April 2008 Edition

SHOP MANAGEMENT

Snacks Sold Separately

Using a vending machine to organize its tool inventory put money back into the pocket of a tool and die manufacturer

Davis Tool & Die of Fenton, MO, had had significant growth since it opened its doors in 1989 and yet it never established a tool crib or inventory control system. As it grew, tools and parts were scattered around the shop and it had no concept of its inventory status.

"We would order a tool because we thought we were all out, but would discover later that there was a full box tucked away on a shelf," Doug Green, purchasing agent, said.

With about 65 workers in the shop, there was no order to the inventory, accurate job-costing was impossible, and inefficiencies wasted money.

Davis Tool partnered with AutoCrib, Santa Ana, CA, to develop a simple-to-use, easily-implemented solution to its dilemma. AutoCrib is a provider of point-of-use dispensing systems – tool vending machines – with more than 4,000 installations worldwide. The concept of industrial vending evolved into a variety of products that help manufacturers control perishable tooling, safety supplies, MRO supplies, and other indirect materials.

The industrial vending machines are driven by AutoCrib’s software, letting users perform distribution-and-return tasks at a traditional tool crib window while using point-of-use dispensing machines.

Embracing a system of inventory management software and tool dispensing had an immediate impact on Davis Tool. Used for a variety of tools and supplies, automated dispensing machines assist in curbing inventory costs.

The reports . . . put $40,000 back into the pocket of Davis Tool & Die

Looking like an ordinary vending machine, a shop employee walks up to the automated dispensing machine, enters his employee number and PIN on the keypad or touch screen, and the tool or item needed for the job is dispensed. Inventory is adjusted and key data are captured: who, what, when, and job number. Reorder points are set and stock outages are eliminated through automatic electronic reordering to the supplier of each item, reducing production downtime.

RoboCrib to the Rescue

To help organize Davis Tool, AutoCrib brought its RoboCrib1000 to the facility. The RoboCrib1000 is based on a series of counter-rotating carousels that provides quick access to more than 1,000 items. This system was designed for job shop applications. Users enter information through a touch screen, which is equipped with keyword search capability. Items are delivered by individual pie shaped bins. The RoboCrib accommodates such items as gloves, welding supplies, MRO items, tools, and other items.

The system was designed to dispense large or delicate items not easily dispensed from traditional tool vending machines, while eliminating the need for individual repackaging. Users gain flexibility and product density in a 3'×3' footprint with a weight capacity in excess of 1,000 lb. RoboCrib1000 has the ability to run as a stand-alone unit or become part of a larger automated tool crib system.

"Our biggest challenge was gathering up the stock and deciding what to place in the RoboCrib," Green said. "It was time to clean house."

Implementation of any new process is often a hurdle.

"It’s not just the new hardware and software; there’s retraining personnel and getting management on board. Everyone has to take ownership of the process for a successful implementation," Steve Pixley, CEO of AutoCrib, said.

AutoCrib worked with Davis Tool & Die to create a real-time interface between its shop software, JobBoss, and the AutoCrib software that runs the RoboCrib. The interface saved time by importing jobs into the RoboCrib and tracking job costs.

Controlling Costs Through Accountability and Efficiency

The automatic purchasing feature eliminated the manual purchase order process for mundane items in the dispensing system. The average time per personnel cost of a purchase order is $150.

"We’ve already seen a difference in the automated reordering process," Green said. "Our costs are going down. I’m certain we’ll never run out of needed parts during production. There is no reason a costly stock-out should ever happen again."

Typically, point-of-use systems reduce overall consumption by 20 percent

Accountability is an issue with many shops. The capacity to control waste and inventory levels is a selling point where tight budgets and cutbacks are the norm.

Typically, point-of-use systems reduce overall consumption by 20 percent. Savings come from three areas: increased accountability makes shop workers more careful of what and of how much they use; dispensing in the correct package quantity means less waste; and setting upper control limits for a specific process ensures that tools are not wasted.

A pull system for dispensing tools and supplies is a component of lean manufacturing and can reduce both inventory and the cost of ownership. About 35 percent of the cost of ownership is the purchase price of an item. The remaining 65 percent is made up of receiving, counting, storage, disposal, and handling costs. With automated dispensing, many distributors stock the machines, keep an eye on the reorders, and handle disposal of used items. This is more efficient for the shop, provides significant savings, and frees personnel for other tasks.

With much better control of run rates and stock on-hand, Green said he was able to negotiate consignment agreements with his vendors for the most used items. The reports generated by AutoCrib let Green see what is being used and has put $40,000 back into the pocket of Davis Tool & Die by moving to consignment agreements.

"The payoff with the RoboCrib is huge. We have inventory accuracy, use patterns, and reduced obsolescence," Green said. "We’ve saved the shop money and are now much more efficient." AutoCrib

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