7 Forms of Waste: Excess Inventory

Excess Inventory as a form of waste in lean maintenance

Last week, we discussed over processing as a form of waste in lean maintenance. This week, we take a magnifying glass to excess inventory to understand why it occurs (sometimes very often) in maintenance and how to balance it with a CMMS. Ryan McEachran, IOT Integration Manager at ALPS, recalls a major waste of excess inventory that occurred at a food and beverage production facility he previously worked at in this week’s case study, 1500 Seals and Gaskets.

Excess Inventory in lean maintenance: cost, environmental impact, resolution

Not having the parts needed to make a repair is frustrating, having too many parts in inventory that never move is even worse. Excess inventory often results as a consequence of overproduction, such that excess product ends up in inventory. In maintenance, overestimating a PM schedule or preparing for unscheduled maintenance can lead to overstocking spare parts, sometimes referred to as safety stock. This ultimately wastes dollars, storage space, and transportation required to relocate/retrieve spare parts (if stored off-site). The case study from our transportation article is an excellent example of this.  

In some cases, unprocessed inventory becomes obsolete and new parts are needed to replace the old. These can have major environmental impacts if new parts are being shipped by air carrier and the old parts are frequently being disposed of. Utilizing the inventory function in a CMMS to make sure your part stores are relevant with the correct safety stock is an efficient and cost-effective way to save operational expense.

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Case Study

Ryan McEachran, IOT Integration Manager at ALPS, recalls an instance where the food and beverage processing facility he previously worked in encountered major consequences as a result of having excess inventory of spare parts:

“The facility contained large amounts of process piping for liquid transportation, so it was required to replace gasket and seals on a scheduled basis depending on the corrosiveness and temperature of the liquid. In a previous attempt to reduce costs, the replacement gaskets and seals were ordered in bulk and the extra inventory would sit on a shelf available as spares.

A 3-day Shutdown of the facility was scheduled annually for maintenance activity which included the replacement of all 1500 critical gaskets and seals in the process piping. Upon startup and testing to begin production, it was noticed that multiple seal and gasket blow-outs, pressure fitting failures, and leaks had occurred. This required the piping to be disassembled and investigated to discover the cause. The root of the problem was that the rubber seals had sat on the spare parts inventory for so long that the plastic had dried out.

This resulted in not only duplicate efforts and time for maintenance, but also delayed startup and affected operations. The gaskets needed to be reordered because the ones in inventory were no longer reliable. These all added up to be significant costs, including:

  1. Double product purchased for inventory.
  2. Increased labor hours in maintenance.
  3. Delayed Startup in production.
  4. Wasted product from the leaking seals.
  5. Increased cleaning costs due to spills.”

Ryan’s experience is an extreme example of the detriment that can be caused by keeping excess inventory. While it is important to plan for scheduled outages and the spare parts required for maintenance activity, overstocking inventory can cause more harm than good and can be more costly than cost-saving. Spare parts inventory should be kept to a minimum and only include items that cannot be readily obtained on short notice