Companies put up with stores’ inadequacies, go around the storeroom by creating individual sub-stocks, attempt to fix it themselves (reengineer), which is not sustained, or outsource the function. The problem with outsourcing is finding the right fit because there is no algorithm that can effect the optimum situation for all plants. The selected outsourcing provider must have the ability and experience to provide a specific implementation plan and an adjustable operating procedure in order for any program to be successful. The selected outsource provider also must be acceptable to all plant personnel, which is a challenging task.

A large, multi-plant manufacturing company was experiencing the inefficiencies Mr. Atout described; the company decided to outsource itsmaintenance, repair and operations (MRO) stores operations to a third-party provider whose core expertise is on-site MRO stores management. The decision to change was a difficult one since a mistake in selecting the provider and/or a mistake in selecting the proper process could result in costly downtime and production interruption. After all, an unreliable storeroom results in unreliable assets and an unreliable plant.

The directors who selected the provider and its process were satisfied that their decision was the correct one.However, a concern was raised over the reaction to the change by plant personnel. Would operating personnel cooperate and be proactive in making sure the change was successful, or would they find ways to undermine the process and defeat the program in total?

Prior to implementing the change, the directors sought out the top five categories in which third-party MRO programs have been/could be attacked or defeated in house. The directors reasoned that if they were aware of actions that could sabotage the defined benefits (the reasons for change), they would be able to avoid them before they took place. The directors ended up with a list of at least 55 happenings.

Although a difficult selection process ensued to pick the top categories, here are the top five practices that occur in terms of frequency and negative effects upon a reliable plant.

  1. Price:
    • Get a local supplier to provide a lowball price and claim: “The new supplier’s prices are high…all of them!!!”
    • Require a single source; get the source to increase pricing to the new supplier: “The new supplier’s prices are high!!!”
    • Compare new supplier’s price to last price paid: “The new supplier’s prices are high!!!”
    • Request a price for a spot buy of one; compare it to a price for a larger quantity: “The new supplier’s prices are high!!!”
    • Require a high quality part with nosubstitutions when a lower quality, acceptable part is on the shelf: “The new supplier’s prices are high!!!”
  2. Support:
    • Deny positive support and/or derail efforts from the supplier to achieve the agreed upon key performance indicators (KPIs) that measure the value of the change:Danger is mutual termination of agreement.
    • Maintain an acrimonious attitude toward the supplier’s on-site personnel: Causes turnover, lack of performance, poor environment.
    • Create unreasonable spot buy emergencies for a single source part: Claim lack of supplier response.
    • Maintain self-fulfilling prophecy: “It will not work, i.e.,not my idea.”
  3. Downtime:
    • Remove a critical spare from stores in off hours; request the part during store hours, creating a stockout: DOWNTIME!
    • Remove a new SKU without authorization and replace it with a used part: DOWNTIME!
    • Provide misinformation on a critical spare, causing incorrect installation: DOWNTIME!
    • Draw out large quantities of a SKU and put them into a sub-stock, causingstockouts: DOWNTIME!
  4. Brands:
    • Refuse to use supplier’s approved brands: Defeats KPIs.
    • Refuse to properly test new brands and/or sabotage the test: Defeats KPIs.
    • Approve a new brand; after use, unauthorized substitutions claimed by other departments: Defeats KPIs.
    • Set up a particular brand under a different description and SKU number: Increases inventory anddefeats KPIs.
  5. Inventory:
    • Establish sub-stocks of parts in stores inventory: Duplicates inventory costs.
    • Purchase parts bypassing the storeroom: Stores inventory becomes obsolete, decreases price leverage.
    • Require incorrect min/max quantities: Increases inventory and/or causes stockouts.
    • Refuse to recognize inventory reduction benefits: “Corporate does not charge us for the cost of money.” Okay,why not stock 100 of everything?
    • Require multiple stock locations (e.g., by machine type): Duplicates inventories, defeats KPIs.

These and other possible detriments to a successful third-party MRO program were addressed by the directors and any and all in theworkforce who had anything to do with MRO. Defining potential problems before they had a chance to occur resultedin a minimum of problems and a smooth-running MRO operation from the start.

Hopefully, companies that recognize that MRO change can contribute to plant and product reliability will be confident in knowing that successful and sustainable programs will work well when all are aware of the benefits of positive actions.

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