Original Date: 08/26/1996
Revision Date: 01/18/2007

Supplies and Spares Management is a three-phase program, implemented by Weirton Steel Corporation (WSC), to minimize inventories and improve manpower utilization for the ordering, releasing, receiving, storing, handling, and delivery of materials, supplies, and spares required to efficiently fulfill operational needs. The key to the initiation of the program was a Union agreement signed in June 1996, allowing flexibility of the workforce. Phase I is in process, with Phases II and III scheduled for completion within two years.

WSC has supported a $4 million inventory of supplies and spares for a number of years in as many as six store locations. Supplies and spares were distributed from stores to satellite storerooms, operations departments, maintenance, and other users. Because of a cumbersome procurement process, unreliable delivery, and inadequate control, inventories would accumulate to ensure that sufficient supplies and spares were readily available. Approximately 20,000 motors and large spare parts were in the inventory. No single ownership existed. Motors and spares were found throughout the plant. Many were obsolete or damaged when placed into service. In some cases, the motors or spares were misfiled. A centralized inventory distribution and control system was needed to correct the problem, but job infringement issues concerning the local Bargaining Unit delayed correcting the system for several years.

In 1996, WSC initiated a three-phase program to minimize inventories and improve manpower utilization. Phase I focused on the elimination of satellite storerooms which would require changing the job descriptions of 39 personnel involved in inventory maintenance such as movers, loaders, and storeroom clerks. The company could contract out, but the Bargaining Unit wanted to preserve jobs. An agreement was reached permitting WSC to establish new job descriptions that would provide the necessary flexibility of the workforce to accomplish Phase I. The Purchasing Department worked out new agreements with vendors to reduce the vendor population from 42 to 12. Storeroom commodities are now being sold back to the vendors. The armature shop was closed. Personnel from storerooms are being reassigned to manage and control the inventories. Vacated, storeroom facilities were being converted into control and procurement centers, and inventory costs were reduced from $4 to $2 million.

Phase II will focus on centralizing the motor inventory control. All existing motors will be tagged, entered into the computer, and housed at a central store. A plant-wide, needs assessment will be conducted and viable spares will be sold. Obsolete motors will be scrapped. Centralized control will allow single, large volume procurement at discount prices. Overall motor inventories will be reduced. Phase III will focus on implementing the spares inventory control and procurement centers, and will follow a similar approach for motor inventory control.

Some benefits are emerging from Phase I, and many more will be recorded after the completion of Phases II and III. Inventory control will be significantly improved and more efficient at fulfilling operational needs. Once inventories are reduced, more capital will be available for additional modernization improvements. Pricing discounts will be attainable because of negotiations with fewer vendors for volume buying. The workforce can be better utilized due to the flexibility of job descriptions. Improved inventory records will lead to reduced repair costs, reduced failure costs, and warranty repair tracking. Improved relations with the Bargaining Unit could lead to additional agreements in other areas requiring job flexibility to preserve the workforce.

For more information see the Point of Contact for this survey.