Lean-based material handling

Mark A. Lewis
Tags: inventory management

For nearly all manufacturing plants, an efficient maintenance, repair and operations (MRO) process is a fundamental requirement for success. From storage of strategic spares, to facility maintenance, to support of scheduled service, a disciplined maintenance operation - integrated with product and overall company schedules - should be the goal of every company. However, for a surprising number of organizations, this is not the case. Many companies operate without an integrated computerized maintenance management software system in place, or in some cases without any systematic maintenance package.

At the same time, an even greater percentage of organizations have given little more than cursory thought to the efficient storage and retrieval of MRO parts. While many - even the majority - of manufacturing and distribution divisions have invested heavily in advanced material handling equipment (MHE) such as automated carousels and vertical lift modules, most maintenance stores are still held in inefficient static shelving and pallet racks, in dimly lit parts rooms or cages, and without a computerized stock locator system.

Business drivers and technological innovations are beginning to force change in these practices. In their pursuit of lean manufacturing, organizations are beginning to recognize the need to integrate modern maintenance planning and work management processes with modern MRO material handling processes to minimize the impact of two of the deadliest wastes of all: machine downtime and suboptimal inventory management. A modern approach to MRO inventory management that incorporates optimized business practices and technologies will go a long way to enabling you to control both categories of waste. This paper addresses the key topics associated with applying modern material handling practices and technologies within the context of MRO stores management.


Shelves and racks are examples of man-to-part storage equipment.

Systems control of MRO stores has existed for years, and has matured greatly within the last decade. As early as 1999, Doug Mitchell suggested that "there is no surer sign that a technology has arrived than when industry giants begin adding it to existing products as a feature." Today, major enterprise resource planning (ERP) players such as Oracle and SAP tout enterprise asset management (EAM) and computerized MRO (cMRO) as tools within their product suites, and other vendors are quickly coming to market with either imbedded applications or improved integration to leading point solution vendors. While the past norm has been for maintenance departments to autonomously select their own systems, this trend is reversing and integrated systems are becoming more common.

Notwithstanding the cost implications of an integrated system (which will vary, depending upon vendors and existing functionality), multiple systems result in multiple views of inventory and operations, and may result in suboptimal MRO processes. Benefits to integrating CMMS software with corporate purchasing and scheduling - or with the overall ERP system, if it exists - are fundamental building blocks to improved operations, including the following:

Purchasing: Both maintenance and production parts require ordering, receiving, holding and consumption. Integrating MRO parts with general purchasing will reduce redundancies, reduce or eliminate double ordering, and greatly improve inventory accuracy and availability.

Scheduling: Integration of maintenance and production systems allows maintenance to optimize parts purchasing, picking and assembly to assure the correct parts are available, kitted and delivered to the maintenance area when needed. This greatly improves the utilization of the maintenance personnel, as there is little or no downtime associated with either manually assembling the service kits and/or searching for missing parts.

Inventory optimization: Leveraging the existing inventory optimization functionality inherent in most ERP systems can automatically adjust inventory balances and safety stock levels as well as remove the manual calculation burden from MRO operations. Particularly in multi-site operations, this can result in much lower overall inventory carrying costs.

Automated parts storage: While possible without integration to the corporate/ERP system, the use of automated storage and delivery equipment, such as carousels and conveyors, does not usually present a justifiable alternative. With integration, the ability to commingle MRO parts storage with production and distribution parts allows the maintenance organization to take advantage of the inherent efficiencies of those systems.

Developing and implementing an efficient MRO parts storage strategy is the other major undertaking after - or while - addressing integration issues. For many maintenance operations, the "parts crib" concept has changed little from that employed a generation ago. In the past, the lack of systematic controls for MRO parts often necessitated a need for physical control. This physical control manifested itself in separate maintenance parts storage areas, often located in inconvenient, out-of-the-way locations. The drawbacks to this type of storage - slower access to parts, manual parts access control, paper-based check-in/out procedures, remoteness of service parts from the production line, etc. - have been well-known for some time. However, until the advent of systems-based storage and improved material handling and storage options, many operations didn't feel confident in changing their existing processes.

