MRO Inventory Squirrel Problem

 

Squirreling is one of the biggest hindrances to successful inventory management for MRO businesses, and field service technicians tend to be the biggest squirrels of all. Ironically though, the squirrel problem is something of a vicious circle, being both a cause of MRO inventory problems and a symptom of them.

 

Is your field workforce the biggest obstacle to effective MRO inventory management?

If so, this post will help you understand why field engineers are a cause of inventory shrinkage, and how you might go about dealing with your metaphorical squirrel problem.

 

What is Squirreling?

Squirreling is better known as inventory hoarding, something which field service personnel are notorious for. Engineers have a tendency to take unofficial ownership of spare parts and operational consumables, hiding them away in their vans or perhaps even at home.

 

Inventory Theft

 

The problem is most likely to occur though, when poor (parts and consumables) availability motivates technicians to hoard MRO inventory, purely because they want to ensure work orders are fulfilled at the first attempt.

 

Why Do Field Engineers Hoard MRO Inventory?

Well-meaning or no, inventory hoarding is bad for your business, and is therefore something to put a stop to if you can. When unchecked, squirreling of MRO inventory has a serious impact on operating costs and service performance.

In order to fix your MRO inventory squirrel problem, you need to look for the underlying causes and motivations, which may include:

  • Poor availability of MRO items in your designated inventory locations
  • The desire to have spares and consumables available “just in case” they are needed on a job
  • Fear of not having inventory on hand for out-of-hours emergency callouts
  • Technicians’ belief that they can provide better customer service by carrying “personal” inventory

If these are the most common root causes of MRO inventory hoarding, they also have something in common. They are all compounded over time when your company ignores, disregards, and fails to take steps to curtail hoarding behaviour.

 

How To Tackle the Causes of Squirreling

Once the root causes of your company’s squirrel problem are understood, you can take steps to fix the problem by eliminating the causes. Before taking action to stop your engineers from hoarding, you must make sure they have no excuse or reason to continue with their well-intentioned, but costly habit.

 

As you might have noted in the previous section of this post, the majority of reasons for squirreling relate to the availability of parts and operational consumables.

 

If you want to stop MRO inventory hoarding, you’ll need to:

  • Improve the systems/processes used to determine what items, and how many of them are held in your stores.
  • Create replenishment policies based on max/min inventory levels for all SKUs
  • Integrate inventory management, work-order allocation and dispatch software, to ensure each work order shows exactly what parts and consumables are required for a job.
  • Introduce controls to physically restrict the withdrawal of inventory from designated stores

Control systems for issuing operational consumables are becoming more sophisticated. If you need your field engineers to maintain inventories in their vans, you might consider the use of RFID tracking to record the issue and removal of consumables from in-van inventories.

 

If feasible though, it’s always better to have field agents requisition only the parts and consumables they need for their work-order schedules.

 

Inventory Manager

 

Requisitioning might be controlled by RFID smart-lockers or cages in MRO storerooms, which can be filled by warehouse staff according to each field agent’s daily work-order manifest. Field agents then access their individual lockers on a daily basis to access their inventory.

These are just some ideas to think about though. The important thing is to introduce control measures to prevent field engineers from accumulating personal MRO inventory caches or “squirrel stores”. These measures must be accompanied by others which increase field agents’ confidence in the ability to access the consumables they need, when they need them.

 

Changing Field Employee Behaviour

Once the root causes of hoarding have been addressed, your company can introduce policies and procedures for field agents’ inventory requisitioning. Policies should clearly discourage field agents from squirreling and include the use of sanctions in the event that rules are contravened.

 

Inventory Hoarding

 

Field agents must understand that the rules are based not on a desire for bureaucracy, but on a clear rationale. You will need to highlight how and why MRO inventory hoarding…

  • Impedes accurate demand forecasting
  • Creates excessive levels of stock and increases working capital requirements
  • Generates unnecessary inventory costs
  • Contributes to excessive inventory obsolescence
  • Makes inventory unavailable for other engineers who may need it (and hence hinders customer service rather than improving it)

If you deliver the message to your engineers in the right way, you can help them see that controlled MRO inventory is better for customer service, promotes higher reliability, and supports business growth, which ultimately makes it better for their career prospects and job security.

 

Kill the Squirrels’ Appetite, not the Squirrels

Squirreling results mostly from your engineers’ desire to help their customers, and is more a matter of misguidance than nefarious intent. While tackling the behaviour head-on might seem like the path of least resistance, it is also bound to be the least successful method of stamping out squirrel stores.

 

Improve MRO Inventory Management Processes

 

Having worked with many clients in the energy, mining, and construction theatres, Logistics Bureau can assist your team to improve demand forecasting, purchasing and internal control of MRO parts and consumables.

Our consultants are also skilled in change management, and can help you regain engineers’ trust in parts and consumables availability, so discouraging the use of squirrel storage. If you’d like us to help your company fix its MRO inventory squirrel problem, contact us and speak to a consultant today.

 

Contact Rob O'Byrne
Best Regards,
Rob O’Byrne
Email: [email protected]
Phone: +61 417 417 307