If the mission of Materials Management is to provide “the right parts, in the right quantity, to the right place, at the right time, with the right level of quality, and at the least total cost to the organization”, then what part does the storeroom play in achieving that goal? To help answer that question, let’s first look at the three main aspects of Materials Management: Acquisition, Control and Movement.
The requisition of materials is generally triggered by a Planner, who determines the specific material needs (items, quantities, and required dates) for each Work Order. The Acquisition of this material is accomplished through Procurement, which has the responsibility for ordering exactly what the customer wants (“right part, right quantity”) from an approved vendor who will provide parts that meet prescribed specifications (“right quality”), often at the lowest price (“least total cost”).
After the required parts are delivered, the Stores organization assumes responsibility for the proper handling and Control of those items in the receiving/warehouse area(s) until they’re needed in the field, at which point Logistics arranges the Movement of the material to its final destination (“right place”) just when needed (“right time”). Doesn’t sound like Stores has much of an impact on achieving the mission, does it? After all, they’re just the middleman between Procurement and Logistics, right?
But don’t be fooled. First of all (as a lot of you are probably already thinking) in many organizations, material Movement is done by Storeroom personnel, which means that “Logistics” is really “Stores.” Second, the very fact that Stores is embedded in the middle of the material flow means they can potentially impact every one of the elements of the mission.
Storekeepers can pull the wrong items or have inventory mixed in the bins. They can mistake stocking denominations (e.g. pairs vs. pieces). They can deliver material too soon or too late, or to the wrong drop zone. They can miss obvious problems with incoming parts, or even introduce defects into otherwise good material through improper handling. To achieve the overall mission, everyone needs to fulfill their roles and execute their responsibilities consistently and accurately.
When we talk about roles and responsibilities though, we’re focusing on the human part of the operation. There’s no question that Materials Management relies heavily on processes, which are supported by transactions, which are performed by people. But there’s another aspect of Materials Management often downplayed or even overlooked, and that’s the storeroom itself.
The storeroom doesn’t have a mission per se, but it certainly has a purpose, which is to house materials in a safe, clean, secure and organized environment. For many of our clients, these adjectives simply don’t apply. But they should, and that’s part of the problem. You can have the best people and the best processes, but without a well-controlled and well-managed storeroom, you’ll experience inefficiencies and other potential pitfalls that will hamper your ability to achieve the overall mission of Materials Management. Let’s examine some of the situations we run into and give a few examples to illustrate the point.
One of the fundamental challenges we find is the condition of the storeroom facility itself. Many times the “warehouse” is nothing more than a building that was recently cleaned out or even abandoned. Maybe it started innocently as simply a place to store overflow materials. It may never have been intended to be a functional storeroom. There may be holes in the roof, broken windows, missing doors, poor lighting, and faulty or nonexistent heating, air conditioning or humidity controls. Storing materials in these conditions isn’t a whole lot better than just leaving them completely unprotected out in the open environment. Dust, dirt, corrosion and other factors can degrade the quality of the materials to the point where they are at best compromised, and at worst totally unusable.
Just because space is available somewhere doesn’t mean it’s a great idea to utilize it for stocking material. Having too great a distance between the storeroom and where parts are needed can introduce inherent delays due to excessive travel time for Stores/Logistics personnel and highly paid craftsmen, not to mention the opportunity for materials to get lost or damaged in transit.
If anyone can get into your storeroom whenever they want, then you probably don’t have the necessary Controls in place to ensure that materials are properly handled, effectively managed and accurately checked out. This can cause avoidable stockouts (“right quantity”), which in turn can lead to expensive, expedited Acquisition, and unnecessary delays in completing critical maintenance work. All of these result in significantly increased costs to the organization.
The physical layout of the warehouse may introduce more potential inefficiencies into the Materials Management operation than anything else. The first question to ask yourself is, “Is my storeroom set up for optimal material flow?” That involves several considerations:
- Does material move quickly between areas (i.e. from the Receiving dock to Incoming Inspection to Stores to Kitting to Shipping)?
- Does material move efficiently within each individual area? In other words, is there adequate aisle space for people and handling equipment; are there a lot of dead ends; have obstacles been removed?
As a case in point, take a look at figure 1 below, which represents the floor plan of the central warehouse at one of our client sites. Note the path required to move materials between the Receiving dock at the front right of the building, and the mechanical/electrical stores area in the back left corner.
This is a large building, with lots of available floor space, which is convenient. However, the size and layout also creates excessive travel time which I hope we all recognize as one of the “Seven Wastes.”
If the path of your material looks like this:
or even this:
then you probably have a reasonably efficient setup.
