How CMMS Improves Inventory Management and Reduces Inventory Losses

Published on January 31, 2021

For companies with plant and equipment, service and maintenance can be a significant ongoing expense. Whether it be one’s own machinery or that of a customer, accurately accounting for technical labor and spare parts can be a challenge. 

As maintenance requirements expand along with the growth of a business’s operations, this is followed by a commensurate increase in repair costs. Implementing a well-thought-out spare parts management system is the only way to balance cost, time, and inventories. It’s vital to have the right spares in inventory and a platform for anyone on the shop floor or warehouse to find parts on time. Unfortunately, organizations overlook the importance of managing their spares until it is too late. 

For current Oracle NetSuite customers, the Shepherd native CMMS app provides a timely solution to this problem. Not only can users better manage their inventory and technicians, but all of this can be achieved from one central location, inside their existing NetSuite ERM.  

What is Maintenance? 

When it comes to the maintenance industry, inventory refers to all the processes, parts, and equipment used to ensure proper asset functioning. The objective of maintenance teams is to have the right inventory, in the right place, at the right time, and at the right cost. It’s the only way technicians can have the right inventory on hand in the right amounts to execute repairs or maintenance operations effectively. 

Before discussing how Cloud-Based Maintenance Management Systems such as Shepherd CMMS can dramatically improve maintenance inventory management and reduce inventory losses, it is appropriate first to take a brief look at some of the notable inventory management challenges: 

Maintenance Inventory Management Challenges 

There could be a multitude of reasons companies fail to have an efficient parts management system, which leads to inventory and productivity losses. The following are key challenges organizations face when it comes down to inventory management: 

Insufficient processes lead to difficulties for service companies

Most small-to-medium-sized businesses use spreadsheets to manage their inventory. While the Excel inventory system works great for small businesses, it creates severe issues for growing companies. Spreadsheets may contain numerous errors that make it difficult for managers and team members to make the right decisions. Studies suggest that some of these errors can cause significant losses and negatively impact the bottom line. 

In the absence of an automated process, for example, technicians take more than they need while transferring parts to customers or other technicians, or parts moving back from customers to the technicians. A warehouse needs to keep the record and be able to account for parts in a very disciplined way. 

Manual tracking is an inefficient inventory management process that leads to errors and reduced productivity. With manual processes and spreadsheets, companies may well keep encountering inventory management issues on an ongoing basis. 

Lack of visibility and control

Envisage a piece of critical equipment going down and lacking the necessary parts to fix it. Downtime can go from hours to days or weeks if you fail to get the parts on time, not to mention the high cost of rush shipping and delivery. 

In an alternate scenario, the parts may be present, but technicians are unable to find them on time. A whitepaper published by Emerson highlights that a technician spent 10% to 25% of their time obtaining parts due to the absence of a streamlined method of location. While seeming insignificant, every minute of downtime can cost a company thousands of dollars. It is just one example of how lack of visibility and control over inventory management can wreak havoc on the bottom line. 

Signs of a Poor Maintenance Inventory Management Approach

  • Rising parts costs 
  • Reduced shop productivity 
  • Reduced asset utilization
  • Consistent stockouts 
  • A high amount of working capital 
  • A high cost of storage 
  • Data-entry errors 
  • Lack of inventory tracking 

The question is why spend thousands of dollars a year on things that can easily be avoided with the right tool? 

Inventory Management in the Age of Big Data 

Progressive organizations are redefining the way they manage inventory and maintenance, while the change is largely driven by the availability of significant amounts of real-time data. The enterprise software systems generate data that makes it increasingly easy for organizations to make more accurate decisions quickly. 

To remain competitive, the manner in which inventory and maintenance processes are handled need be redesigned. When talking about big data and implementation of smart Enterprise Resource Planning (ERP) systems, thinking beyond traditional data on managing parts or service history need be taken into account. It’s about integrating a single platform that could automate everything from financials to process flows. 

