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Parts Inventory System Saves $750,000
Maintenance Technology Magazine
General Motors' Lordstown, OH, assembly plant saved more than $750,000 in 15 months with the help of a parts inventory system. John Ricci of the Lordstown facility, says the savings mainly came from eliminating redundant spares, reducing the cost of repairs, and preventing the purchase of unnecessary parts. The figure does not included savings for intangibles, such as reducing machine downtime.
Ricci says maintenance personnel now can locate every spare part in the plant through a touch of a key using the inventory control system. They know the quantity of each item in stock, and because each part has been tested and certified, they are assured that the parts are in working condition. He says maintenance personnel can view the complete history of every component quickly and determine what it cost new, whether it has been repaired and by whom, and whether it is under warranty and for how long.
Five-year overhaul
The Lordstown plant started production in 1966 with the full-sized Chevrolet. In the following years, the plant, now a part of GM's small car group, assembled Pontiac Firebirds, Chevrolet Vegas, and Chevrolet Monzas. In 1989, the facility began an intense 5 year overhaul of operations. Approximately 80 percent of the plant was renovated. The Lordstown plant distinguished itself as the only site in the automobile industry that was able to modernize while maintaining production. Today, the plant has an entirely new body shop, a new electrodepositon phosphate line, and a virtually new paint shop, along with other updates. The plant assembles the Sunfire and Cavalier models J-Car platform.
During the overhaul, plant management initiated Quality Network, a systematic, plantwide approach to building quality assurance. As part of their role in the network, maintenance personnel concentrated on implementing new preventive maintenance strategies and on improving spare parts management.
According to Ricci, they wanted to be sure they did not have an inventory of duplicate spares, that they were not paying for new spares when the same parts were on hand, and that they were not paying for repairs that were covered by a warranty. Maintenance also wanted the assurance that they could prevent the overhauled plant from incurring the expense of machine downtime caused by the absence of vital spares.
Ricci, a skilled trades supervisor, helped coordinate the organization of spare parts in the plant at the request of the maintenance department. The effort paid off with success in organizing the spares and in getting warranty rewards for a number of covered parts.
However, the maintenance department wanted to enhance the management of spare parts even more. New technologies and services provided by outside vendors were investigated.
They found that PSI of Livonia, MI, offered a service that claimed to completely track usable inventory and eliminate excessive, obsolete parts. PSI made a presentation, and the maintenance department decided to try the service, initially on a month-to month basis. The Repairable Asset Control (RAC) service, consisting of a personal computer with custom software, Intermec bar coding wands and readers, and a RAC coordinator from PSI, began operating in October 1993.
Because 80 percent of the new equipment resides in the body shop, the work started there. The coordinator, working full time in the plant, labeled every spare part with a bar code. The bar code included information on the component, its manufacturer, model and serial numbers, revision level, the machine number it was assigned to, and power-up date. The coordinator downloaded the parts information from the bar code reader into the computer. One of the first tasks initiated by the coordinator was setting up two central locations, one in the body shop and one in the coordinator's office, so personnel could retrieve needed parts and drop off unneeded parts. Ricci said, "Now, when a machine goes down and you inspect it and pull a board out, that suspected bad board is tagged and brought to a common place for the coordinator to handle."
The coordinator from PSI also collected obsolete and redundant spares. Using PSI's network of RAC sites and equipment users, the coordinator assists the maintenance department in brokering off unneeded components.
Included in the services is certification of all spares. Once the service was in place, designated repair areas were established where uncertified components could be delivered. These components were then sent to PSI for evaluation and certification. Some components were repaired and others were eliminated. The result for the Lordstown plant was a leaner and more assured inventory of working spares.
Savings were noted within 3 months of starting the program. When component identification numbers were entered into the database, Lordstown personnel knew which components were still under warranty and handled them appropriately. Covered units were given warranty credit by the manufacturer or repair firm at no cost to the Lordstown plant. "For the first time," Ricci says, "maintenance had the required data on hand to guarantee that all warranty costs were recovered."
Along with eliminating redundant spares, the service also prevents the plant from purchasing unnecessary components. The coordinator reviews every spare scheduled for purchase. If he sees that a part is already stocked when he checks the on-line inventory system, he flags the order to stop the purchase.
Like most automobile plants, Lordstown's vendors base is spread out internationally. Lead time on getting parts from these vendors has been as long as 6 months and in some cases over a year. RAC has helped alleviate the problems with long waits by adjusting inventory to ensure that an adequate supply is on hand.
One third of the $750,000 savings came in the first few months when Lordstown's inventory was brought under control. In the months after that, RAC helped the facility achieve continuous improvement in spare part inventories, providing consistent monthly savings. For example, savings from January through October 1995 fell into four main categories: warranties, 48.8 percent; preventative purchasing, 43.2 percent; free certification, 6.2 percent; and inventory reduction, 1.9 percent.
This savings profile does not include intangible savings, such as preventing machine downtime. With downtime costing $3000 to $6000/minute, Ricci says the Lordstown plant has saved a substantial amount by having essential spares stocked and ready for installation. He adds, "To get a part flown in during downtime is very expensive. There have been several occasions when having the right spare part on hand has saved us from having the main line go down."
Because of the success of RAC in the body shop, the plant has spread this service to other departments. Concludes Ricci, "At Lordstown, we're in business to make automobiles, not to keep track of spares. By letting the service do that for us, we've saved a tremendous amount of money and we expect the savings to continue in coming years.
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