Here is the bottom line.
You want to take control of spare parts inventory so that you can be confident that you have the parts that you need, when you need them, without excess expenditure.
Right?
Great.
Well the good news is that achieving that goal is simple.
The bad news is that it is not easy – if you don’t know how.
In this post I am sharing with you three easy steps to take control of spare parts inventory.
These are the steps that I have taught to hundreds of companies worldwide and it has never failed to achieve incredible results.
Are you ready?
Let’s go!
Step 1: Develop a stocking policy
Yes, boring but true.
The first step is to develop a policy that guides decision-making on whether to stock an item and how many to stock.
It seems to me that the first instinct of many who commence a program to take control of spare parts inventory is to start taking things out. They find the obvious outliers and start making changes.
This feels good, but it is a false economy.
What they are doing is making changes to the inventory without making changes to the way that the inventory is managed.
This is short-term thinking that ultimately only makes matters worse.
Creating a policy (and telling everyone about it!) is the necessary first step because it guides all actions that follow.
Step 2: Develop a simple system for measuring progress and reporting to the right people.
Yawn! I know right, still boring.
You can see it now, right? When someone says, ‘Hey, here’s an idea. Before setting out on a mission to take control of spare parts inventory, why not develop a simple system for measuring progress and reporting to the right people.’
Hardly the dynamic answer the Vice President was looking for!
And, ‘Hey, don’t we already do that?’
Well, most companies do something. But most of them also don’t do it very well. Or very completely. Or they make it way too complicated. Or they generate numbers and don’t report them to the right people. Or, worst of all, they don’t take corrective action when the numbers tell them to.
Step 3: Stop cherry-picking ideas
One way to ensure ongoing problems with your spare parts inventory is to take a ‘latest bright idea’ approach to addressing the issue.
I have no doubt that you have experienced this because I get emails about this all the time.
Someone decides that they need to focus on fast moving items. When that doesn’t work, six months later it’s slow moving items. Then it is critical items. And so on.
Companies keep chasing their tails when trying to take control of spare parts inventory because a simple approach that works appears to be, well, too simple.
Not dynamic enough. Not positive enough. Not urgent enough. Too boring.
Yet, it works!
Do it!
To Recap 3 Steps to Take Control of Spare Parts Inventory
Step 1: Develop a stocking policy – a way to guide decision-making on what to stock and how many.
Step 2: Develop a simple system for measuring progress and reporting to the right people – report what matters and take action based on the feedback.
Step 3: Stop cherry-picking Ideas – apply the fundamentals with rigor and stop chasing your tail.
If you follow these three simple steps, then you will start to take control of your spare parts inventory.
Click here for information on our Practitioner Playbook.
Posted by: Phillip Slater