Inventory Management for a Public Utility 

A community service utility became concerned that their maintenance, repair and operating (MRO) inventories were growing beyond plan.  Management was prompted to review the situation and institute an effective solution for the following inventory situations; MRO inventories were stored in multiple warehouses, over 72,000 SKUs had to be managed, duplicate inventory existed, multiple SKU numbers were assigned to identical items, and inventories lay dormant without usage, multiple inventory systems in use, and MRO inventory began to require more space allocation.

Solution

Our materials management expert assisted the organization to develop an effective inventory evaluation approach to determine MRO inventory categories, inventory usage by category, inventory valuation parameters, common inventory systems, and management inventory reporting.  MRO inventory procurement and issue measurements were developed to determine material flow and warehouses placement.  MRO inventory systems were also evaluated for requirements definition.  Management identified key inventory resources to become power users and trained them to use new standard inventory transactions.  New processes and procedures were generated to document all MRO inventory movement.

Challenges

The MRO inventory consisted of more than 72,000 SKUs and multiple warehouses.  The MRO inventory evaluation approach was not allowed to interrupt day-to-day operations.  A change management program was introduced by management to alter a “this-is-the-way-we’ve-always-done-it” mentality.  Physical inventories were required at all facilities that required resources and scheduling.  New computer system protocols were introduced and each user had to be trained.  Inventory measurements and reporting were introduced to account for all MRO transactions.

Results

The MRO inventory approach allowed all inventory participants to become comfortable with the pending workload, as several months would be required for the work.  Inventory levels are being reduced.  Internal customer service is improving.  Common inventory systems are in use, consistent training, and inventory management reports now exist.  Warehouse managers and inventory user communities have confidence in inventory numbers displayed in the system.  Procurement costs are trending downward.  New inventory processes and procedures help warehouse workers take more pride in their work and serving their customers.