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From the Experts: Is CMMS Inventory Management Right for Me?

By Jonathan Davis | August 26, 2019

Every day Hippo CMMS Solutions Experts help maintenance professionals find solutions to the challenges they face, and at this point the team has about a million years' worth of collective CMMS experience. In this new series, our Solutions Experts share their insights into CMMS implementation, benefits, and best practices.

What is inventory management in a nut shell?

Taylor Maine

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Inventory management ensures your organization's investment in both internal and external product is tracked and maintained. Generally speaking, this can be used in most businesses but may mean something different depending on the nature of your business. It changes from industry to industry. For example, a retail store may use inventory management to track their stock levels to know when they need to order more of any given product. In a manufacturing plant it might be used this way, but it could also be used to maintain the product they already have and use as part of their preventative maintenance program or when tracking labor. This example would be more common and primarily focused on people using inventory management in the CMMS space.

Inventory management software can be as simple as keeping an accurate count of the number of items inside your company's four walls or as complicated as tracking the entire life cycles of all the elements within products. An example of this second one is in airplane manufacturing, where for compliance they need to know the entire life cycle of every single nut and bolt used on a plane. This level of inventory management is how they are able to determine with near-perfect certainty the cause of downtime or even what caused a crash.

Do I even need inventory management?

Jack Keenan

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Yes, the time and energy you invest in getting set up is well worth the rewards. Inventory management is a great way to identify and make sense of your company's inventory. It can answer a lot of different questions, and those answers show you exactly where your company has room for improvement.

Inventory management gives you the answers to "Do you know the cost of your average work order?" and "What is the average cost of inventory per work order?" Knowing the quantities being used, who is using what, and when inventory gets low helps you find inefficiencies and stay on top of inventory costs.

Do I need to mention that a CMMS is a great way to get inventory management up and running? It is.

What are the general steps for implementing inventory management with a CMMS?

JP Mariano

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When you're first getting ready, you'll want to:

  • create a list of all your inventory items

  • associate assets with items/consumables

What's a consumable? A consumable is inventory or a part you order regularly, including bearings, belts, filters, and lights. You can think about them according to their different categories, too. Quick examples are mechanical, electrical, plumbing, and general maintenance.


What information do you include on your list? You'll want:

  • name

  • description

  • category

  • associated equipment

  • storage location

  • supplier and vendor information

  • quantity on hand

  • desired quantity

  • minimum level before reorder

  • unit cost

Once you have your list, a good CMMS helps you keep it up to date. When completing work orders, on Hippo's CMMS there's an easy-to-use section for marking items consumed. This updates your list in real-time. When you reach your minimum level, the CMMS sends an email notification that you are running low on that item.

Remember that the minimum level is customizable and will likely be different for each part. By looking at work order histories, your PM schedule, carrying costs, criticality, and lead times for ordering and receiving parts, you can set safe minimum levels. For example, your minimum level might be really high for replacement fuses for a large asset because their not expensive to buy or store (low carrying costs) but you can't run your operations without them (high related-asset criticality). But you'd likely keep a much lower inventory of some types of lubricant. You tend to use it only for PMs every few months and it degrades over time (high carrying costs).  

 

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What are the common hiccups and how do I avoid them?

Mario Tomberli

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Count carefully: First, you want to audit your inventory carefully so you have an accurate idea of what you already have.

But don't count everything: Even before you start counting, really think about what you need to track. Some inventory may not be worth tracking individually; it's just takes too much time. Take nails, for example. You'll want to track them by the box instead of individually, or not at all.

Stay up to date: Once you know what you want to track and have counted it carefully, you need to make sure your numbers remain accurate. A big part of that is getting your team on board so they're properly tracking use. Here's where a CMMS software is really handy because inventory management is built right into the work orders. 

Every once is a while, double-check. Once you're up and running, you'll need to periodically recount your inventory, make adjustments, and try to determine the sources of any discrepancies. Among the most common reasons are theft and technicians failing to track use.

How can I gauge my success? What KPIs should I be tracking?

Nnenna Ijeomah

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When you're tracking inventory, you get:

  • all the parts information in one easy-to-access place

  • a better purchasing plan with visibility on what has been ordered and who it was ordered from

  • better control of inventory expenses

  • less downtime caused by lack of parts

  • zero confusion on if you have a part or not and where it is

You can check your system's efficiency by looking at different KPIs, including:


  • amount spent on rush deliveries for parts

  • number of times a part is out of stock

  • typically how long a part stays in stock

Good inventory management means never having to rush deliver parts. Once you hit your minimum levels, lead times are short enough to get new inventory in before it's needed. This also means you never hit zero on any part. You're never out of stock. For the last KPI, you want parts to be in stock but not for a long time. It costs money to carry stock, and if you're timing your orders correctly, parts arrive just a bit of time before they are needed. You're pushing the carrying costs back onto the suppliers.

What are my next steps?

Jonathan Davis

I'll take this one. Have more questions about inventory management? Our Solutions Experts are happy to answer them. In fact, they'd love to hear from you about any questions you might have about CMMS solutions. 

If there's a topic you'd like to see covered in this new series, Solutions Experts Answer Your Questions, comment below. Let's get the conversation started.

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Jonathan Davis

Jonathan Davis

Jonathan Davis started out writing for textbooks before branching out to video games and marketing collateral. He has a master’s degree in journalism and a certificate in technical writing.


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