However, if it looks more like this:
then you might want to investigate some options that will improve the flow. This will make your storeroom personnel more efficient and more productive, which will allow them to get more done in the same amount of time.
We just talked about the physical layout of the storeroom, but what about the “logical layout” of the bins? Most people naturally gravitate to some form of the traditional alpha-numeric row-rack-shelf system (such as A-1-A or 01A01). Unfortunately, we’ve seen many examples where this seemingly straightforward method doesn’t quite work as well as it should. It’s not uncommon to see Rows A and B over here and Rows C and D over there; or racks numbered out of sequence; or even large gaps in the row, rack, or shelf designations (e.g. rows numbered 1, 2, 9, 10) that leave you wondering what happened to the rest.
Way too many people use generic bins, like “Floor,” “Outside,” “Boneyard,” or “Mezzanine.” While these narrow the location down to a general area, they often result in a random search of that area to find a specific item. We’ve also seen bin locations called “Gone,” “Obsolete,” and “No Bin” that have inventory on hand – somewhere. They’re usually temporary designations for material that actually exists, but how do you find it when you need to? My personal favorite of all time is “Bob.” To this day, no one – not even Bob, God rest his soul – knows where this is, but there’s supposedly something there!
Standardization is also a frequent issue. One bin identification scheme might be used in the main storeroom, while another is used in the satellites; or different schemes are used in different parts of the same storeroom. It’s usually not a big problem, but it can be a time waster, especially for new employees trying to get accustomed to the layout, and even minor delays can add up. Consistency is important. If rows are numbered from left to right in one section of one storeroom, then they should be done that way in every section of every storeroom. If racks are numbered from bottom to top in one place, then they should be from bottom to top everywhere. If slots go from front to back in one drawer, they should go that way in every drawer. You get the idea.
To be fair, few storerooms are ever intentionally designed with puzzling identification schemes. It happens over time, generally as a result of limited space, wholesale relocation of material or lack of resources to make mass changes in the system when storage media are rearranged. Regardless of the root cause though, the impact is the same: confusion, if not chaos.
I can walk into almost any Home Depot in the country, and as long as I don’t get distracted by a greeter trying to hand me coupons, I can get myself oriented pretty quickly by just standing in the entrance area and looking at the aisle markers. My main objective is to get in, get what I need, and get out as quickly as possible. I don’t like to waste my time, and browsing in a store like that can get expensive!
Obviously, your storeroom isn’t a Home Depot, although we’ve seen many that are stocked just like one! Hopefully, if someone needs something, they’ve taken the time to look up the part number, check the on-hand inventory, and identify the specific bin location that it’s supposed to be in, rather than just meandering around like a blind squirrel looking for a nut. Even so, finding the location can be a challenge. Some storerooms are almost as big as Home Depot or may be laid out like the example above. Providing large visible signage to guide people around can be a helpful tool. It may be as simple as row identifiers (“A,” “B,” “C,” etc.). It may be arrows pointing to specific sections of the storeroom (e.g. “Free Issue,” “Consignment,” or “VMI), or as in the case of Home Depot, the types of materials stored in each area (e.g. “Chemicals,” ”Motors,” “Fittings” and so on).
Another great tool, especially for occasional visitors, is a map of the storeroom that shows where each bin location is. Although it’s a little difficult to read, Figure 2 below shows an example from another client who posted a large, legible copy inside each of the storeroom entrances.
If you look closely, you’ll see that the map indicates where each type of material is located. It also provides a key to explain the bin numbering system, as well as the specific location for each bin. If you know what bin you’re looking for, a quick reference to this map will direct you to where you need to go.
Your storekeepers are the ones who spend the most time in the storeroom, and after a month, or a year, or 25 years, not only do they know their way around, they probably know where every item is, how many are on the shelf, and how long they’ve been there. But your veterans won’t be around forever, and you should be thinking in terms of making it easy on the next generation. It shouldn’t take a new storekeeper – or for that matter any other person who’s never been in the storeroom before – more than about five minutes to get oriented so they can find their way around easily.
Don’t forget that although hopefully rare, there will almost certainly be those occasions when a Craftsman, Supervisor, Security Guard, or other authorized person needs to get material on an emergency basis when the storeroom is unmanned. The ability to respond promptly to these situations often depends on how quickly they can find the required part. The longer they spend in the storeroom, the more likely it is that they will take something and forget to check it out; or remove a part from one bin and put it back somewhere else, or just waste their time. The combination of a well-designed and organized physical layout, an intelligent and consistent logical layout, and effective visual management tools will significantly improve the productivity of your storeroom personnel and others that need to access the storeroom to get materials.
