Are free-issue supplies hurting your bottom line?
May 23, 2022
By Heath Hazard | VP of Sales
By Heath Hazard | VP of Sales
While the phrase “free-issue supplies” makes some cringe, success with this type of system really depends on how your program is run.
Let’s start with what it means to have supplies on free issue. Basically, this is when a site has product stocked in various locations throughout their facility for anyone to grab and use.
This applies to just about anything (including fasteners, electrical components, gloves, safety glasses…or really any form of consumable inventory).
Is free issue right for you?
For many facilities, free-issue inventory is common. While it isn’t inherently a bad system, you do need to keep your goals in mind. Are you focused on cutting costs? Needing to control consumption of common items? Reduce emergency orders?
If so, free issue presents a few drawbacks.
The first is typically that there aren’t going to be controls in place, which means you have no accountability. So, you may be working to drive down the cost of the part, but if people are using twice as much as they should be due to lack of controls, you could actually see costs increase.
Another issue is labor costs. I had a client who made parts free issue so that they didn't have to pay an employee to manage the inventory, which saved them labor dollars.
Sounds great, right? But who did they have monitoring those inventory levels?
They were extremely focused on getting suppliers to lower the cost of the product, but in some locations, they were stocking more than needed (leading to them spend more). And worse yet, in other locations, they had parts that would run out and shut down production.
Lost production time? Talk about painful and expensive…
To me, the primary problem with free issue is that most folks don't have a program designed around it. (They just set it and forget it.) When you do that, you lose visibility, accountability, and perhaps most importantly… you lose data points. And those data points are one of the keys to making your supply chain more agile.
Know your options
If you're looking to address free issue in your facility, I would start by partnering with an industry expert.
Then, challenge them.
Challenge them to help you reduce your inventory (and your risk). They should be able to do this by simplifying your world.
As your partner, you should be able to just offload the inventory management responsibility to them to own, because as the expert, they should be skilled in maintaining optimal inventory levels. They should be able to help you drive productivity through point-of-use stocking and an overall improvement in organization.
Now, shifting to faster-moving consumables…
For these, I would turn to some form of automated supply (technology like RFID, infrared, or scaled bins). That may sound expensive, but when they're done right, the impact to your bottom line is significant.
Each of these solutions works a bit differently, but all three of them provides the ability to view inventory status by location, helps automate replenishment, and introduces an opportunity for you to reduce inventory with confidence.
This way your team has access to what they need when they need it, and you gain more visibility with less risk in your supply chain.
One more option
I once had a client turn to free issue when they shouldn't have, because their true need was visibility. What they really needed was for the RIGHT people to have access to the RIGHT supplies at the RIGHT time.
Based on their needs, we recommended a different automated solution altogether: vending. This was needed because vending provided the ability to track and control.
With vending you have various models available to fit your needs. From coil machines to scaled lockers, you can dispense anything as simple as gloves up to expensive OEM machine parts.
Plus, vending gives your team 24/7 access to the items that they need, while allowing you to track and control your inventory.
Implementing any of these systems can help, but it's really the program that the supplier offers that's going to make the difference because, as the expert, they should be able to analyze your usage trends and make recommendations.
In short, they should provide you with detailed analytics that can truly help strengthen your supply chain.
That's value. That's a partnership.
So maybe there is a free-issue program that's right for you. But chances are, you can elevate what you're doing (and to do that, you need a partner who can challenge the current state of your operations and propose a path forward).
If you've decided that free issue (in your facility) is something you want to tackle, there are a lot of different directions to turn... but it really depends on your needs.
Your needs… meaning NOT a one-size-fits-all solution. The best recommendation is to find a partner who will help customize a program for you and make YOUR needs THEIR priority.
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