A modified wood products manufacturer was planning construction of an additional plant to fulfill increasing demand. The company had already developed a preliminary layout of the facility in tandem with an architect for budgetary purposes. Establish was tasked with maximizing the storage capacity of the Maintenance, Repairs and Operations (MRO) storeroom space allocated in the preliminary layout.
Developing a Cost-Efficient MRO Storeroom
All parts at the existing facility were stored at the point of use. While this provided quick turnaround time in the event of a line breakdown, there were several disadvantages to point of use storage:
Securing inventory was nearly impossible. Outside of the primary storeroom, inventory utilization was retrieved by the user and not updated in inventory until control retrieved the use sheets from the location.
Inventory management took an extremely long time to execute. Inventory control had to walk several miles in order to cover the fourteen locations.
The same item was stored in multiple locations. Each location stored extra, thereby increasing the total part inventory.
In order to be close to its point of use, some items were stored in less than ideal locations.
As a result of these flaws, the hypothesis was that the MRO inventory should be centralized in one location, with some of the items only utilized in one location stored at point of use.
Similar to other MRO warehouses, there is wide range in item usage frequency. Some items are accessed several times a day whereas other items aren’t accessed for years. Unlike a typical warehouse, the items that haven’t been used in years are not necessarily obsolete, as these parts may be hard to find, not manufactured any more, or the part may be essential to run the production line. As a result, Establish explored and ultimately recommended customized solutions to match item utilization. Frequently used items were located in the front of the storeroom and are located on shelves for easy picking. Items rarely used were stored on space efficient narrow aisle pallet racks, accessible only by pallet walkers.
The lumber company got a highly efficient layout that consolidated the storage requirements of the fourteen locations in the existing facility into the one space provided in the proposed facility. Only 60% of the anticipated footprint was needed and the inventory control improved.
There are tradeoffs between storing items at its point of use and at a centralized location. The conclusion is however that the savings in space, inventory and handling far outweighs the easy access. Most important is the inventory control that ensures that the right items are available.
Item usage frequency is important when determining item storage capacity. The less an item is retrieved, the more inconvenient a location it can be stored in. This inconvenience can be purely positional, such as storing the item in the back of the warehouse, or be due to increased storage density, such as utilizing compression shelving to increase storage capacity in the same footprint.