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Reduce Inventory Costs with a Parts Management Agreement

Published: Jul 10 2019

Reducing inventory costs without impacting plant operations is an industry-wide issue. It may seem like a daunting task, and most of the time it is, but CBT is here to help. Some traditional methods for reducing inventory costs include lowering min/max levels so fewer items are in the storeroom, purging storeroom stock that is no longer needed, or eliminating items from the storeroom and relying on supplier’s stock when an emergency arrives. This often leaves companies in a compromising position when an emergency arises, or an unforeseen breakdown occurs.

Most traditional methods focus on the storeroom first, leveraging actual usage information from the last couple of years to determine what items can be reduced. Because the storeroom is in place to support production, CBT has been working directly with customers to determine what is installed on the production floor. Once we are aware of what’s installed on each machine/line/process and what is currently in the storeroom there are several actions that should be taken:

  1. Confidently purge storeroom stock that is no longer installed in the plant.
  2. Assign a criticality rating to components based on the amount of time the plant can run without each component.  Many customers already have some type of rating system in place ranging from critical (must be back up and running in 4 hrs or less) to not important (production can continue for several days if the component fails). There are typically several ratings between these two, but the majority fall between these two.
  3. Check your local suppliers normal stocking levels and/or normal lead time for items that will not impact production for a period of time then rely on your suppliers’ stock for these items. Each application is at a different risk tolerance with this approach.
  4. Leverage Parts Management Agreements if they are available. Rockwell Automation has a great program that allows material to be stored at your facility, but you don’t own the material until the seal is broken on the box. CBT can handle the complete coordination and implementation process of a Parts Management Agreement in your application.

Determining what is installed on the plant floor is the most time-consuming part of this processes, but also the most important. Don’t let fear or uncertainty keep you from getting started, CBT provides complete plant floor auditing services for Rockwell Automation components, motors, gearboxes, drive belts and conveyor belts. Anything that is visible, accessible and identifiable can be audited. When the data is accurately collected, CBT can also work with you to identify items that can be reduced or eliminated from your storeroom and develop risk mitigation plans for critical items.


You can speak with your CBT Account Manager if you would like to schedule an appointment to talk more about leveraging this approach to reduce inventory costs


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