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What Covid-19 has changed in maintenance, repair and operations (MRO) parts management

It’s been said never let a crisis go to waste. And that’s the compelling driver behind recent shifts in managing MRO parts more effectively. Control, data and active management figure prominently.

Maintenance and repair parts management is always a challenge. There’s just such a range from the small and mundane such as fasteners to the much larger and expensive items like entire motor assemblies. It’s not only a matter of maintaining appropriate storage space and accessibility, but ensuring these parts don’t grow legs and are available when needed.

Then along came Covid, which added its own layer of requirements to managing parts, including PPE. Oh, boy. Fortunately, all is not lost as companies are finding new ways to accommodate this weird new world we live in.

If you’re looking for one key focus needed to balance out the changes Covid has wrought, it would be control. And control comes in different forms.

There is, of course, control of inventory in any storage arrangement from bins, shelves and modular drawers to automated equipment such as vertical lift modules (VLMs), vending machines and carousels. Next, there’s control of people accessing that inventory. And the third is control of the supply chain to ensure critical parts are available when critically needed.

“More control of inventory is needed these days,” says Brian Baker, regional business director at Kardex Remstar. “Especially during the chaos of the early days of the pandemic, people realized how sloppy they were in parts management. They’re now looking to get more organized whether it’s using equipment or software to gain better control of the parts they have in their facility,” he adds.

When it comes to people, a much greater focus is on how people interact with MRO inventory. “Beyond masks, social distancing is the next most important factor. And the fewer the number of people needed to access inventory in both restocking and picking operations, the better with Covid,” says Michael Fiorito, Modula’s director of business development global.

As to the supply chain, companies are now having to plan more to ensure adequate supplies. “That has required a better understanding of the supply chain and where inventory comes from,” explains Shane McCarthy, Lawson Products’ senior vice president of supply chain product management and marketing. “It ranges from placing orders more quickly, especially for PPE, to being aware of secondary sourcing options, especially for mission-critical parts,” McCarthy adds.

What that doesn’t mean is that Covid has led to expanded inventory levels. All experts interviewed agreed that finance teams are still focused on maintaining lean levels of MRO parts.

This brings in what is increasingly the key enabler of better MRO control: Data. Rick Walter, program manager at Synovos, explains companies are collecting more information about not just what they have and how frequently it is used, but where and when they need to source future MRO spend.

In the end, all this has emphasized “how essential and mission critical MRO parts management is,” says Jim Owens, senior vice president of supply chain solutions and service at SDI.

Shifts in inventory management

“Eventually, the pandemic will turn out to be a benefit, and a turning point when it comes to parts management,” says Leonard Bashkin, general manager at SecuraStock.

Let’s start with PPE.

Prior to the pandemic, PPE accounted for 5% to 10% of MRO inventory by most estimates. How much that has expanded is a bit of an open question. The typical range is 15% to 30% of all MRO inventory; however, it is not uncommon to find the amount of PPE inventory on hand has increased a whopping 50%. Whatever the exact number, a whole lot more masks, gloves, goggles, hand sanitizer and other safety items are in MRO inventories since the start of Covid. The other shift, says Owens, is a shift from general passive management of PPE to active management.

Getting that additional inventory has not always been easy. In the spring, just finding some of it was a challenge. Procuring and stocking it can still be difficult. That’s made secondary sourcing important even today. Beyond that, “companies are now authenticating items, working with authorized distributors and often insisting on a chain of custody,” says Synovos’ Walter.

Once PPE is stocked, companies are taking different approaches to managing it. Most frequently, it is more important to make PPE available to people within the facility than to ensure its security. “It’s critical to have it in people’s heads that PPE is readily available and ready for use. And, that’s not going to become any less important as companies bring more people back into the facility,” adds Lawson’s McCarthy.

As to non-PPE inventory, that is in a bit of flux, too. Most experts say overall MRO spend is down noticeably. With the large increases in PPE, that means operating equipment parts and supplies are really off, typically due to reduced business levels and equipment usage. And needless to say, the drive to lean in tougher economic times is almost an inevitability.

