Within the world of Indirect/MRO inventory management at conferences, trade shows, or over a beverage the diatribe…depending on your view of the world amongst the professional rank and file, always boils down to a few specific functional aspects of a properly managed inventory system.
These debates while extremely valuable in advancing the knowledge of every one of us, and incalculably valuable to the end user/client from a spend reduction and inventory accuracy standpoint vet out the highest of priority and strategically most important aspects to incorporate in most if not all inventory management program implementations. However, the single most important one seems most often to get hidden in the program performance explanation between vendor and client.
Of all the functional aspects of managing Indirect/MRO inventory, ONE stands out as
THE MOST IMPORTANT…
-Yes, software systems are important. One needs to know if the system is robust enough and has the capacity to manage all the data points its referencing among other things. Keep in mind-Software doesn’t fix poor process and procedures.
-Yes, the process and procedures are very important. One must know and incorporate ALL the proper steps to maintain proper inventory values, quantities, and settings as well as suppliers, manufacturers, and systems. The problem with processes and procedures is if you don’t follow them religiously, you’ll revert to the same problems you had.
-Yes, clean accurate data is extremely important. There is no better (or worse) analysis than “Junk in-Junk out”.
-Yes, strategy is critical to success. Everyone within the strategy needs to know the plan, the purpose, and the expectations before they hit their first key stroke or put away their first sku. One person not following the plan can louse up the entire system.
-Yes, global contracts and unique purchasing strategies are very useful, and it’s a great start but only a start…
I could continue to demonstrate examples of what people think is the most important aspect of a properly managed Indirect/MRO inventory program…but let’s cut to the chase.
The single most important component of a properly managed system is…
YES- The People who work within and manage the detail of the afore mentioned Very Important but not the Most Important aspects.
The People need to be industry experts with a core competency for Indirect Material, who have experience in managing the entirety of the processes/system. AND, they need to be the day to day operators within the systems not only to keep the system operating properly but also to continue the improvement and cost savings/spend and other initiatives. A properly managed program literally costs nothing. The savings and spend reductions return an ROI beyond the cost of the program labor.
When you consider hiring an Indirect Inventory Manager (first-know the difference between an Pure Integrator, an Distributor integrator, and a Distributor) to come in, clean up the mess, set up the system, apply the proper process and procedures, launch the program and then turn it over to the people who created the mess in the first place…..you’ve just added another layer of complexity to the potential problem package.
While for some this is not new news, but for others who still believe they can do it properly and internally or implement one or two of the important criteria …. please understand, after over twenty-five years in the industry one thing is still very true-
Manufacturers are good at manufacturing, because it’s their core competency. Indirect/MRO is not their core competency and it shows. When money in the form of sku’s sitting on shelves, not being used or returned, not being tested to find better performing product, not finding new suppliers to challenge pricing strategies, not implementing cost savings, warranty and repair programs, glove wash programs, vending solutions, Kitting and Kanban solutions, and on and on…..because it’s not your core competency…it’s your money and you’re losing it. Hundreds and hundreds of thousands of dollars
Somebody with a detailed knowledge of how to properly set up and maintain the system: the mins and max’s, order and buy quantities, suppliers and deliveries, crib layout and design, …someone who knows the functional day to day from experience who can in short order set the program up for success and deliver that success year over year is why core competency is so important. It’s a very large reason companies succeed … or fail.
Start the new year fresh with a no cost no obligation consult with us to discover if it makes sense for you to consider having our core competency work for you.
All the best in 2019-
Business Development Manager
Mobile: (989) 295-0422
5310 Hampton Suite 1, Saginaw, MI 48604