Best Practices for MRO Storerooms

Without the right parts, materials, and tools, keeping your assets and equipment up and running is impossible.

And the first step to ensuring you have what you need right when you need it is to follow best practices for your MRO storeroom.

What is an efficient MRO storeroom?

The MRO storeroom is where you keep all of your organization’s inventory for maintaining operations. It’s how you manage your investments in inventory. A successful MRO storeroom helps you reach your overall goals and objectives, more uptime and less unscheduled downtime.

What are the signs of an efficient MRO storeroom?

Are you:

• Ensuring your parts are physically safe and secure?
• Running your MRO storeroom at the same time as production?
• Ensuring only store parts and equipment related to a specific asset are checked out, except for free stock and operating supplies?
• Tracking metrics and KPIs for costs, the value of storeroom items, and stock-outs?

When you have a solid foundation of best practices and procedures, you reap the benefits of always having what you need when you need it, keeping assets and equipment up and running for as long as possible for the smallest amounts of time, effort, and money.

Why do organizations under-appreciate MRO inventory?

MRO inventory never makes its way into the final products, so managers across the organization tend to not see it as contributing to the bottom line. However, they’re failing to see MRO as an investment with a definable return. MRO storerooms can minimize production costs by:

• Helping your assets run smoothly
• Increasing safety for your workers
• Decreasing unscheduled downtime

For example, if a mission-critical piece of equipment breaks down, you need to get the required parts to fix the problem as soon as possible. If you don’t optimize your storeroom, your tech may have trouble locating the necessary parts, leading to costly delays. But if you optimize your storeroom, your tech knows exactly where to find the parts they need, keeping downtime to a minimum.

What are some of the other names for MRO inventory?

Now that we know what they are and why they’re important, let’s quickly remove any possible confusion by looking at a few other names for MRO inventory, including:

• Consumables
• Indirect materials
• Industrial equipment
• Plant upkeep supplies
• Maintenance, repair, and operation items

It’s important to know that the word “items” and “supplies” can be interchangeable, and all these terms can be seen both ways.

What should you include in MRO management?

here are five main areas of MRO that you need to carefully control.

Measurements

Just like that old gem in business, if you can’t measure it, you can’t manage it. The more you can measure, the more you can solve. Look for:

• Stock-outs, which is when you don’t have the parts or materials you need
• Cost of parts, which is how much you’re spending on parts and materials
• Vendor competency, which is vendor performance, including quality and timeliness

If you find that you’re spending a lot on a specific type of part when historically, you weren’t ordering as many, you can ask the tech that works on the equipment that requires those parts to determine if there’s something wrong. Then, if needed, you can provide the proper training to minimize the amount of that part so you can lower your costs.

In many ways, this is where you lay the groundwork for future success. Once you have data you can trust, you can use it to ensure you get the parts and materials the team needs.

Personnel

A good practice for managing personnel in your MRO storeroom is to start by simply ensuring everyone is on the same page. If there are rules, print them out and post them. If there are problems, address them as a team. Consistency is key.

This can be especially important with schedules for different shifts. To keep everything streamlined, you need everyone trained to the same standards with a clear understanding of assigned roles. You can use RACI (Responsible, Accountable, Consulted, and Informed) to help define roles further.

Standard operating procedures

The maintenance team needs to be consistent, pushing to do all the same work the same ways. Everyone needs to use the same parts and materials the same ways.

This is a managerial responsibility. Make sure all employees are task-qualified as soon as they’re brought on. Every technician’s records should include a list of their current qualifications and estimated times for future training and skills upgrading.

Although the old system of master and apprentice still works, you can standardize and streamline the process by building out instructions for your most common inspections and tasks and then storing them in your EAM software, where new techs can easily access them.

Technology

Using technology to maintain MRO storerooms helps improve efficiency. One tech trend many organizations are adding to their storerooms is vending machines that stock and dispense tools and materials as needed.

Not only do these vending machines make it easier and faster for your team to acquire necessary tools, but it allows for more accurate counts, increasing overall accountability.

These vending machines let you directly see your inventory, and you can even control who has access to certain parts using access codes.

What should you know if you’re an MRO storeroom manager?

An MRO storeroom manager has to show effective leadership skills to run the storeroom successfully. Here are another few key traits an MRO storeroom manager must have.

Staying on top of KPIs

An MRO storeroom manager tracks the right KPIs and monitors them to see which are performing well and which are lagging. This used to be challenging, but modern EAM software helps you track your KPIs easily, so you can access the data from your computer, tablet, or smartphone. Robust reporting features also help managers.

