How Improved Asset Management Increased Profits for One Virginia Contractor

Since its founding in 1976, Superior Paving Corp. has worked hard to be an industry leader. But for years, its asset management and inventory control process were on unsteady ground. It had been that way for a long time, in fact, and something needed to change.

“They had no idea what they had. [Inventory] wasn’t logged anywhere,” said Preston Ingalls, president and chief executive officer of TBR Strategies LLC. “There was no parts catalog—no listing.”

Parts were scattered around the storeroom—unmarked and uncategorized. No records were being kept of what was coming in or going out, and even worse, no records were being kept of exactly who was using the parts or returning them to storage, as the parts room had unsecured access. Superior Paving’s leadership team called on Ingalls and his team to help get their storeroom in order as of its overall total process reliability (TPR) efforts. The TPR program taps into the Japanese concept of “total productive maintenance.” The TPR process includes five phases, from diagnosing asset management needs to post-program assessment:

1. Conducting a gap analysis
2. Developing a support network
3. Development of a plan
4. Education, training and execution of the plan
5. Evaluation through key performance indicators (KPIs) and audits

“When we started working with them, they were spending an astronomical amount as a percent of their asset value,” Ingalls said. “They didn’t understand the true cost or burden to the organization.” 

A More Secure Space

The storeroom was open, vulnerable and available to all employees, which is a major problem where security is concerned. “They had no inventory control,” Ingalls said. “You’ll never have true accuracy if it is open to personnel. It was up on the mezzanine, which means it was difficult to get parts up and downstairs. They had lots of undocumented parts just sitting on the shelves gathering dust. Because they didn’t know what they had, they would often have to place emergency orders for items that were already there.”

Improvements Start with Identified KPIs

To tackle these issues and get things organized, catalogued and supervised, they decided to implement a maintenance, repair and supplies management program—a disciplined approach to managing inventory.

They first established a set of KPIs for the business. One of the most important— tracking money spent, and, by extension, waste accumulated—was key. According to Equipment Manager Ralph Sine, “Being able to track waste opened the eyes of Superior’s management to practices they simply had to change.”

“When the business decided to reorganize its asset management, some of the biggest contributors to their success were establishing a baseline for data to gather the age, hours and bad actors of the equipment,” Sine said. “And organized inventory management has been important to asset management by providing us with information on obsolesce. We had three times the value of our current inventory before we got started on TPR.”

The staff discarded wasted and obsolete parts and marked, catalogued, and organized what remained. Equipment Inventory Specialist Rocky Miller said the organization of the parts room has made it possible for employees to quickly find parts and has created a place to sign out those parts, so others know who has removed them and where they have gone.

A site map details the room itself, while clearly marked shelves and drawers make ease of finding parts a snap.

Obsolete Inventory Goes Out the Door

“By organizing our inventory, we’ve also been able to make the room a contained and secured space,” Miller said, adding that fewer than a dozen employees have access to the room now. After organizing, Miller then began the laborious process of surveying the inventory and ridding the storeroom of obsolete or deteriorated inventory—translating into not just more physical space in the parts room, but money saved, too.

“We trained Miller on the program, and he made decisions on getting rid of a lot of stuff. The cost of maintaining a storeroom is 25% to 30% of the total value,” Ingalls said. “If you have $1 million worth of parts, it will cost you $250,000 a year to run it, including pilferage, losses, personnel, taxes, etc. It is called carrying or holding cost. If you have a lot of stuff that just doesn’t have value, you’re paying every year to shoulder that burden. It’s like paying the interest on your credit cards. You never see it, but it accumulates.”

Growing Pains

Sweeping change at any company is also accompanied by a need to change the mindset and deeply rooted habits of its employees. As the team became acclimated to TPR, greater levels of organization and declining amounts of waste, Superior Paving was no exception.

“We started (training) in the shop first, and we went through probably a year or a year and a half of changing the culture,” Sine said. “Everyone was concerned about their jobs because everything was changing. This was reorganizing and regrouping; getting more bang for our buck. It was just going to look different than it was before. Everyone got engaged within the shop. We’ve gravitated through the rest of the company.”

Dipping Costs & Rising Efficiency

Eventually, the company saw its maintenance costs slowly declining. More than that, they saw a decrease in down time, thanks to a new habit of tracking parts history and projected usage. Now Superior Paving had the tools it needed to minimize waste and maximize the team’s use of time, inventory management and physical space, the company had positioned itself for greater future success.

A Trickle-Down Effect

That readiness for anyone who might drop by and visit will benefit the company for years to come, Miller adds, saying he wants the principles of TPR to extend to other areas of the company. Ingalls praises Superior Paving as a company whose employees truly listened to the theories and practices espoused in the TPR program, and then successfully implemented them. It’s not always as easy as it seems, Ingalls says, but it has always proven worthwhile.

“There’s a place for everything and everything in its place. People don’t always see the value in doing that,” Ingalls said. “You have someone depending on their own knowledge and recall—‘I know where I put that thing.’ But our memories are not reliable.” 

It’s Only the Beginning

For Miller and his coworkers, an efficient parts room is only the beginning—and the benefits are numerous and immediately seen. “We’ve been able to establish data on what we have and what we need. Our fleet is always evolving, so we’re able to keep track of what equipment we might become obsolete at the end of the next season, which in turn will help us evaluate just what we need to stock or not stock for that piece of equipment,” Miller said. “Also, the data that is provided with having an organized parts room has helped us reap more rewards, such as tracking KPIs, as well as other valuable information.”

Throughout the company’s evolution, Miller adds, its leaders and employees haven’t forgotten its humble roots, and they stand ready to assist other companies in benefitting from the training they received from TBR Strategies.

Ingalls said, “This has provided Superior with a major competitive advantage. Having the right parts at the right time in the right condition means less downtime, which equates to increased production. They have much to be proud of.”