Should You Consider Using MRO Vending Machines?
By Doug Wallace, CPIM, Life Cycle Engineering
As I was cleaning out my shed last weekend, I looked around and thought to myself, “Where did all this stuff come from, and how much did it cost me?” The answer to the first part of that question is easy; I bought most of it from my local Ace Hardware Store, Lowe’s or Home Depot. The answer to the second part of the question is a lot harder. Frankly I have no idea how much I spent on all of it, but a reasonable estimate would be “lots.”
I paid particular interest to some of the things I have stored on the shelves: WD40, motor oil, caulk and other sealers, plumbing supplies, tape, and painting materials. The reason these particular items drew my attention is because I realized that I see the same ones at almost every client site I visit.
If you run an MRO storeroom, you probably stock a lot of these “consumables” and “supplies.” Like me, some MRO storeroom managers have no idea how much they spend on these materials. But whether you know or not, it’s still probably a lot. You also realize that these can be very popular items, and it can be difficult to keep up with the demand at times. Everyone jokes about being out of stock on “C” batteries at Christmas time, or knows a guy who seems to wear out a brand new pair of leather gloves every week.
But this isn’t a laughing matter. Stocking your own shed or garage from the company storeroom is outright theft, and should be dealt with strictly, even to the point of immediate dismissal. But even “innocent” abuse on the job site should not be tolerated. You need to know exactly who is using what, how many, how often, and in some cases even what for. Otherwise, it’s a free-for-all – literally – and don’t think people won’t take advantage of it!
You have to have at least some of this material available; in many cases it’s essential to completion of important work. So how do you effectively control the usage and associated spend of these items? In case you haven’t figured it out yet, simply maintaining huge inventories in an open storeroom or satellite(s) won’t do it. That may keep your customers happy, but your costs will be through the roof. Even stocking smaller quantities without the proper controls in place won’t work. Eventually you’ll see your MRP system kicking out requisition after requisition to keep replenishing the supply.
One way to manage consumables and supplies is to dispense them from vending machines. To be fair, the equipment itself isn’t cheap – as much as a couple thousand dollars for even a small one – and that doesn’t include the cost of associated data lines, wireless, and other supporting infrastructure. But don’t let that scare you; there are ways to lower your investment, and vending machines provide some valuable tracking mechanisms that can help you minimize your ongoing expenses as well.
A good starting strategy is to lease rather than buy. This reduces the initial cost and provides an opportunity to assess the benefits before making a long-term commitment. Some MRO suppliers will even subsidize the cost of the equipment and installation in exchange for increased business.
Vending machines can be set up to require swipe card access to obtain material, which allows usage to be tracked to the requester. Some vending machine software systems can be programmed to restrict access of certain materials to only authorized individuals. These features provide the capability to generate department-level reports that can be reviewed by area supervisors to ensure that materials are being issued to appropriate personnel for appropriate purposes.
A typical MRO vending machine strategically stocked with personal protection equipment (PPE), common consumables, and even small operating supplies such as cutting tools, grinding wheels, etc. can have almost an immediate positive impact, and can generate as much as a 20% reduction in usage in a short period of time. One of our clients reported more than $20,000 in material savings within 12 months of installing their first vending machine.
Aside from the lower spend, additional savings can be realized from a reduction in manual support systems such as requisitioning, receiving, stocking and issuing. In most cases, your material suppliers would manage the inventory for you, and by accessing real-time usage and inventory data remotely, they can initiate just-in-time replenishment processes to ensure a high level of supply service with minimal support from your internal personnel, processes or systems.
With a well-conceived strategy and an effective implementation, vending machines can minimize your material costs and keep your storeroom from becoming just another convenient – and cheap – do-it-yourself supply house.
Doug Wallace, CPIM, has more than 30 years of combined experience in supply chain operations and management consulting, specializing in the areas of global enterprise planning, production and inventory control, and materials management. As a Materials Management Subject Matter Expert for Life Cycle Engineering), his primary focus is on implementing best practices in procurement, warehouse operations, inventory optimization, and utilization of associated business and information systems. He can be reached at [email protected].
© Life Cycle Engineering, Inc.
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