Using technology to organize

This includes the use of tags like RFID tags, EAM software, and handheld devices. Managers use these to manage the MRO storeroom easily and make it easier for the employees to understand and carry out their tasks. Additionally, you can consider adding vending machines that stock and dispense parts and tools. They significantly improve the security of your tools and materials and help your team get their work orders done faster.

Some vending machines even allow you to create sets of tools for specific tasks. The machine dispenses a package of all the tools required to complete a PM if you set it up to do so. Vending machines make it easier for everyone to do their jobs faster and with higher accuracy while also minimizing the amount of lost or stolen materials.

Prioritizing security

Security of the storeroom always needs to be a top priority. You can’t afford to have theft occur in your storeroom and you certainly don’t want to lose critical parts and materials. Managers must find the right balance between making everything accessible so techs can quickly get what they need and keeping everything under lock and key to prevent shrinkage.

Utilizing vendor support

The relationship between vendors and storeroom managers have evolved over the years, and now in some cases, vendors control what they send and when. Instead of the manager tracking use and sending in orders, everything is done by the vendor. Because these relationships can become complex, you need to make sure you have the right one for your specific situation. In many cases, you pick and choose the parts and materials you want the vendors to control, leaving less critical supplies under the older systems.

What are best practices for MRO?

So now that you know what to expect in terms of MRO storeroom management, let’s take a look at what good and bad MRO storeroom practices look like.

Keep your parts organized, so they’re faster to find to minimize downtime. If you can’t find a part that you have listed as “available,” you need to better organize your storeroom by keeping your more expensive items more secure.

You can increase your level of organization by keeping high-use items closer to the front of the storeroom, so they’re faster to grab when needed. However, always ensure you know what part is assigned to each work order so you can track where they go.

Assigning parts correctly

Make sure all assets that are checked out are assigned to a work order. Avoid blanket orders because it’s harder to track which parts are being used, and if you see any parts that are checked out without being attached to a work order, investigate immediately.

Cleaning well and often

Fairly self-explanatory— keep the storeroom clean so it’s easy to navigate, minimizes safety risks, looks better to people who come in to inspect or just find a part, and makes finding items easier.

Sorting by traffic

Ensure your parts are ready and available immediately and that your team has easy access to them and knows where to find them. You don’t want your tech asking you where to find a missing part when a critical piece of equipment is down.

Additionally, prioritize your faster parts. Place your faster parts in the front so your team has easy access to them, and then keep the slower ones in the back.

Securing as much as possible

You have to make sure you properly secure the storeroom. Consider getting a keycard to lock doors or an alarm system to tell you when a door is left open, so others don’t come in when you’re out.

Securing your storeroom is always a priority, but your kitting area should always be separated from the storeroom and equally secure. Ensure all parts in the kitting area are assigned to a work order, and check that your kitting site is always organized and clean.

Completing regular walkthroughs

Doing a weekly walkthrough of your MRO storeroom to visually inspect what’s going on can alert you to things that you otherwise wouldn’t be able to see by just looking at metrics.

Select a few parts, check the numbers, and compare them against your current records. What you discover can give you an idea of how accurate your numbers are, helping you find discrepancies early.

Controlling the indoor climate

Ensure your assets are climate controlled and have adequately conditioned air in terms of humidity and temperature. Make sure the temperature and atmosphere in the storeroom is comfortable and matches any specific requirements for safe and long-term storage.

Limiting the stock

All your parts have to be tracked to reduce loss. You have to know where each part is, where it’s going, how it’s used, and who has access to it. There should be no free stock items at all, no matter how simple and small.

Completing cycle counts

Monthly cycle counting helps you determine the whole count of the warehouse just by counting several items in different areas within the MRO storeroom. This way, you save time by not having to count the entire storeroom.

Keep in mind that when you do your count, make sure you’re counting correctly. For example, you count nails by the box, not by how many nails are in each individual box. But for larger inventory like motors, you count by each one.

Turning large parts

Because the vibrations from production floors can damage large equipment over time, make it a habit at least once a month to turn your large motors regularly to avoid damage. Equipment that has high horsepower motor shafts needs to be turned at least 1 ¼ turns monthly.

Additionally, some large bearings have a similar requirement. Though they don’t need turning, you have to store them on a vibration pad to avoid damage from production floor vibrations.

What are some bad MRO practices?

So, now that you know some good practices for MRO storerooms, let’s look at the bad, so you know what to avoid.

Ordering too much

If you see that you’re ordering the same parts for the same equipment repeatedly, look into the reason behind it. If it shows that the item in question is already in your inventory, you need to step up your inventory management because something is lacking.