As previously stated, some level of systematic control of MRO stores is becoming commonplace. This greater level of systematic control, especially when

integrated to the master inventory and planning system, allows for a reduction in physical control and presents a wide variety of storage strategy options for consideration.

Should MRO parts be held in central stores, or near a production line, or even sometimes at a separate facility? The answers are as varied as the companies and conditions that manage those parts, and there are no "right" answers. For some companies such as Alcoa Primary Metals, eliminating individually managed satellite storage cribs and moving everything into central stores resulted in huge savings. Said one Alcoa worker: "It was amazing what came out of the woodwork. Someone brought in a cabinet with more than $38,000 of pumps and jacks in it."

For others, like Siemens VDO, installing vertical lift modules (VLMs) close to the point of use was a more efficient alternative. Said one Siemens leader: "The time required to retrieve MRO parts was reduced considerably. In addition, the small footprint of the VLMs opened up approximately 2,000 square feet of floor space."

Allowing consideration of new storage strategies is the most important factor in the development of an efficient MRO parts storage strategy. The question of where, how many, which parts and when to store them will almost certainly result in a final solution that is unique to each operation. Other storage strategies to consider are:

Storage alternative considerations must include the above points, which are only a few of many MRO parts storage strategies. However, as stated earlier, there is no "right answer," and every operation will have a unique set of variables that leads to a storage strategy that is best for them. Understand it's not the final answer, but the process of questioning current norms, that results in fundamental improvement.


Bar-code tags and readers are becoming more widely used in MRO stores.

No discussion of parts storage would be complete without some discussion of automated identification technology. While common in distribution operations for years, the use of automated ID in MRO - tied mainly to the use of CMMS - is only now beginning to increase. While a standalone maintenance system (particularly a smaller one) may function well with manual entry and tracking of parts, integration with manufacturing and distribution parts storage systems will almost certainly warrant the investment in and use of some form of automated ID technology. The discussion that follows covers the three most common automated ID technologies: bar coding, radio frequency identification (RFID) and voice activation.

Bar coding: A bar code is an array of parallel bars and spaces arranged according to a particular symbology that allows automated scanning devices to read them. In use for almost three decades, bar codes are now familiar and commonplace in distribution and retail operations. However, only in recent years have maintenance organizations begun aggressively implementing bar code control over MRO stores. When combined with a systematic storage process, the use of bar codes can virtually eliminate misidentified parts and the selection of incorrect parts, and greatly increase the efficiency of reusable parts and equipment tracking. Automated bar code tracking is a baseline enabler of systematic ID tracking and is a prerequisite for any effective MRO storage strategy. Organizations not currently using bar codes for MRO stores should investigate their use in the near future.

RFID: This is an automated identification and data collection technology that uses radio frequency waves to transfer data between a reader (interrogator) and items that have affixed tags (transponders). Unlike bar codes, which are familiar and well known to most people, RFID is still in limited use in industry, and even more so in maintenance operations. RFID is similar to bar coding in many aspects, as both use tags or labels affixed to the part for identification, and both use special readers to read the tag and/or label data. The major difference in the two is that RFID uses radio waves to read the tag data, where bar code readers use light waves (laser scanners).

While still in early adoption, RFID offers several distinct advantages over traditional bar coding, including:

Many companies have piloted RFID programs, and an increasing number are actively using RFID technology in MRO. Some areas of documented savings include:

All maintenance organizations, even those currently without system control, should investigate the use of RFID in both their MRO parts stores and directly on service equipment. The current rapid adoption of RFID in industry may soon allow it to overtake bar codes as the new industry standard for automatic part identification.

