Discover Hidden Risks: 3 Services to Optimize Your Material Handling Operations - Parts Focus

We interviewed Nichole Moran, Director of Client Services and Lisa Bardill, Senior Manager of Business Development, Services. During our discussions, we discovered that there are three services Fives offers to assist customers with uncovering hidden risks in their intralogistics operations.

We developed a series of newsletters summarizing these conversations, diving deeper into these risks and how companies can surface them. The first discussion focuses on your parts and the processes involving them.

Q: We're seeing increased automation in warehouses and distribution centers. How does this impact maintenance strategies and parts management?

A: The rise of automation in warehouses and distribution centers is transforming maintenance strategies and parts management, requiring a more data-driven and strategic approach to asset reliability. Key considerations include:

Predictive & Condition-Based Maintenance – Advanced automation generates real-time performance data, enabling predictive analytics to anticipate failures before they occur. This shift minimizes unplanned downtime, optimizes labor resources, and extends asset life.

Optimized Spare Parts Inventory – quantitative insights help balance just-in-time inventory with critical spare availability, reducing carrying costs while ensuring operational continuity.

Workforce Upskilling & Digital Integration – As automation complexity grows, maintenance teams must be equipped with advanced technical skills, including robotics, PLC troubleshooting, and network diagnostics. Investing in training and digital tools is essential to maintaining uptime and maximizing ROI.

Strategic Downtime Planning – Given the continuous operation of automated systems, maintenance must be precisely scheduled to align with operational demands. A proactive approach ensures maximum system availability while minimizing production disruptions.

OEM & Vendor Partnerships—Reliance on automated systems necessitates stronger collaboration with OEMs and third-party service providers for remote diagnostics, software updates, and specialized repairs. Strategic vendor management enhances response times and long-term system performance.

Organizations can drive efficiency, reduce operational risk, and enhance overall supply chain resilience by aligning maintenance strategies with automation capabilities.

Q: Can you walk us through how a virtual inventory analysis works and what specific insights it provides?

A: A Virtual inventory analysis is a data-driven approach that leverages automation and advanced analytics to assess and optimize inventory across the facility. This process provides actionable insights to improve efficiency, reduce carrying costs, and mitigate stockout risks.

How It Works:

Data Aggregation – The process integrates WMS or ERP Systems data to create a centralized view of inventory levels, movement patterns, and demand signals.

SKU Rationalization – analytics assess SKU velocity, obsolescence risks, and usage trends to identify overstocked, underutilized, or redundant items.

Demand Forecasting – Predictive models analyze historical data, seasonal trends, and real-time demand fluctuations to optimize reorder points and safety stock levels. This historical data model can survey our entire install base, not just the individual customer, site, or asset.

Parts Criticality Assessment – The system prioritizes inventory based on operational impact, ensuring critical spare parts are available without overstocking low-priority items.

Key Insights Provided:

Cost Reduction Opportunities – Identifies excess stock, slow-moving items, and potential consolidation opportunities to lower carrying costs.

Stockout & Downtime Prevention – Highlights at-risk items and makes recommendations for preventing supply chain disruptions.

Optimized Order & Replenishment Strategies – Ensures inventory levels align with actual usage and demand forecasts, reducing waste and improving turnover.

Supply Chain Risk Mitigation – Identifies vulnerabilities in supplier lead times and suggests alternate sourcing strategies.

By leveraging virtual inventory analysis, organizations can transform inventory management from a reactive process to a proactive, strategic function—reducing costs, increasing service levels, and strengthening supply chain resilience.

Q: What are some warning signs that a facility's parts management strategy needs optimization?

A: An ineffective parts management strategy can increase costs, cause operational disruptions, and reduce equipment reliability. Executives should be aware of these key warning signs that indicate the need for optimization:

1. Rising Unplanned Downtime

Frequent equipment failures due to unavailable or delayed spare parts.

Increased reliance on emergency orders, leading to higher costs and extended repair times.

2. Excessive Inventory Costs

High carrying costs from overstocked, obsolete, or redundant parts.

Lack of visibility into inventory turnover, leading to unnecessary capital being tied up.

3. Stockouts & Critical Part Shortages

Regular shortages of essential components force workarounds or production delays.

Long lead times due to poor demand forecasting and supplier inefficiencies.

4. Poor Inventory Planning & Usage Visibility

No clear correlation between parts consumption and equipment maintenance cycles.

Reactive ordering instead of proactive inventory planning.

5. Inefficient Supplier & Procurement Processes

Over-reliance on a limited number of suppliers increases supply chain risk.

Lack of structured vendor agreements, leading to price fluctuations and inconsistent delivery times.

6. Lack of Digital Integration & Analytics

Dependence on manual tracking methods increases the risk of errors and inefficiencies.

Limited use of predictive analytics to optimize reorder points and reduce waste.