Not assigning parts

If you have bad storeroom practices, you’ll have unassigned parts that aren’t checked out to a specific work order. Parts have to be checked out for a work order no matter what. This way, you can monitor the process of where the part is going, what it’s being used for, and when it’ll return.

Lacking a return-to-stock process

Similarly, you have bad storeroom practices if you return a part, but your parts have no return process. Your parts have to have a return process in place so you can know where they were, especially when taking them to the production floor can cause damage to parts.

Not kitting for scheduled work

Your kitting area has to be clean, organized, and secure at all times. If you have no work schedule for what is supposed to be in the kitting area, it’ll be hard to know what is set aside for the next day.

With good MRO storeroom practices and rigorous leadership, your MRO manager can avoid these bad management practices.

Here are some of the other most common problems that occur when management isn’t as good as it should be.

• Scorecard isn’t being used
• Operating procedures are lacking
• Employees aren’t trained properly
• Employees are okay with complacency

Lacking a scorecard

You need a simple way of identifying if your organization is moving in the right direction, and that’s essentially what a scorecard does. If you don’t have one, it’s hard to see if you’re going in the right direction. Here are some MRO KPIs to include in your scorecard.

• Stockouts
• Expedited orders
• Value of inventory
• Individual item inventory turns
• Number of tagged parts per asset
• Percentage of parts with min/max/reorder points
• Total of maintenance costs and maintenance material costs

All these metrics are vital to track because they add to your total maintenance costs and give you an idea of where your organization is going.

For example, if you’re always seeing the same part for the same equipment ordered over and over again, you can look into the reason it’s happening. By solving issues you find, you reduce potential downtime and save costs by avoiding buying replacements that are unnecessary.

Allowing overall complacency

Sometimes best practices and new changes are met with disdain, and your team members may not be too happy about them. They may wait for the changes to fade away or change back to the original way of doing things. Don’t let this happen— make sure they all follow the correct, new demonstrated best practices.

Making unnecessary measurements

Simply put, sometimes KPIs are being tracked that hold little to no value. This wastes everyone’s time and makes things cluttered and less streamlined.

Lacking standard operating procedures

Obviously, you run into problems if you’re not following the standard operating procedures and guidelines that detail how to use the parts, materials, and equipment correctly. These issues are a waste of time, resources, and money. Stay proactive by being aware of and following basic, necessary procedures.

Failing to train staff

If members of your team don’t know the proper standard procedures, mistakes happen. Even just one employee not being aware of what to do risks the efficiency of equipment and production. If there is a demonstrated best practice, make sure they know and follow it perfectly.

What are the benefits of managing an MRO storeroom correctly?

When you manage your MRO storeroom to the best of you and your team’s abilities, you’ll reap the benefits.

Reducing waste

By having an organized and clean MRO storeroom, your parts are readily available for your team, which increases overall efficiency. This means less wasted time, labor, and parts.

Reducing overall costs and freight costs

Decreasing freight and overall costs generates more revenue because you’re keeping more of that money in your pocket that is usually spent on shipping costs.

For example, if you’re always expediting replacement parts because they go missing, not only are you having to pay for freight shipping in addition to your planned inventory shipments, you also have to spend more money on the replacement parts themselves. By keeping track of how and when your parts are used using a CMMS, you can prevent replacing those parts by understanding a problem is occurring and implementing a quick solution. Doing so means saving money on freight costs and the cost of replacement parts.

Reducing inventory carrying costs

These costs happen when you keep items in your storeroom, so if you’re minimizing the amount of inventory you have by reducing the amount of extra and unnecessary parts, you can get this cost down a bit lower.

Increasing usable space

By removing parts you don’t need, you’ll have so much more room to optimize your MRO storeroom, even more, opening up other opportunities for organization, processes, or additional products.

By streamlining your MRO storeroom and tracking the right KPIs, you’ll gain more benefits as time goes by and your organization grows.

How does the 6 S method eliminate MRO storeroom waste?

Here is how you can use the 6 S method to get rid of storeroom waste easily:

Sort
Get rid of equipment that is no longer in service.

Straighten
Use ABC analysis and check turnover rates and sort your parts accordingly.

Scrub
Keep your MRO storeroom clean, organized, and at the right temperature.

Standardize
Create a schedule for how you follow the 6 S’s and keep your standards high— don’t go for the cheapest materials or parts, buy from good, trusted vendors with high-quality products and that you know deliver their products on time.

Sustain
Keep innovating and bringing the processes that are working to other areas to make other areas more efficient.

Security
As mentioned before, keep your storeroom secure using high-tech locks, security systems, and cameras.