A lesser but still important aspect of visual management involves the incorporation of dedicated areas into the warehouse layout for things like:
- Incoming Inspection/Quarantined Material
- Returns to Suppliers
- Returns to Inventory
- Repairable Spares
The basic premise is that if there’s material in one of these areas, the warehouse personnel will notice it and realize that something needs to be done with it. If the areas are empty, then that indicates there’s no action required. Although this may seem like a potential waste of valuable space, it is helpful to have separate areas for each type of material, so that it’s readily apparent what – if anything – needs to be dealt with, and specifically what needs to be done with it. Some people will claim that this system requires too much space, but the opposite is often the case. This type of visual management system keeps different types of material from getting intermingled, and also allows it to get processed and dispatched faster, which means there is less stuff sitting around taking up valuable space.
Speaking of valuable space, one of the most common laments we hear from warehouse managers and storeroom personnel is, “We’re out of room!” Sure enough, we often see pallets in the aisles; racks crammed to capacity (or beyond); shelves buckling under weights they were never designed to support; bins overflowing; and material crammed into corners and cabinets. After every available square inch is occupied, parts get scattered elsewhere throughout the site, which appears to lend credence to the claim. Unfortunately, all it really does is exacerbate the problem and mask the underlying issues.
Frequently, “lack of space” is a perception rather than reality, and has nothing to do with space at all. What it really involves is inventory Control or lack thereof. Before worrying about being out of the room, focus instead on utilizing existing space effectively. First, throw out the trash. Then get rid of all the non-stock stuff, like files and Christmas decorations. Next, identify and dispose of your obsolete parts. Finally, review your min/max levels to make sure you’re keeping the right amount of stock on hand. Adjust the stocking parameters as necessary, and reduce any excess inventory through usage, sale, or even scrapping if appropriate. Remember that depending on your carrying costs and expected usage, it may be cheaper to throw stuff out or pay a restocking fee than to keep it!
Once you’ve done all that, see if you still have a problem. I bet you won’t; but if you do, then you can try to find additional space elsewhere (suitable for proper Control of material) that can be used as satellite stores. Or you can consider other ways to optimize the area that you do have. For example, in some storerooms as much as 50% of the floor space is unused or taken up with aisles. Material handling equipment is available that operates with as little as half the normal aisle width, which can increase the available floor space by as much as 10-20%.
Transferring materials from traditional metal shelves to high-density cabinets can cut the footprint by as much as 50-60% for those parts. Also, there is often unused vertical space that can be accessed by double stacking cabinets, using high-lift equipment, installing mezzanines or carousels, or other methods.
If you choose this path, don’t take it by yourself. Get some advice from a manufacturer or local distributor of racking, shelving, and storage systems. They can suggest solutions that will help increase your available space and optimize your utilization. Many of them will even conduct an assessment and provide recommendations free of charge. Free is good, take advantage of it!
Another thing to consider is whether you’ve allocated the right type and amount of space for each individual item. Based on your reorder point and reorder quantity, you should be able to accurately predict what your maximum inventory level will be. Knowing the size of each part and the approximate dimensions of the packaging will allow you to translate that information into an accurate estimate of the space required to contain it. You can then determine if the item will fit in available cabinet space, or whether it would be better suited for a shelf or pallet rack. This information is critical when establishing new items, but is also helpful when consolidating inventory of the same part from multiple bins, or when relocating materials from one storeroom to another or one storage medium to another.
The key is to ensure that there is just enough space set aside for each part to maintain the anticipated inventory without having multiple items in a single bin, multiple bins for a single item, or too much-unused space. Some suppliers and manufacturers will perform this type of analysis as well (albeit probably not for free) and incorporate your stocking plans into their recommendations. In fact, some suppliers will even customize the configuration of high-density cabinet systems to accommodate the specific items and quantities that you plan to stock, and in some cases may even agree to do the initial stocking!
Last but not least, make sure all of your material handling equipment and supplies are maintained properly. We see people struggle with broken pallets; chronically weak batteries on electric forklifts; carts with wobbly wheels; hydraulic pallet jacks with leaky seals; and all kinds of other challenges that slow down the operation and frustrate storeroom employees. This stuff isn’t cheap, and neither is keeping it all in good working condition, but the alternative can be much more time-consuming and costly.
These situations don’t create themselves, and they don’t happen overnight. Obviously, people play an important role in every one of these areas, but it’s not always the people themselves that are the problem. Sometimes it’s just the decisions that some people make and that others have to live with. With sound strategic planning and effective tactical execution, many of these pitfalls can be avoided. At the very least, they don’t have to be perpetuated. All of them can be fixed — some relatively quickly and inexpensively; some may take more time, money and other resources. Either way, if you don’t proactively manage your storeroom, your storeroom will eventually manage you!
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].