7. Fragmented or Decentralized Inventory Management

Multiple locations holding redundant or misaligned stock, leading to inefficiencies.

No centralized view of inventory across facilities, making it difficult to reallocate parts efficiently.

The Path to Optimization

Addressing these warning signs requires a shift toward an analytics-powered, predictive, and centralized approach to parts management. Leveraging automation, predictive analytics, and strategic supplier partnerships can significantly reduce costs, improve equipment reliability, and enhance operational efficiency.

Q: How do you help companies balance having enough spare parts on hand versus tying up too much capital in inventory?

A: Balancing spare parts availability with capital efficiency requires a data-driven, strategic approach that aligns inventory levels with operational needs while minimizing excess costs. Here’s how we help companies achieve this balance:

1. Data-Driven Demand Forecasting

Leverage historical usage data, equipment failure trends, and predictive analytics to determine optimal stocking levels.

Implement AI-driven modeling to anticipate demand fluctuations and prevent stockouts without overstocking.

2. Criticality & Risk Assessment

Categorize parts based on criticality—prioritizing essential components for high-value assets.

Conduct risk assessments to determine which items require on-hand stock versus on-demand procurement.

3. Dynamic Replenishment Strategies

Implement automated reorder points based on real-time consumption, reducing excess inventory while ensuring availability.

Use vendor-managed inventory (VMI) or consignment programs to offload capital investment while maintaining access to critical parts.

4. Centralized Inventory Visibility

Create a shared digital inventory across multiple locations to enable cross-facility part sharing instead of redundant stocking.

Utilize cloud-based inventory management systems to track movement and optimize distribution.

5. Strategic Supplier Partnerships

Develop agreements with OEMs and key suppliers for on-demand fulfillment, reducing the need for excessive in-house stock.

Leverage just-in-time (JIT) delivery models to optimize cash flow without increasing risk.

6. Lifecycle & Obsolescence Management

Regularly review and phase out obsolete or low-usage parts to prevent capital from being tied up in outdated inventory.

Aligning spare parts strategy with equipment lifecycle planning to adjust stocking levels as assets mature.

The Result: A Lean, Resilient Inventory Strategy

By combining predictive analytics, strategic sourcing, and real-time visibility, companies can maintain the right balance—ensuring critical parts are available when needed while freeing up capital for other strategic investments.

Q: What are some best practices for parts cage management that work well across different types of facilities?

?A: Effective parts cage management is critical for maintaining equipment uptime, controlling inventory costs, and ensuring operational efficiency. Implementing best practices can reduce waste, improve accuracy, and enhance asset reliability. Key strategies include:

1. Digital Inventory Tracking & Automation

Implement a barcode or RFID system to track parts in real-time, reducing manual errors and improving accountability.

Utilize cloud-based inventory management software to provide visibility into stock levels, reorder points, and usage trends.

2. Defined Access Controls & Accountability

Restrict access to authorized personnel using badge scanning or PIN entry systems to prevent unauthorized usage and theft.

Implement a check-in/check-out process to track who removes parts, ensuring accountability and usage insights.

3. Strategic Organization & Labeling

Arrange parts logically based on frequency of use, criticality, and maintenance needs to minimize retrieval time.

Use standardized bin locations and clear labeling to reduce search time and misplacement.

4. Automated Replenishment & Min/Max Stocking Levels

Establish minimum and maximum stock thresholds to trigger automated reorder alerts and prevent stockouts.

Leverage just-in-time (JIT) replenishment to minimize excess inventory while maintaining availability.

5. Regular Audits & Cycle Counting

Conduct weekly or monthly cycle counts to ensure inventory accuracy and reduce discrepancies.

Perform root cause analysis on inventory variances to address systemic issues like miscounts, shrinkage, or improper stocking.

6. Critical Parts Prioritization

Classify parts based on criticality, ensuring high-impact components are always available while reducing stock for non-essential items.

Align stocking levels with predictive maintenance strategies to ensure the right parts are on hand when needed.

7. Supplier & Inventory Optimization

Partner with OEMs and vendors for consignment inventory, reducing the financial burden of holding high-value parts.

Enable cross-location inventory sharing within multi-site operations to avoid redundant stocking.

By implementing these best practices, organizations can reduce inventory costs, improve operational efficiency, and enhance equipment reliability — ultimately strengthening the overall supply chain and maintenance strategy.

In the following newsletter, we will discuss the second service offering: physical inventory analysis.

About us:

Fives is a leading Intralogistics solutions provider dedicated to optimizing warehouse and supply chain operations. With years of experience and a passion for innovation, we help businesses streamline their processes, boost efficiency, and enhance their overall performance. Welcome to our newsletter, where we delve into the dynamic world of warehouse management, supply chain optimization, and cutting-edge technology that powers seamless operations.

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