United States and also in Europe and everywhere, they had storerooms for their war machine and things of that nature. Nothing has really changed on how things are set up. The only thing that has really changed is technology and the skills to utilize and understand where we’re at. So now that we’re in the 21st century, we need to bring the mindset of, We’re no longer a broom closet, but we are someone that can really benefit our program, because you’ve got a core group of people working in your storeroom that can give you information, because they’re in it all day long that maybe they’re not being tapped into.
08:18 Ryan: Absolutely. So what I heard from that is, the technology is the biggest thing that’s changed in this industry. We talk a lot about CMMS. Obviously, we are a CMMS too. Any tips, advice, recommendations for the MRO department to better utilize a CMMS?
08:41 RH: Sure, there are core standards. The good thing about societies like the Society of Maintenance Reliability Professionals, which I am a member of, and other core societies across the land, GAF, MAM and things of that nature, is, there are standards for training and there are standards about how to insert data into the CMMS system. The biggest aspect about a CMMS system, regardless of what it is, is utilizing it to its fullest potential. And in my experience, I used to be a consultant and all that stuff, but my experience walking in to storerooms is, number one, you may only have 30 to 40% utilization of your CMMS system. So if we can increase that number to better benefit the company and utilize your CMMS system for what it’s designed to do, your results are remarkable. They truly are. ‘Cause then you get the opportunity, Ryan, as you well know, is to do KPI reporting and be on-time deliveries and just so much information is available for us now and it’s at the tips of our fingers. But a lot of people just still don’t use it.
09:54 Ryan: Yeah, again, it all comes down to… We’ve got technology now, let’s utilize it, let’s consume it, and that’ll give us better data, reports, insights to run our business better. So we were just talking about KPIs and using technology to better track and measure KPIs. Any suggestion for great KPIs to track for an MRO team?
10:22 RH: Sure. Everybody… I shouldn’t say everybody, but these are known KPIs for MRO storeroom. We all wanna know what our inventory level is. If I’m a president of a company or a CEO, I wanna know what the overall financial impact our MRO storerooms, and there’re, quite honestly, MRO storerooms that have tens of millions of dollars invested into it, whether it’s equipment personnel or even the parts themselves. So understanding the inventory buy-in is really important, from a high level view, but as we get more granular inside as a storeroom person or an MRO person myself, I wanna know stock-outs, so every time a maintenance technician comes in and the part that was actually in the CMMS system, saying that it was in the drawer, but when you go up there, it’s not there… I wanna be able to have a system to tell me that that’s a stock-out so I can report against that and then that will close the loop on maybe someone taking a part out of the storeroom and not issuing it to a work order, so that’s a great KPI, so we have inventory value, inventory turns and stock-outs.
11:35 RH: But one of the key things that I really like to look at, and this is on an annual basis is looking at my obsolescence excess inventory, and that’s really helpful. So you know any idle, or rarely used inventory or RUI as we speak. So four or five basic key KPIs are very important. So we’re looking at inventory levels, inventory turns, stock-outs and basically what we’re issuing out, so that gives us our inventory turns and then on the back side of it, looking at dormant or idle or rarely used inventory.
12:14 Ryan: Yeah, that’s great. One of the common pieces of feedback that we’ve gotten is, how do we benchmark ourselves, how do we know if this is the right inventory level, how do we know if this is an okay level of stock-outs that we have? Any suggestions for our listeners to set benchmarks and say, like, “This is good, this is great, this is not okay”?
12:42 RH: Sure, it all depends on the industry. Each industry is different. Whether you are in a food and beverage industry or you’re in the mining industry, so each industry or manufacturing, they do have different kind of numbers, but they’re kind of parallel. There are industry standards out there, for instance, if you look at your top of the line MRO Inventory in a proactive facility, you should be 2% of your overall asset value. So if you have $100 million worth of assets out on the floor, you would want 2% of that in your storeroom for critical spares. And we based critical spares, I’m kinda segwaying into the next thing I wanna talk about is we base critical spares as basically insurance spares and they are the most critical and they’re usually the highest cost, the longest lead time, and things of that nature. And then you have B items and C items, and they kind of cascade down a list of importance.
