How do you feel when you walk into your organization’s storeroom? Anxious? Frustrated? Maybe even a little afraid? For many organizations, storerooms are like attics: drafty, dark, and disorganized; places you only go if you absolutely have to. This blog post will provide you with some insight to take back your storeroom and improve your inventory management, enabling you to save time and money in the future.
Let’s look at some numbers
A typical organization overstocks about 29 percent of their internal inventory, according to the findings of CPIM (Certified in Production and Inventory Management), Andrew Gager. Let’s say that your entire inventory store is worth about $50,000. That means that you likely have around $14,000 worth of overstocked materials. Now imagine what you could do if you had that amount back in your budget.
But overstocking is not the only way that inventory can be mismanaged. More than half (58 percent) of a typical organization’s inventory has been stationary for more than three years. Now, some of these untouched items are important, though uncommonly used parts. But a significant portion of these items are probably obsolete. Let’s use the same example as before: if your inventory storeroom is worth $50,000, that means that you have around $29,000 worth of potentially obsolete items.
Why do these problems occur?
- No system for obsolete part disposal
Parts and other inventory items can become obsolete in several ways:
Equipment replacement: The equipment that utilized the part was replaced and the parts cannot be used by the new equipment.
Damage: Improper upkeep or accidents have caused the part to become damaged.
Cannibalization: A section of the part was used for another purpose and was not replaced.
Expiration: In the case of consumables, cleaning solutions, etc., the part was not used by its expiration date and is no longer safe to be used.
Without a proper way to dispose of these items, they can take up valuable space in your storeroom, lead to unsafe working conditions, add extra time to simple maintenance tasks, and lead to the next reason, “disorganization”.
Storerooms are notoriously disorganized. Parts are often stacked on top of each other and are poorly labeled. According to Gager, facilities staff spend about 18 percent of their days searching for tools and inventory. Sometimes storerooms are so disorganized that facilities staff will go out and purchase what they need to avoid searching for it in the storeroom.
Disorganization will often cause organizations to unnecessarily reorder inventory because parts are improperly labeled or lost. Your staff will then have to wait for the parts to come in before they can complete the work order or planned maintenance task.
How to take back your storeroom
- Create a catalog
The first step in taking back your storeroom is to identify, document, and label what is currently there. This process will help you to identify obsolete items, commonly used items that were ordered and misplaced, and some real gems as well: you may very well be holding on to parts that are out of production but that you still need for your equipment. The best way to catalog your inventory is with a Computerized Maintenance Management System (CMMS), like FMX.
As you go through this process, be sure to note the quality of each item and its priority to your organization. Is it in good condition? For consumables, is it still within its expiration date? For larger parts, does the item have all of its components? Is the part crucial to maintain operations or is it no longer needed by your organization? Enter these notes in your CMMS so that you can review them as you’re going through the next step, “obsolete inventory disposal”.
How FMX can help: Each inventory item receives its own entry in FMX, where you can include its name, supplier, and any details about its quality and relevance to your organization. Once the entry is created, FMX will assign it a unique QR barcode for easy identification and labeling. FMX also makes it easy to search for the exact item you’re looking for and edit its description or change its quantity. If you already have a spreadsheet of your inventory, an FMX customer success representative can import that information for you.
- Remove obsolete materials: Once you have identified obsolete items in your inventory, you’ll want to remove them. But wait, remember those numbers from before? You’re likely looking at removing 25 percent or more of your inventory store, and depending on the size of your storeroom, those items could be worth a lot of money. Before you toss them, check with your purchasing and/or financial departments. They may want to sell these materials or donate them for tax credit. At the very least, they’ll likely want to document the loss.
Regarding consumables—If your organization stocks a lot of consumables they likely already have a waste management process. If you are not aware of this process, ask around before you throw these materials in the trash or down the sink. If you have expired commercial cleaning products, check the labels. Manufacturers often include instructions for disposal on the label. If you can’t find any instructions on the label, check with your local waste disposal facility for how to properly dispose of the products.
- Determine appropriate stocking minimums and maximums: There is a thin line between being overstocked and being understocked. Think about the inventory used for your most common repairs and planned maintenance tasks. This should give you a good starting point to establish some preliminary stocking levels. Using a CMMS over time will give you a better indication of what your actual minimums and maximums should be.
How FMX can help: FMX can help you track which inventory items you’ve used in the past week, month, year, or more. This information will allow you to more closely predict how many items you’ll need in the future. FMX can also help you keep track of the amount of time it takes to reorder inventory items from suppliers. This information will give you a good indication of how much of a particular item to keep in stock.
Another thing to consider when determining your stocking minimums and maximums is the item’s priority. For example, if you’re from a manufacturing facility and you do not have a critical part for a piece of production or safety equipment, that can be a big problem. Even if that piece of equipment rarely requires maintenance, it is important to keep at least a few of those particular parts in stock.
How FMX can help
FMX enables facilities managers and their staff to more efficiently and effectively track inventory, equipment, purchasing, and much more. FMX provides a unique QR barcode for every asset, and enables facilities staff to save time by scanning codes from any smartphone or tablet to adjust inventory quantities, obtain asset maintenance procedures and history, and more.
FMX also provides facilities managers with valuable insight into inventory usage and purchase histories.
Allison is a product marketing manager at Facilities Management eXpress. When she’s not writing marketing content, she is likely hiking with her dog or cooking delicious Italian food.