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News

MRO product standardisation minimises stock without compromising performance

Buck & Hickman : 14 February, 2014  (Special Report)
Chris Gordon of Buck & Hickman describes how the process of purchasing and managing tools, maintenance, repair & overhaul (MRO) and health & safety products for manufacturing and process facilities can be a complicated one, requiring hundreds or even thousands of stock-keeping units to be available whenever and wherever they are needed on-site.
MRO product standardisation minimises stock without compromising performance
Significant amounts of cash can be tied up in slow-moving products, while there may be little thought given to whether these products are delivering optimal performance and value, with the same product simply reordered whenever stocks run low.
 
In a bid to simplify the process and reduce working capital, many companies have in recent years been taking a long, hard look at the process to see how it can be improved.
 
One of the areas where the greatest impact is consistently achieved is in ‘standardisation’ – minimising as far as possible the number of different brands and models of product used for the same task, while ensuring there is no compromise on performance, quality or safety.
 
Typically undertaken as part of an overall improvement initiative, standardisation can rapidly deliver a measurable commercial return.
 
How it works – a simple example
 
In one facility handling sensitive metals, glass is banned completely in one area of the factory because of its propensity to contaminate the products being manufactured. Because of the nature of the tasks being performed in this section, the risk of cuts to the hands had been assessed as the highest possible, meaning all operatives working there were required to wear safety gloves with the maximum Level 5 protection. After some searching, a glass-free glove offering the required protection was sourced, but this did not negate the contamination issue. Operatives working in other, less sensitive areas of the factory were still wearing around a dozen other types of gloves, many of them containing glass, but on occasion still had to enter the glass-free area, with the potential that they may forget to remove or change their gloves when they did so. And as many of the different glove types looked very similar, there was a real risk that an operative could inadvertently choose the wrong type.
 
The answer lay in standardising the gloves in use in the factory. An internal study revealed that the Level 5 glass-free gloves could be used throughout the factory without any impact on productivity while negating any risk of glass contamination. The estimated annual cost saving – based on zero waste due to glass contamination, reduced downtime, and fewer SKUs needing to be ordered and processed, exceeded £100,000.
 
The role of standardisation
 
It is not only in the area of safety where standardisation can play a role. Production consumables can be standardised for both operational and commercial gain, too. In the area of abrasive discs and belts, for example, it is not uncommon for companies to source and stock multiple grades of product to cope with all stages of the process from weld and burr removal to finer cosmetic finishing. Yet innovation in recent years has created abrasive products that not only reduce the number of process stages required (and therefore the number of different belts or discs needed) but last longer too. 
 
While the initial purchase price of these new items may exceed that of the existing products, the true value they can offer will only be appreciated through a study of whole life costs and, of course, trials under real operating conditions. Considered in these calculations must be factors such as a comparison of processing time, changeover time, and reject rates. Standardisation in this area will only work if the operatives using the new consumables buy into the process and are fully trained in getting the best out of them. Incorrect product choice by the operative, poor technique, and disposal of consumable products which may still have useful life in them – simply because they have always been changed at those intervals – will all conspire to ensure that any potential cost savings identified at the outset are not fully realised. Hand in hand with the standardisation of products, therefore, must go a process to standardise procedures to ensure maximum value is extracted from the change.
 
Delivering standardisation
 
How can the benefits of standardisation be delivered, in pressured production environments where the interests and motivators of different stakeholders in the process – financial directors, quality managers, purchasing teams, production managers, health & safety specifiers, and production operatives – may vary radically?
 
The initial opportunity for standardisation can be identified internally or externally by a consultant or supplier. An initial feasibility study should set targets for the project which are SMART - specific, measurable, attainable, relevant and time-bound objectives. Once these are agreed, with a documented projection of financial benefits, buy-in should be sought from key stakeholders such as the head of production and financial decision-makers, before the procurement team are involved.  The next stage is the establishment of an ‘integrated product team’ (IPT) who will agree timescales and location for the trial. The trial then takes place, with the IPT evaluating the results and then preparing a final evaluation against the original objectives and proposal for sign-off by all stakeholders. The full project is then implemented, with training and induction for those individuals involved in the changeover, measured and continuously monitored against the objectives set. 
 
While SKU numbers will almost inevitably fall, with a positive impact on cashflow, standardisation should not be considered solely as a means of reducing the costs of MRO purchases. In some instances initial purchase costs may increase as the value and compensation they offer will appear elsewhere on the balance sheet. Best value will be extracted through taking a holistic view with a scientific approach to assessing the return on investment at every stage of each project.
 
Planned and managed effectively, in conjunction with a partner who can provide independent advice alongside a broad product range and ongoing technical support, a product standardisation programme  has the potential to deliver significant operational and commercial benefits.
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