13:44 RH: So the big thing is, is understanding what your true value is. And a baseline for anybody, if you wanna just talk the way it should be, layman’s terms, if you have a dollar, 2% of that dollar should be in your storeroom at a proactive site. Now I’ve seen it as high as 10% or 20%, it’s unbelievable. So the better you get in maintenance and proactive maintenance and reliability, the lower your storeroom inventory becomes, because then things, they flow through your storeroom, instead of having to be stored in your storeroom.
14:21 Ryan: Yeah, absolutely, absolutely. And I think that serves as a really good benchmark for our listeners to say, “Alright this is what we wanna run towards. It doesn’t matter necessarily where we are today.”
14:33 RH: That’s right.
14:33 Ryan: “It’s about where we wanna go in the future.” And I think having that just north star, so important.
14:41 RH: It really is, and like I said, this is also, Ryan, based on what industry you’re in, okay, because there are some more technical industries where you may have to increase your storeroom based on availability of parts, whether they’re coming from different parts of the globe. So you really… Don’t hold yourself to the fire. Basically, your storeroom is a mirror of your maintenance program. I can walk into any facility without even knowing anything about your maintenance program, or even going out on the production floor and tell you where you’re at, just by looking at your storeroom operation. It’s a key indicator of where you’re at. Seriously, it truly is.
15:28 Ryan: Yeah, absolutely. Pivoting a little bit, so maintenance, what we always say, often goes under the radar. How can we better recognize the work that the MRO team, inventory teams do?
15:47 RH: One of the things that I like to do, and everybody talks about it, is communication. The biggest thing that I see are storeroom people, and you mentioned it earlier, kind of like the heroes behind the scenes that no one really recognizes, but you can bet when there’s a part needed because a line is down, the storeroom becomes out in the forefront. But after that part is obtained, the storeroom goes back into the dust so to speak. So what I like to do is to have our storeroom people involved in A3 boards. I liked where we have what the problem was, what a root cause is, and give a resolution and then give some what we’re doing to maintain and to sustain it and actually broadcast that and really give our storeroom as part of our maintenance team some kudos, so to speak, of the hard work that they do day in and day out.
16:47 Ryan: Absolutely, and another question that I’ve been thinking about as we’ve been chatting is, when is it the right time to find someone dedicated for this role, to manage your inventory? ‘Cause I imagine there’s a lot of companies out there that are just working on an ad hoc basis. They’ve got that closet of parts and you kind of walk in, you pick out a part, but you don’t really have a sole person focused on it. When is it the right time to do that? And how do you also think about staffing an MRO team as your company grows?
17:25 RH: The way I look at it is, I would look at your maintenance technicians wrench time, believe it or not, because if your maintenance technicians are searching for parts and things of that nature, because you don’t have storeroom personnel, you’re taking away for what they are designed to do, and that is to restore equipment to its level, to operate efficiently. I would take a look at… And really, it’s no hidden secret. People say, “Man, I spent all day looking for a part.” Well, that tells you right there, Ryan, that you would need a qualified person in your storeroom to take that heat away. And that is their focus is making sure that you had the right parts at the right time, at the lowest cost. That’s what I always do, is… And you asked about staffing levels, staffing levels used to be, if you’re a 24-hour operation, you would have staffing around 24 hours, but now with RFID, with the technology that we spoke of earlier in the 21st century, there’s a lot of techniques that can be utilized to ensure that your storeroom does not have to have personnel 24 hours a day.
18:40 RH: So it all depends on your area of business, but I will say this, if you’re having issues of a lot of stock-outs and you only have one storeroom person working during the day and they’re doing the receiving and things of that nature, but you’re seeing a lot of stock-outs because someone is taking parts outside of the timeframe of your storeroom person, I would really start looking at possibly adding a storeroom person on an off shift to cover those bases.
19:08 Ryan: Absolutely. So, what I hear from you is you’re looking at it from a very data-driven perspective, it’s all about tracking and measuring wrench time, it’s looking at stock-outs. That’ll give you better perspective into when we need to hire, when we need to bring that additional headcount or additional person into the business. And I love that perspective.
