Parts Management Best Practices Joyce Mitchell
Parts Management Best Practices • Determine the Correct Part # • Locate The Part In The Store Room • Maintain An Accurate Inventory • Establish Effective Stocking Levels • Institute Accountability • Manage Vendor Relations • Identify And Dispose Of Obsolete Parts • Develop Written Procedures • Enforce Security • Manage For Performance
Standard Format-Example Only • ALWAYS USE CAPS FOR ALL ENTRIES IN FASTER. It is easier to read and insures consistency. • Part #: First three characters should represent the manufacturer of the item, followed by the part number. Determine how to address non-alpha or numeric characters. • Description 1: The most important thing to remember is that the format MUST be consistent! Primary Identifier, Secondary & further description. Also try to reduce space wasters, such as commas or dashes, unless necessary.
2. Locate The Part In The Store Room • All stock parts should have a primary Location and, if needed, a secondary • Shelves, drawers, wall and other storage areas should be labeled with a location • How is the Store Room Organized: part number, description, category, demand, size • Non-stock and shop supplies segregated from stock inventory and labeled as such. • Have a defined space for Receiving, Returns, Warranty, Parts awaiting Technician • Discourage & limit the habit of maintaining used parts or “private store rooms”
3. Maintain An Accurate Inventory • Verify count on all incoming shipments (Barcode will print correct # of labels) • Count inventory prior to every re-order • Daily inspection for empty shelves • Establish valid Max Issue quantities • Make an adjustment when a discrepancy is found ** • Perform a physical inventory count at regularly defined intervals
Possible Variance Reasons • Received wrong part number or quantity • Issued the wrong part or entered the wrong part # • Entered the wrong issue quantity or unit of issue • Issue not input to FASTER or input to FASTER & not given to Tech • Counted the inventory wrong or entered wrong count • All stock not counted, were some stored elsewhere? • Package quantity inaccurate • Parts were lost. Check on the shelf behind or nearby. • Parts were stolen. • if part is frequently issued in conjunction with another part, run a parts issued report for both parts and see if one is missing
4. Establish Effective Stocking Levels • Set the appropriate max/mins **(demand, lead time, space, packaging, price breaks) • Run Parts Order Recommendation report (3206) daily • Run Parts Inventory Movement Report (3222) • Investigate reason for a stock out • Establish reasonable order frequency • Review downtime reports for WO status Awaiting Stock or Non-Stock part • Run Inventory Turns report (3229) & establish a goal for inventory turns
Establishing Max/Mins • usage history, continued future demand, availability • lead time, time to receive delivery from vendor • current in-stock quantity • Sales, price increases, product shortages • storage space or special storage requirements • cost to order, paperwork and labor, unit cost of item • how packaged, case lots, pallets, slings • seasonal usage • related items that affect usage • budgetary constraints • shelf life • shipping costs
5. Institute Accountability • Receipts –Parts Received Detail report (3204) • Issues –Part Issue Report (3201) and Independent Issues (3217) • Outstanding Orders –Orders Not Received (3205) • Transfers –Parts Transfer report (3207) • Returns to inventory –Parts Issue report (3201) with “show returns” option • Adjustments –Parts Audit (3201) report: cost/qty adjustment, key change, merge, order/receipt delete, part delete • Variance – Parts Inventory Discrepancy report (3227)
6. Manage Vendor Relations • Develop strong contract specifications or agreements that establish price, delivery terms and quality. • Comparison Shop & Document Savings • Monitor vendor performance: • Price: System will notify when price exceeds established percentage • Delivery: Use Order Search to monitor back orders & to insure delivery time complies with contract • Set up a warranty for all parts except consumables • Establish good rapport
7. Identify & Dispose Of Obsolete Parts • Run Obsolete Parts reports to identify parts with no use. Determine why. • Run a Parts Issued to Equipment report to identify parts related to equipment you plan to dispose of • Decide best method for disposal: return, exchange, auction, garbage • Prevent accidentally re-ordering: change to non-stock, change status, change Store room
8. Develop Written Procedures** • Map out process flow • Detail the steps for each task • Who is responsible for each function? • How soon or how often should it be done? • Define how it should be done. • Establish limits (At what point should management be brought in?)
Adjustment Procedure Example 4.Valid reasons for an Inventory Adjustment may include: Incorrect Data Input Loss Spoilage or Breakage Theft 5.If total dollar value of the adjustment is $25.00 or less, proceed with the adjustment. If the total dollar exceeds $25.00, get prior approval from management. 6.Open Parts Processing and Select INVENTORY tab. 7.Type in Part # to be corrected in both the Part # “From & To” fields.
9. Enforce Security • Maintain system security by assigning individual user ID’s and sensible permissions • Secure the stores area, if possible. Limit access. • Publicize zero theft tolerance policy
10. Manage For Performance • Require strict adherence to all procedures. • Require all safety and regulatory guidelines are followed • Outline behavioral expectations for employees (punctuality, attendance, phone & internet use, etc.) • Develop a code of ethics to alleviate even the perception of unethical activities • Know how much it costs to operate (salaries, expenses, overhead, parts loss) • Promote proactive communication with customers. • Discourage shop vs. stores attitude • Share your accomplishments and successes
Parts Management Best Practices How to get started . . . • Customize These Practices For Your Operation • Prioritize & Plan How To Best Implement • Establish Timelines For Accomplishing • Improve And Revise
Parts Management Best Practices • Other Suggestions? • Questions? • Comments?