As Owens explains, Covid has actually given MRO parts management an opportunity to improve significantly. “It underscores the need to make one person accountable for outcomes. Now is a good time to get away from the model where every group has its own agenda. Maintenance wants an overabundance of parts. Finance wants as few parts as possible. Procurement wants to buy in quantities to get the lowest price. Engineering wants only the highest quality parts. Instead, we are now at a point where one person should be responsible for all risk mitigation in the MRO parts buying, and for that matter parts management, cycle,” he says.

Data and control

Overall, Covid has not had much impact on equipment usage trends to store parts. Roughly 80% of all storerooms continue to use bins, drawers, cabinets and shelves. The balance is split between carousels (both horizontal and vertical), vending machines and VLMs, which alone account for roughly two-thirds of all automation. Companies here include Kardex Remstar, Modula and SecuraStock.

In addition, about 80% of all MRO parts management is by the company using the parts. Vendor-managed inventory (VMI) accounts for the balance with companies such as Lawson, SDI and Synovos actively guiding and directing the MRO parts procurement and restocking process.

Perhaps Fiorito of Modula said best what others are thinking about concerning the various MRO parts management solutions these days. “While significant shifts in parts management have not resulted from Covid, the disease has certainly provided a compelling reason for companies to re-examine their practices and make a change that gives them better control over all aspects of MRO parts management,” he says.

Regardless of who is managing the parts, more data is increasingly the most effective ally to ensuring the right parts are on hand when needed without breaking the bank. This comes in several forms.

One is to shift from non-smart, non-connected storage scenarios to ones that are smart and connected. This unlocks data about inventory availability and facilitates easy tracking of who signed out what parts and for what purpose.

That, in itself, typically reduces the number of people accessing parts, creating improved social distancing almost by definition. Furthermore, better data also has the potential to reduce the number of visits needed by VMI representatives, further enhancing social distancing. Experts generally agree that anything that can be done, including shrinking storage area footprints that require fewer people to operate efficiently, is a benefit during Covid. Ultimately, it’s all about keeping people safe and healthy.

More data has additional benefits, too. Baker of Kardex Remstar says more data also leads to better organized inventory, resulting in better overall control and cost savings. More data also leads to fewer stockouts and the danger of extended downtimes at inopportune times, explains Bashkin of SecuraStock.

Several suppliers spoke about their efforts to connect virtually with their customers to discuss everything from equipment and systems development to new parts for their operations. These and similar efforts are all about reducing the direct interactions with people for obvious reasons. And as we all know, people and how they communicate are essential to making anything work in this time.

Covid and the supply chain

The danger of unexpected and even extended downtimes due to a lack of MRO parts is one of the more notable hallmarks of Covid. It has required many to rethink how they manage the parts supply chain.

As McCarthy of Lawson recalls, “we had a huge surge in March and April for PPE but the supply chain was not ready for that. Suppliers could name their terms. We are now at a better balance of demand, supply and pricing. But companies need new practices to ensure all parts are available to them.”

“The most effective people here are migrating from being reactive to being proactive if not predictive,” says Lindsey Tierney, Synovos program manager. “Companies need to strategize what they need and how they are going to ensure they have in inventory,” she adds. And that goes for parts beyond PPE.

Secondary sources in many cases are now a must, explains Walter of Synovos. “They are also looking at how steady a supply of parts their OEMs can provide to ensure they aren’t caught short,” he adds.

Data is critical here. Not just to provide a window into the supply chain but to provide a better window into a company’s own operations and MRO needs. “For instance, CMMS (computerized maintenance management systems) allow companies to plan out more. Even to go so far as to reserve parts for specific work orders,” continues Walter.

Covid has clearly opened up some new opportunities for MRO parts management. As SDI’s Owens says, now is the time to shift from systems built almost exclusively for efficiency to systems also built for resiliency.

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