This is Part 3 in our 4-part series on maintenance programs and benchmarking. If you missed Part 1 or Part 2, read it now. In this week’s edition, we discuss how inventory can influence your benchmarking efforts. Unless you are Overstock.com, too much inventory doesn’t just take up valuable warehouse space, it also can be a detriment to your company’s bottom line.
In addition to maintenance costs, the other key piece of the replacement asset value (RAV) in your benchmark puzzle is your inventory of repair and replacement parts.
Don’t “Guesstimate”
Top performing companies don’t “guesstimate” when it comes to their inventory of these items. By implementing predictive maintenance, top performers are able to use the data analysis to determine the health of their facility and/or plant assets. As a result, this knowledge empowers them to warehouse or store only what is needed, based upon known replacement part lead times, costs and how critical the equipment is.
Diving Deeper into the Negatives of Carrying Too Much Inventory
- Opportunity Cost – cost associated with giving up the use of money tied up in inventory
- Storage Cost – cost associated with having to store extra inventory
- Obsolescence – things stored for a long period of time can spoil, go beyond service life or become obsolete. This is especially true for wear components such as tires, belts and bearings that are stored in non-atmospherically controlled conditions.
- Increased taxes – the more inventory you carry, the more taxes you’ll pay which adds to the total cost of conversion. (*Note: if your turnover for inventory is greater than one or two times a year, this is an immediate concern.)
Isn’t preventive maintenance good enough?
Still not convinced predictive maintenance offers the strongest opportunity? Check out next week’s blog on what benchmarking has to say about preventive maintenance. In the meantime, click here to learn how IVC Technologies can help you get control of your costs through our CBM Program Audits.
Up Next: The 30/30/30/10 Rule of Preventive Maintenance (PMs) – what is it and why does it matter?