How do you stock and manage maintenance, repair and operations (MRO) products at your facility? While there are various ways to improve the efficiency of an MRO process, more companies are turning toward vending as a viable way to drive down cost, primarily through product standardization and consumption management.Let’s examine the ways vending can help companies control consumption, increase safety and compliance, improve productivity and reduce the overall cost of maintenance, repair and operations (MRO) products.
A Changing MRO Market
The MRO market is extremely fragmented and is comprised of many small players. The largest player in the space controls around seven percent market share, while the top 50 MRO companies control less than 30 percent of the market.
Meanwhile, as competition heats up, MRO suppliers are distinguishing themselves by offering point-of-use dispensing (vending) systems within the walls of their customers’ facilities.
Although profits are pinched, because many products stored in the machines have lower margins, suppliers are seeing an increase in their total non-vending business. Because suppliers’ brands are more visible in the facility, they are viewed as a solutions provider. So, large suppliers are driving greater customer loyalty by investing in new and innovative vending solutions for customers.
Vending: A Viable Choice
Industrial vending is a viable way to drive down cost, and that’s why many companies are embracing it. Product standardization and consumption management are key benefits. In fact, the industrial vending machine—which is similar to the consumer version—is gaining popularity and reshaping consumption in the MRO space.
MRO: Feeling the Pain
As companies work to manage their MRO expenditures, they experience some common pain points—and these transcend company size, industry and location including
Inventory Redundancy and Obsolescence
The lack of a proactive inventory management process can result in as much 60 percent of inventory items becoming obsolete. These inactive parts tend to accumulate over time, tying up cash on unused inventory. Additionally, the lack of clean data, coupled with various product requirements, creates an environment where inventory costs skyrocket.
Because MRO purchasing is often performed by the users of the MRO materials, significant time and energy can be spent shopping for non-core or non-strategic MRO materials. A compliance gap results when different users in the same company buy the same commodity from different sources. Basically, they’re shopping for the same thing, not comparing notes, and buying from different sources.
Industrial Vending Benefits
With the right program, industrial vending can complement a company’s broader MRO strategy. That includes making a wide variety of materials such as cutting tools, fasteners, adhesives, personal protection equipment (PPE) and first-aid items immediately accessible, 24/7, near the workers who need them. With their well-lit glass fronts, the machines advertise the availability of preferred products and drive greater compliance to the items desired. Point-of-use dispensing also increases productivity, reducing trips to the crib and time spent managing and handing out low-cost items like gloves and glasses.
The key with vending is that even as products become accessible, they are more controlled and traceable. Some users set controls so that certain items can only be dispensed by certain employees or in limited amounts. But most find that the system’s ability to track usage via individual user ID is enough to bend the curve in consumption. Just because it’s there does not mean that users will ‘over-consume.’ And, because employees know they’re accountable for what they use, they naturally use products more responsibly. There is also no reason to hoard product, because needed products are always just a few steps away.
Vending Topline Benefits
Corporate United’s partner, Fastenal Company, reports that industrial vending can reduce consumption costs by an average of 30 percent. With more than 20,000 Fastenal vending units in the market, we believe that the data is statistically relevant. Here is a breakdown of the most impactful benefits of industrial vending.
- Reduce holding costs. Vending machines drive immediate stock reductions and help companies carve out low turnover items. In some cases, companies can choose an optional consignment program, which means that the product is owned it until the user actually vends it.
- Control usage. Because employees know they’re accountable for what they use, vending helps them to choose products more carefully. They are prompted to enter a department, project, cost center, etc., which allows plant managers or procurement to view usage reports online and in real-time.
- Reduce loss. Vending limits access to product until it is needed and effectively reduces the risk of loss or theft.
- Reduce space constraints. Most vending machines are designed to hold a vast array of products within a highly compact footprint, freeing up significant floor space.
- Improve productivity. Vending machines serve the location where they’re installed, reducing the time needed to travel, locate and retrieve parts. User-friendly touch-screen technology speeds up transaction times and when an item runs low, an automated order can be sent to the supplier.
- Stocks out and provides 24/7 parts availability. Vending machines reduce reliance on storeroom personnel and costly rush deliveries by providing 24/7 controlled access and monitoring of product.
Vending Red-flags Problem Areas
The same technology that helps control consumption can also be utilized to ensure compliance and improve safety. For example, many companies use the vending system to generate automated email alerts whenever first-aid supplies are dispensed, allowing them to follow up on near misses and make adjustments to prevent future incidents.
Other customers use hydration product machines to ensure that workers comply with their hydration program. If a worker doesn’t dispense the required amount of beverage during the day, the supervisor receives an alert and addresses the issue. This type of visibility can be a small, yet meaningful step on the path to ensuring a safe working environment.
Can you afford not to vend?
Vending equipment isn’t cheap, with prices for an advanced web enabled machine exceeding $10,000. But companies should not be intimidated because there are ways to lower the investment. A wise strategy is to lease vending equipment rather than buying it. This reduces the initial cost and provides an opportunity to assess the benefits before making a long-term commitment. MRO suppliers like Fastenal will often subsidize the cost of the equipment and installation in exchange for increased business .
In an uncontrolled environment, inventory values are inaccurate and unit pricing and unit of measures are very inconsistent. A streamlined vending solution provides greater visibility and real-time usage data to help reduce stock to optimal levels, while still accounting for emergency purchases as needed.
With a fully automated reorder process and local personnel to keep the machines filled, the right vending solution can help free up time, improve productivity, lower costs and, most importantly, promote a safer work environment.