19:32 RH: Yeah, back just to get back to the… To get back to the four key elements of success in material management and MRO, number one, you have to have a cultural change. And we spoke about that earlier, Ryan. You have to… We’re no longer a broom closet, okay, we’re not… I’ve heard people say parts crib or storeroom clerk or anything, so we have to have a cultural shift to say, these are professionals. I’ll put it to you in perspective, Ryan, if you had $4 million, you gave me $4 million, wouldn’t you want me trained to manage your $4 million for you?
20:08 Ryan: How…
20:09 RH: But unfortunately, we give $4 million worth of inventory to someone that is really under-utilized and under-trained. So there needs to be a cultural shift there. The second key element is certified MRO training. There are so many areas of opportunity here to train. There are standards out there like the Society of Maintenance Reliability Professionals and others that can give that certified core training to understand what MRO is all about. That would really benefit our associates in MRO. Another one key important is, is the documented processes in auditing. I have seen it time and time again where I do it one way, you do it another way and our results, we have a lot of variability. So if we document our process, and then we audit those processes, we can eliminate a lot of the waste and variability that we have.
21:04 RH: And lastly and most importantly is the proper utilization of CMMS. You have to have a robust CMMS system. But even if you buy a robust CMMS system and you’re under-utilizing it, then what good are you? So you must utilize your CMS system that we’re spending so much time and effort to install and train people, but we have to utilize it to its fullest potential. And that’s the gaps that I see. And those are the four key elements of success in MROs, it’s that simple, cultural change, certified MRO training, documented processes in auditing, and utilizing your CMMS, it’s that simple.
21:42 Ryan: Absolutely. I love it, Radar, I love how you put it into perspective. Because I can imagine that the average company out there has millions of dollars in inventory. You should have someone focused on that, knowing what’s in inventory, what’s not in inventory. You want someone who’s trained because you’re giving them the keys to potentially millions of dollars in inventory.
22:12 RH: Yeah, you actually are. And Ryan, I just wanna give you some quick numbers here, and maybe this will ring into somebody’s head that’s on the fence about MRO storerooms and whether it’s important and things of that nature, but in 2012 alone, US businesses spent $100 billion on MRO materials, $100 billion in 2012. Okay? Of this, there was 10 or $12 billion that were left on the shelf. So we’re asking people that normally we’re paying a very lower wage to, we’re really not training them to this, we’re saying, “Okay, we’re giving you $4 million or there are $6 million to manage, but we’re not gonna pay you as much as we’re paying our forklift driver.” Now to me that just is crazy. If you’re investing this much time and money just, like you do the assets out on the plant floor, wouldn’t you want to invest that as well as someone that is taking over or managing your MRO? That’s a no-brainer to me. It’s like I said, Bryan, or Ryan, if you gave me $4 million, wouldn’t you want to know that I’m gonna take care of it for you?
23:24 Ryan: I would. [chuckle]
23:25 RH: Yeah. In a positive way. I’m not gonna go to Fiji on you, I’m not gonna do that, but that I would take and give you some positive return on that. That’s the gap that we’re seeing cross and I have done storerooms above the Arctic Circle, I’ve done them in different countries, I’ve done them in multiple states across the United States, and I gotta be quite honest with you. They’re all the same. They’re all the same. It’s the same song and dance that you hear, and no matter how good they say they are, they’re all the same. And that’s why I actually sent you the PowerPoint, so you can see some of the pictures. And these are real life pictures that I have taken, and this is in the 21st century, when you walk in, you see millions of dollars just laying on the floor.
24:14 Ryan: Yeah. It’s crazy. And again, I think that also highlights the importance of the training aspect.
24:25 RH: One more thing, you know, Ryan, and I don’t mean to be long-winded but this is so important that everybody understands the sheer gap that we have under MRO and the importance that it pertains to the reliability aspect and the overall efficiency of any plant that we do. Trust me. If you don’t have the right part at the right time at the lowest cost, it’s gonna cost your company a lot more than that part’s worth. So wouldn’t you wanna have someone that’s utilizing the CMMS system to its fullest potential, having that person well-trained so you make sure that you can run efficiently for your customer base? That’s the hidden elephant, Ryan. That’s the hidden elephant in the room that no one wants to talk about, but we sure are spending a lot of money to the point of $100 billion in 2012.
25:10 Ryan: So, obviously, things have changed quite a bit and I’m guessing that the MRO space has changed quite a bit since you’ve been in the industry too. We’ve talked about technology, I’m curious, what have been some of the other things that have changed throughout the industry since you’ve started working in the MRO space?
