Technology Trends in MRO Inventory Management

Transcription

1 June 2012 Technology Trends in MRO Inventory Management

2 Technological Advances Technological advances are changing the dynamics in level of MRO inventory management and data management has a distinct focus area for business unlike the traditional inventory management where data collection was considered to be a part of accounting procedure and data were only being used in financial statements. Though the material demand for the current year was based on the inventory data gathered, it was not accurate and could not help inefficient utilization of resources. However, recent technological advances have changed this scenario and the advances in technology in each level of MRO inventory management is shown in fig.2. Fig.2. Technological Advances in MRO Inventory Management The main areas of focus in MRO inventory management are handling the physical inventory and handling the related data Physical Handling of Inventory includes receiving, palletizing, tracking, monitoring, retrieving and replacing Data Management includes data collection, management, easy retrieval and analysis of data to understand the expected demand that raises both the visibility and transparency of order fulfillment and usage process

3 Automatic Loaders Automatic loaders handle the trays carrying material and help in easy conveyance and palletizing of materials. This could be useful in handling boxes of spares parts or materials like pump, motors etc. Pallet Trucks Pallet trucks are used for easy movement of materials between the racks or shelves and store them in exact location as planned. Pallet trucks come in different sizes and with a range of carrying capacity. It could also be automatic and be controlled by the GPS system (Geographic Positioning System) Voice Directed Processing Automatic/Semi-Automatic Racking & Shelving Systems Automatic or semi-automatic inventory stacking system helps in compact storage of tools and equipment and supports the usage material identification technology such as bar code and RFID tracking systems Voice directed processing of MRO inventory helps in picking, securing, replenishing and truck loading of materials. This process supports the operators especially in perpetual inventory management systems. Bar Codes Bar codes help store operators in linking the purchase orders, work orders, spare parts and equipment and track the equipment for accounting and also for retrieval when required for usage. RFID RFID acts as another tracking technology used in tracking inventory. The information collected through this tracking could be helpful in forecasting the current status and future requirement of the inventory.

4 Vending Machines Vending machines are usually connected to the inventory management software and the tools stored in it are labeled with RFID tags. This system makes it easy to frequency and level of usage of particular material. Vending machines also have the flexibility of moving to the work area for easy retrieval. This system is also secured with proper security system installed in the vending machine thereby preventing loss or theft of the materials. CMMS (Computerized Maintenance Management Software) CMMS provides support in collecting data, storage, retrieval and analysis to be used in useful form to understand the inventory requirement. This software forms a network among all the important processes from order processing to inventory and cost management to support the management to move towards achieving optimization of inventory. Fig.3. Typical Functions Connected by CMMS (Computerized Maintenance Management Software) Changing Trend in Inventory Management Traditional inventory management has been dependent on the theoretical inventory management frameworks such as Economic Order Quantity (EOQ), ABC Analysis etc., and all these models were designed to work under assumptions of ideal environment. One such example is the assumptions made for Economic Order Quantity Model that is used to determine the optimum order quantity. The assumptions of EOQ model are as follows:

5 Demand or usage is predictable Demand or usage is constant Receipt of inventory is instantaneous Price of the items remain constant throughout the procurement cycle Materials in many processes are flow controlled i.e. materials move in pipelines starting and stopping depending on operational requirements Variable costs are limited to ordering and carrying costs Stock outs can be avoided if orders were placed at the right time All these assumptions had been considered to be the ideal situations which cannot be achieved in the real world inventory management. There had been many other theoretical models which have been debated for their possibility of practical implementation. Technological advances in inventory management have helped in changing these assumptions to some extent and have helped in implementing these theoretical models in the real world for effective inventory management. Changes in the assumptions Demand or usage is classified into predictable and unpredictable demand or usage Demand or usage can be classified as constant or perpetual Ad-hoc order placement capabilities and lean inventory management systems help in achieving prompt supply Materials do move in pipelines otherwise the movement of the material anyhow tracked using tracking systems Only ordering and carrying costs remain variable while the prices of the materials are negotiated and fixed with the supplier for a fixed period Orders are placed on time and stock outs are minimized to a negligible extent Shift in Inventory Management Approach Traditional approach of managing MRO inventory has been periodical as it involves resource, time and effort. With the advances in technologies, perpetual inventory management has been made

6 easier. Currently, companies are moving towards perpetual inventory management from periodical inventory management. Fig.1. Shift in Inventory Management Approach Technology Driving Inventory Optimization Technological advances in every level of inventory management would support in the adoption of perpetual inventory management system and thereby help in optimizing the inventory purchased and utilized. Bigger companies like fortune 500 manufacturing companies already use these technologies as part of lean manufacturing technology. Medium sized or fast growing manufacturing companies can adopt these technologies to save significant costs on MRO inventory management and sourcing. Sources

7 Author Anithamaragatham G Senior Research Analyst