By following these steps, you’ll reduce the amount of waste in your MRO storeroom and minimize cost and loss.

What are MRO KPIs you can improve with an EAM?

EAM software helps managers store, track, and locate data easily, which is essential when tracking KPIs. There are a few KPIs that are vital for MRO managers to track.

Inventory turnover rate

It’s important to know if your inventory turnover rate is increasing or decreasing on a monthly basis. An EAM can help you see which direction your turnover rate is going by capturing accurate data and storing it in the cloud, so the data is always up-to-date.

If it’s rising, be aware that there may be a problem with an asset, either an employee, a part, or a piece of equipment. You can use these measurements to make future decisions and help you not spend money on unnecessary items.

Stock-out items

This is how you find there are missing parts and shows what parts are in the reserve stock. This should be around 5%. Anything else means you need to up your security or order more of a particular part.

EAM software can tell you when you’re running low on parts and materials, so you can order more parts when alerted. An EAM also helps you get to the bottom of why you’re missing parts faster by alerting you in real-time when you’re low.

Inaccurate inventory

Should be as accurate as 95%, anything lower needs to be immediately addressed to avoid loss of time and costs. An EAM updates regularly and across all departments, so when you implement an EAM, you always have up-to-date, accurate data, which helps you avoid any inaccuracies in your inventory.

Your techs can update the data in one place, and those changes are available to all who have access to the data, which minimizes miscommunication, unlike traditional and outdated paper or spreadsheets.

Percentage of parts assigned to assets

This should be 100% (except for free stock items) because all assets must be assigned to a work order. An EAM helps you track where, how, and when all your assets are used, including what work order they’re assigned to.

Additionally, an EAM helps you assign the work orders and allows your techs to access what work orders are assigned to them. Having clear access to the location of parts minimizes the chance of losing your materials by tracking where they are and who has access to them in real-time.

Amount of expedited parts

Needs to be as low as possible. If it’s too high, there are probably underlying problems. Getting to the bottom of what’s causing you to constantly expedite parts can save you a lot of money. Because you can see what part was assigned to each task when using an EAM, you can easily track down who had access to the part last, where it was, and how it was used.

This helps you find the root of the problem quickly, saving you time and money by not having the problem recur and not expediting replacement parts constantly.

Emergency purchases

Again, this should be limited as much as possible. Emergency purchases cover overnight deliveries, replacement parts or equipment, or expedited parts. EAM software automates your inventory ordering process, so there’s less of a chance a part is not ordered due to human error. When data is updated across the board using an EAM, data is more accurate, as are your purchases, so you’re less likely to have to expedite parts or materials.

Backorders

A low rate of back-ordered items means your vendors are working in sync with your organization and your goals. Ensure you have contracts with trusted vendors. This metric should be as low as 5%.

An EAM  helps you have all your vendor information all in one place, so you can check the metrics of any vendor with ease.

Inactive stock

By measuring this metric, you can determine which stock hasn’t been touched in months or years and determine any reductions in working capital you can gain.  An EAM makes it easy to check these numbers, so you don’t have to manually go back in spreadsheets to find old data or dig through cabinets of old files to find the last time the inventory was used or when it was purchased.

How does an EAM improve your MRO storeroom?

By using EAM software to maintain your MRO storeroom, you cut down on the amount of work you have to do. EAM software not only helps you automate ordering parts and materials but also automates invoicing. It also gives you reports that show exactly how your storeroom inventory is being used, by who, when, and with what work order. This way, you can see where and how your budget is being spent.

All your data is synced directly with the cloud so you and those with the right permissions can access, change and update information as needed with no miscommunication or lost data. By using the cloud, you won’t have to worry about losing a spreadsheet with critical information or a spreadsheet giving out-of-date data to a technician.

By streamlining your invoicing, reporting, ordering, and maintenance, you won’t have to work as hard while still using the best practices for your MRO storeroom.

Next steps

Sign up for a free demo today to see how ManagerPlus can help you reduce your costs and manage your business’s inventory more efficiently.

CEO summary

EAM software solutions help maintenance departments keep critical assets online for less money by streamlining processes, capturing and leveraging reliable data, and tracking KPIs. EAM software improves our storeroom and production efficiency and organization and minimizes both planned and unplanned downtime, so you’re less at risk of wasting time and money. Implementing an EAM ensures you always use the best MRO storeroom practices.

Using an EAM saves you from over-ordering, ordering replacements, and minimizes the chances of theft by tracking all your parts and materials. By tracking all your parts across all departments, you won’t lose money on missing assets. Unlike older management systems, a modern EAM solution lives in the cloud, ensuring everyone has access to up-to-date data.