Specialist wire and rope manufacturer

Challenge

Store issue processes were not being adhered to with many engineers failing to record their requisitions of stocked products at the point of issue.

Consequently IESA's perpetual cycle counting routines were revealing a stock accuracy reading 70% or lower, compared to the benchmark target, IESA's average achievement across open access storerooms, of 95% or higher. The value of shrinkage - un-booked items - had a monthly average run rate of £8,000. The primary impacts were the loss of budgeting data to plan and manage the maintenance department, together with the risk of items becoming potential stock outs and effecting downtime in production.

This resulted in a high proportion of the monthly issues being costed as stock losses, leading to a lack of visibility. Furthermore, anecdotal evidence suggested potential downtime impacts due to unavailable parts.

Objectives

  • A target was set to reduce the quantity and value of unrecorded stock losses by 75% through a culture and compliance change initiative.
  • Additionally an immediate target of 90% stock accuracy was set, with the intention of increasing that target in the medium term to the industry wide measure of>95%.

Solution

IESA engaged with the engineering department and their management team to devise and implement a bespoke set of published KPI measures.

The measures recorded and ranked individual engineers based on their propensity for correctly recording their stock item requisitions, the aim being to drive process compliance through a combination of visibility and management support.

Additionally, IESA increased the scope of the perpetual inventory checking procedures together with the frequency to eliminate any potential, residual inaccuracies so as to be able to accurately track improvements as they were achieved.

IESA also provided the site with a set of bespoke, highly visual KPIs, exclusively for the engineering department, and this information was shared with key stakeholders and compliance was monitored at an individual level.

The information was shared on a monthly basis at a pre-arranged review meeting, progress was tracked and targets amended once they had been achieved. IESA also ran a high profile communication campaign alongside the KPI graphs to reinforce the message of compliance.

Benefits

  • IESA's data management facilities allowed us to trace, on behalf of our client, the improvements in stock accuracy and process performance on a continued basis.
  • Through April and May 2013 the barcoded systems recorded a doubling in the volume of recorded issues.
  • The value of un-recorded stock issues has also fallen significantly, to below the 75% reduction targeted. The net effect of these improvement measures has been improved budget data for the engineering management team, increased stock availability and reduced production downtime, allowing the client to plan and cost maintenance activities with traceability and accuracy.
  • Within four months the stock accuracy, based on results from daily cycle counts, improved dramatically to 90%, and it is anticipated that the target of 95% will be passed during Q4 2013. The KPIs will continue to be compiled and assessed in order to avoid any retrograde movement.