Focus on Reliability

Do Storeroom’s really need KPI’s?

 

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In business, we use acronyms to communicate and abbreviate content. One such acronym KPI (Key Performance Indicator) we hear and use regularly. In maintenance there are several KPI’s used including those tracking MRO Storeroom performance. Recently we conducted a poll asking which Storeroom KPI people considered most important.

The results were interesting because the top two KPI’s combined were almost five times greater than the one Leadership tracks on their financials. The two KPI’s with the highest rating were Inventory Turn Ratio 31% and Cycle Count Accuracy also at 31% followed by Stock-Out percentage at 24%. The KPI listed on the poll with the lowest importance was Inventory Value at a mere 13%.

MRO KPI poll
These numbers demonstrate a disconnect between what Leadership deems important verses what is truly important for maintaining equipment. Many Maintenance leaders have written in detail about having the “Right Parts at the right time in the right quantities” for maintenance to be successful along with reducing the overall cost of operations.

This said, businesses need to turn a profit, which is why concern over Inventory Value is so heavily weighted by Leadership. It is not fiscally responsible for Storeroom’s to carry every part that may or may not be needed. Therefore, Inventory Turn Ratio and Stock-Out percentage KPI’s gives us a better view of what a Storeroom should carry. The Cycle Count Accuracy KPI is used as an internal “Process Control” indicator ensuring inventory stored is correct when needed.

So how do businesses achieve and meet their overall fiscal goals while properly maintaining their assets? Great question, glad you asked! Completing an annual analysis of your inventory will bring into view items such as (AI) Active Inventory (RUI) Rarely Used Inventory, (IUI) Infrequently Used Inventory and (OI) Obsolete Inventory. This is where the rubber meets the road for having the “Right Parts at the right time in the right quantities” along with the improvement of your Storeroom KPI’s.

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Topics: Maintenance and Reliability Storeroom/ Materials Management materials management training purchasing bestpractices