25:33 RH: I would say the cultural shift, there are companies that are coming about… We’ve already talked about the technology side, but the cultural shift that an MRO storeroom is an asset to our reliability-based programs and our maintenance programs. So I have seen just in the past two decades alone, I’ve seen a turn of thought process saying, “Hey, we always kinda left our MRO people out of the conversation, we just asked them to do whatever, and they had no clue of why they were doing it.” So what I have seen over the last decade or two, bringing the MRO side into view. That’s why we’re having a podcast today. Bringing it into view so people like myself who have been in the trenches, have been to all these different storerooms, can be the voice of the storeroom person or people that are with their head down saying, “This is never getting better.” So if we can shed light on that and give these people an opportunity to succeed, it will be a positive for all of our maintenance programs across the board. So that’s the key element that I’ve seen over the past decade or two.
26:45 Ryan: That’s awesome, that’s great to also hear that there has… You’re starting to see this cultural shift at least the beginnings of it, I think that’s a very, very positive thing.
26:55 RH: We have a long way to go though, Ryan. We have a long way to go.
26:58 Ryan: Long way, yeah.
27:00 RH: At least now, though, we have the tools available, all we have to do is share these tools. And the great thing about what you and I are involved in, is being able to share the best practices and tools and so people can understand, “Hey we can get better.”
27:15 Ryan: Absolutely. So you mentioned the SMRP for some resources to better hone your skills and knowledge in MRO, any other resources, places you go to continue learning about MRO and getting better at it?
27:31 RH: Sure. First of all, I’m not a paid anything for anybody but I will say this, your technical college is, your technical communities, they’re pretty much on board with the key learnings, and if they’re not, feel free to communicate with me, we’ll give an opportunity to have that communication. But people like Life Cycle Engineering in Charleston, South Carolina, or Marshall Institute, or University of Wisconsin, there is an abundancy of training available. You can go online to Society of Maintenance Reliability Professionals, and get all the help or you can go on LinkedIn and just start building your network. And there are so many professionals out there that have been in the trenches in it. Good part about it is now we’re starting to see the younger generation come up and understand that there’s a call for them to replace us old guys so to speak, and it’s really good to see. I was just in training last week actually, and it was really refreshing, Ryan, to see a younger group of people in the training that I was in. Because normally in the past, you didn’t see that. So it’s really refreshing to see another generation come up and understand and utilize the technology that they grew up with and what we’re into today and take us from an analog into a digital world and that’s where we really need to help.
29:00 Ryan: That’s amazing. Well, Radar, you are one of those young guys too. Come on.
29:05 RH: Oh man, I’ve been around a while, but I will say this, absolutely very, very passionate about what I do, and communicate the best practices of MRO and I have to give my mentor Wally Wilson, and Wally, you can look him up, has written so many articles about MRO and best practices. And when he and I worked together a decade or so ago, I really got underneath his wing and just absorbed all of his knowledge from him and took it to the next level and now he and I banter back and forth and communicate. He learns from me, I learn from him still. But that’s what we need is have another generation that I can learn from them and they can learn from me and we can continue down the road to success.
29:54 Ryan: That’s awesome. And Radar, where can our listeners connect with you, learn more about you and follow you?
30:02 RH: Actually, LinkedIn is the best. If you just type in Radar… My first name is Donald. But if you just type in Radar in LinkedIn, there’s only just two of us, you’ll see Donald Radar Huntsinger on LinkedIn. That’s the best way to communicate with me. I’m a baby boomer, so I’m really not into Twitter and all these other things. I’m too busy to do all that, number one, so LinkedIn is the network that I utilize all the time.
30:29 Ryan: Amazing. Well, thank you so much for taking time out of your busy day. It was great having you, Radar. And thanks for doing this.
30:37 RH: It was a pleasure, Ryan. I thoroughly enjoyed all the work that you do and all the team success that you guys have had. I follow you on LinkedIn, you and I’ve communicated, and I just wish you the best success and if anybody has any questions, feel free to contact me.
30:51 Ryan: Thanks so much, Radar, and thank you to all of our listeners for tuning in for today’s Masterminds in Maintenance.