Voice activation: This technology is not new to industry, and has been evolving since the introduction of basic speech recognition more than 20 years ago. Speech recognition is common today, and voice-directed menu options are common in areas such as phone information systems, office directories, etc. It's now possible to use voice automation to transact work that once required a paper printout, bar code or RFID scanning. As the technology has matured and begun to deliver on earlier projected benefits such as multilingual transactions, low user training costs and highly efficient task transaction completion, the adoption rate of voice activation in production and distribution has grown steadily in recent years. With this increased adoption rate, the technology is being accepted more readily and vendors are beginning to offer voice as a value-added solution to improve operational performance. While currently more limited in application than bar coding or RFID, voice activation may be an option for some maintenance operations.

Generally, for most maintenance operations, the use of bar codes for MRO parts storage and tracking will be sufficient to greatly increase the ease of access to parts while increasing the accuracy of parts storage. RFID technology, while very much in the forefront recently, is still most applicable to high-dollar parts and equipment for security purposes, and for reusable equipment where the RFID tag on the equipment holds the usage and/or service history. Although rare today, with its promised ability to allow service personnel to convey complex queries directly to the MRO system, voice activation may eventually be common in maintenance transactions.

The last topic discussed is the physical equipment used for MRO parts storage. Parts storage equipment can generally be broken down into two main categories: man to part, and part to man. The first category, man to part, will be most familiar to MRO personnel. It consists of storage standbys like pallet racks, shelving and bin storage. With the advent of system-directed storage, and particularly when integrating with production and distribution storage, part-to-man systems such as horizontal and vertical carousels, and automated storage and retrieval systems (AS/RS) become viable and may offer significant improvement in parts storage efficiency.

Man-to-part storage: These systems are the mainstay of MRO parts storage. Initially cheaper than automated part- to-man storage, they can provide dense part storage and are the easier of the two types to manage manually. On the down side, this type of storage (by itself) does not provide part check-in/out control and inventory tracking, which can lead to lower inventory storage accuracy. The three major types of man-to-part storage are described below:

Part-to-man storage: Automated part-to-man storage devices offer several advantages over standard man-to-part methods. Controlled access to the devices provides more part protection and security. Check-in/out processes aid in access supervision and tracking. And, the ease of access to a greater vertical dimension often results in more effective storage density per square foot of floor space.

The obvious disadvantage of part- to-man systems is their much higher initial investment cost. Automated storage systems are also more difficult to reconfigure than more traditional storage methods, and have an on-going maintenance cost associated to their use. (For many, the need to expend MRO time and resources in the upkeep of devices used to store parts is not an ideal situation.) However, regardless of configurability and upkeep concerns, the high initial cost of these systems has been most responsible for the relatively low numbers of automated storage equipment in use for MRO stores.

With the advent of integrated systems, and the resulting ability to combine MRO stores with production and inventory stores, this investment cost is not specific to maintenance and can be spread across other department budgets. The ability to spread investment costs across departments has resulted in an increase in the use of automated storage systems and warrants their inclusion in any discussion of planned MRO storage. A few of the major automated part-to-man systems are described below.

Continually changing business pressures are forcing MRO departments to review their operational processes and find ways to run leaner, faster and more efficient than ever before. Without the integration of maintenance systems to purchasing, manufacturing and planning, any optimization of maintenance strategy will be suboptimal and will often result in a net loss in overall organization efficiency.

After integration, the next topic is to address parts storage strategy and equipment. Efficient storage principles, such as storing pre-kitted parts and storing parts close to the point of use, can greatly improve MRO performance. The parts storage equipment that best fits with the overall storage strategy of the organization can then be selected, and often can be leveraged by manufacturing and distribution as well as maintenance. The sharing of storage equipment often results in the ability to justify storage automation, which can lead to efficiency gains not only in maintenance, but also across the organization.

Mark A. Lewis is the director of logistics solutions for Oracle Corporation. For more information, e-mail mark.a.lewis@oracle.com or visit www.oracle.com.


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