How to Justify an Inventory Clerk

 
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I learned how critical an inventory clerk is to the success of a maintenance department while performing inventory walkdowns for a major food manufacturer in Ohio back in 2005. I have always had a love for inventory but my love for it grew even stronger after this experience.

What is an inventory walkdown? An inventory walkdown is the process of collecting the following information for every part in a maintenance storeroom:

  • Cost

  • Description

  • Equipment (where used)

  • Manufacturer Part No.

  • Model No.

  • OEM?

  • Part No.

    • Current

    • New (if applicable)

  • Quantity

  • Specifications

  • Stock Location

  • Type

  • Vendor Item No.

This ensures that all parts are accounted for and accurately reflected in a company’s CMMS. Let me take a step back - it’s really the attempt to collect this information because most of the time, the information is not readily available because a part may be old or obsolete, it may NOT be in its original packaging, and sometimes, the entire maintenance team doesn’t even know what the part is. For the identifiable parts, after parts data has been collected, it’s then verified and uploaded to the company’s CMMS.

What did I learn while walking down parts? Well, 1st of all, an inventory walkdown is a time-consuming process and I spent the whole summer in the storeroom. During this time, I saw lots of things and asked lots of questions. The 1st thing that I saw, repeatedly, and what bothered me most, was that maintenance technicians (MTs) were constantly looking for parts. First thing in the morning, I would see an MT search for a part by opening and closing multiple drawers and if a part wasn’t found, it was on to opening and closing multiple cabinets. Later on, Michael Pratt, Maintenance Manager of SROriginal Desserts, taught me that the jargon for the process of opening and closing drawers and cabinets to find a part is called “parts surfing”. Parts surfing sounds cool, but it has no place in a maintenance storeroom. If I ran a storeroom, I would put up a sign that said,

“Parts Surfing Not Allowed. See Me if the Need Arises.”

And it didn’t stop there. I saw parts surfing repeated over and over again throughout the day. I then asked the MTs how much time they spend, on average, looking for a part. They said, “Thirty minutes per part but sometimes it takes days!”

I was flabbergasted and I immediately calculated the cost of not having an inventory clerk.

  • Average No. of Parts Needed / Day: 5

  • Average No. of Minutes Spent Looking for a Part: 30

  • Plant Hours: 24 / 5

  • Average No. of MTs / Day for 3 Shifts: 10

  • MT Standard Labor Cost: $25 / Hour

  • Average No. of Days / Year that a 24 / 5 Plant Runs: 260

(5 Parts / Day) x (0.5 Hours / Part) x (10 MTs) x ($25 / Hour) x (260 Days / Year) = $162,500 / Year

Not only is this a complete waste of money and an MT’s time, what if a critical machine is down? What if a part that was needed couldn’t be used simply because it could not be found yet it actually existed somewhere in the storeroom? The bottom line is that the cost of parts surfing is insignificant compared to the cost of production downtime.

I then had another inventory walkdown assignment at a food manufacturing plant in Georgia. And guess what? The same thing was going on there. Once again, I was flabbergasted and told the maintenance manager that I had an idea to develop cost justification for an inventory clerk. Because he was struggling to justify an inventory clerk himself, he wouldn’t let me leave the plant after finishing the assignment without creating and giving him a copy of it. So back to my hotel room I went. I then created an inventory clerk justification spreadsheet and gave it to the maintenance manager before I left. Not only did I address the time wasted on parts surfing, I also addressed some of the other factors detrimental to a plant when they don’t have available, organized, and easy-to-find parts simply because they don’t understand the value of investing in an inventory clerk. The factors that I included in my spreadsheet follow:

  • Annual Obsolete Parts Holding Cost

  • Annual Part Search Opportunity Cost

  • Annual Unknown Equipment Spare Parts List Cost & Opportunity Cost

  • Annual Maintenance Technician Purchasing Cost & Opportunity Cost

  • Annual Unkitted Work Order Parts Cost & Opportunity Cost

  • Annual Part Expediting Cost

  • Annual Parts-Related Downtime Cost

  • Annual Unmanaged Inventory Cost

  • Annual Unmanaged Inventory Processes Cost

  • Unnegotiated Lower Pricing Vendor Agreements Opportunity Cost

  • Annual Vendor Non-Conformance Cost

So, please, I beg of you, if you don’t have an inventory clerk, please click here and use my spreadsheet to justify one to not only make everyone’s life easier in your maintenance department, but to save your plant time and money and increase bottom-line profits. And guess what? After you complete the spreadsheet, it’s typical to see a payback period of an inventory clerk of less than one month!

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About CMMS Data Group

Founded in 2000 to help organizations achieve maintenance excellence, CMMS Data Group is the market leader in CMMS software and services. Led by the award-winning MVP Plant™ CMMS software, the Company also provides comprehensive reliability engineering services, enabling maintenance and facilities teams to increase reliability, capacity, productivity, and profitability.