Automation is the Way Forward for Your Business 

Manual inventory tracking will only keep damaging the bottom line over time. Even if a company is using an old-fashioned inventory management software, they will keep struggling to completely overcome all their maintenance inventory challenges. Therefore, the ideal way forward is to implement an integrated system that fits a company’s workflow and business model. 

How CMMS Can Address Inventory Management Challenges 

When it comes to having the right system in place, a powerful CMMS becomes inevitable. A Cloud Maintenance Management System (CMMS) can handle most of a company’s maintenance management needs. 

It simplifies equipment, property, and asset maintenance management activities through the implementation of a powerful central database. For current Oracle NetSuite users, inventory management can easily be implemented and enhanced with Shepherd CMMS. 

What is Oracle NetSuite? 

Oracle NetSuite is a leading cloud ERP that automates inventory management and optimizes cash flow while reducing users’ costs. It comes with a set of native features and tools that help organizations with various business aspects: accounting, HR, services automation, CRM, budgeting, financials, and more. Starting in 1998, the company now has over 22,000 users worldwide, across 200 countries. 

Solution: Shepherd CMMS – A 100% NetSuite Native App 

Shepherd is a NetSuite Native App that further adds to existing NetSuite features and enables businesses to combine all data and manage everything from one unified platform without any integration. In addition to basic NetSuite functions, maintenance, field services, equipment rental, and health & safety can all be centrally managed.  

Shepherd configures its internal cloud maintenance management system with NetSuite’s Fixed Asset Management SuiteApp. In other words, it is a 100% native NetSuite app that leverages core NetSuite ERP, accounting, CRM and other functionality to provide a comprehensive maintenance management solution. The following are a few of the key features of Shepherd CMMS: 

Automate Order Creation

Shepherd uses equipment usage readings to forecast future service task dates and generate service orders automatically.

Shepherd CMMS - Forecase Service Results Screenshot

All service data from PM scheduling and completion to reporting and usage metrics can be recorded, while creating service contracts and enabling technicians to accept, claim, and transfer parts. 

Service Forecasts 

Shepherd CMMS - Equipment

A maintenance forecast can greatly benefit business, especially when operating in a run-to-failure mode. It ensures that the right parts are present and available, at the right time, in the right quantity, and in the right place so that emergencies can be responded to quickly. Besides, technicians can use Shepherd CMMS to report on used parts, follow-up tasks and record work time. 

Mobile Application 

Shepherd CMMS mobile application delivers an equally robust experience to its browser-based application. Available on both Android and iOS, the mobile app makes things easy for everyone involved from managers to field technicians and customers. 

Shepherd CMMS - Mobile App

From checking inventory availability from the field and locating parts with the GPS feature to capturing sales opportunities from the field, the mobile app keeps everyone on the same page. 

Intuitive, Multiple Dashboards 

NetSuite powers dashboards for Shepherd that cover a variety of business aspects from financials and HR to analytics and projects. Shepherd works seamlessly with NetSuite’s project modules. 

Reporting

Reporting is essential to facility management. Shepherd reports and searches leverage NetSuite’s reporting and search engine capabilities to deliver a superior reporting experience. This unique feature enables Shepherd to be cross-reference with NetSuite data, which simplifies cross-department reporting and searching. 

More reporting features include: 

  • Service order summary reports 
  • Asset service history 
  • Major maintenance report 

Shepherd CMMS comprises a comprehensive pack of features that cover every possible feature needed to improve inventory management and minimize losses. 

From supply chain management to financials, NetSuite ERP enables greater visibility and complete control over one’s business. If maintenance and other teams are to be kept on the same page, all that needs be done is to add Shepherd CMMS to the current NetSuite toolkit and maintain accurate levels across the organization. 

Final Thoughts 

All companies are seeking greater efficiency, accountability, and cost management within their businesses. For companies with equipment and machinery that requires servicing, keeping accurate accounts of what spare part has gone where and when has been a procedural weakness. With SaaS applications such as Shepherd CMMS, the bottom line can now be improved through automated inventory maintenance management.  

Please contact us for a discussion of how Shepherd can bring greater efficiency to your business. 

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