Poor inventory management hurts more than purchase orders and balance sheets. The impacts of ineffective inventory control are far-reaching, touching every facet of manufacturing, from worker and end-user safety to premature equipment failure. Not having the right parts on hand can cause critical safety risks that jeopardize employees, operations and productivity.
4 Safety Risks Tied to Poor Inventory Management
Risk #1 - The Danger of Using Incorrect Parts
Using incorrect or incompatible parts to compensate for stock shortages compromises equipment safety, quality and reliability.
Incorrect parts may not meet the original equipment manufacturer (OEM) specifications for material strength, load capacity or durability, leading to structural failures, machine malfunction, product defects and increased breakdowns.
Imagine using a replacement bolt that lacks the tensile strength needed for a high-pressure system. It could break under stress, causing the machine to collapse or release hazardous energy. An expensive, and possibly dangerous, proposition in many industries.
Risk #2 - Delayed Maintenance and Repairs
Failing to have the right parts or tools available for scheduled or emergency maintenance can result in increased wear, higher repair costs and unplanned downtime.
Imagine a worn-out hydraulic hose starts to split under stress. If replacement components aren’t available for proper replacement, employees may feel pressured to create a makeshift repair to keep production moving. This could lead to the hose bursting, leading to serious injuries like burns, infections, blindness and more if the hydraulic fluid hits an operator.
Risk #3 - Insufficient Stock of Safety Components
Does your production equipment require the use of certain essential parts like machine guards, lockout tagout, or safety sensors for safe operation? Not having these items on hand can significantly increase the risk of occupational safety incidents. Without proper safety components, the employee risks injury from moving or rotating parts such as gears and pulleys.
Imagine a piece of equipment that needs repair, but employees lack the lockout tagout (LOTO) devices and indicators they need. LOTO devices are critical for the safe de-energizing and isolation of machinery during maintenance or repair. Without them, workers may skip proper procedures, and the equipment could have an unexpected restart, or systems could remain energized.
Risk #4 - Consumables Not in Stock
Not having MRO consumables like lubricants and cleaning supplies on hand inevitably leads to impacts on machine performance, equipment overheating and costly breakdowns. The result may be contaminated work areas, malfunctioning machinery due to lack of lubrication, increased risk of slip and falls and exposure to hazardous material.
Imagine a piece of equipment that has a slow oil leak that reaches walking-working surfaces. The worker heads to the supply closet for absorbents to clean up the spill and identify the hazard but can only find a general cleaner. The product may not cut through the oil, leaving a slick surface primed for injury.
Direct and Indirect Safety Costs of Inventory Mismanagement
Lapses in inventory control can lead to higher costs, downtime and liability concerns like these:
Downtime and Production Losses
The average cost for a downtime event for manufacturers ranges between $36,000 in the consumer goods space to $125,000 per hour in the energy and heavy industry space, according to a 2023 “Value of Reliability” survey by ABB.
Poor inventory management can lead to the unavailability of essential parts, consumables, or lubricants, necessary to keep machinery running smoothly. When these items are out of stock, it may result in equipment failure or reduced efficiency, directly impacting safety and productivity. For example, if you need a replacement seal for your cylinder, it may take up to 8 weeks or more for delivery. Investing in a spare seal kit on-site will prevent costly downtime.
>> See how MCE company Lone Star supplies new seal kits for your cylinders.
Employee Injury and Liability
Employers pay about $1 billion per week for workers’ compensation costs (OSHA). The cost per medically-consulted worker injury is about $40,000, while the cost per death is about $1.4 million, according to the National Safety Council (NSC).
When safety-critical items or parts aren’t available, workplace hazards inevitably increase, leading to potential costs from medical expenses, legal liabilities and increased insurance premiums. Delays in maintenance due to inventory shortages can increase the likelihood of employee injuries, as equipment that isn’t properly maintained or lacks essential parts may malfunction. Reduce the risk of safety-related incidents by ensuring the availability of essential stock. You can calculate the cost of safety-related injuries to your organization by using OSHAs Safety Pays Individual Injury Estimator.
Impact on Employee Morale and Retention
Only 45% of manufacturing workers report their morale as high, according to a study by Epicor — a major issue as the sector braces for a 3.8 million workforce shortage.
Workers rightly expect to work in a safe environment that protects their health and wellbeing. Frequent or recurrent safety events impact employee morale and trust, leading to increased absenteeism and turnover. These issues expose the company to liability risks if employees are injured as a result of missing safety components or delays in essential repairs. Not to mention the costs of hiring temporary workers and opportunity loss.
6 Practical Inventory Management Tips for Improved Safety
- Use Vendor Services: Proactive stocking, which MCE offers as part of its VMI (Vendor Managed Inventory) services, can mitigate safety risks from missing stock. By holding safety stock and ensuring that critical components are available as needed, MCE helps prevent potential downtime and safety incidents that could arise from delayed maintenance.
- Organize Storage Room: A disorganized stockroom is a recipe for missing stock, damaged items, and safety risks. Maximize your vertical space with shelving to keep essential items easy to access. Perform inventory checks regularly and consider inventory management software to streamline efforts.
- Prioritize Stock Levels of Safety-Critical Components: Implement regular inventory audits focusing on safety-related items and parts needed for essential functions. Be sure to document low or missing stock items.
- Implement Predictive Maintenance Inventory Practices: Leverage data to ensure maintenance-related parts and consumables are well-stocked. Tools like proactive analytics can reduce reliance on emergency inventory costs, saving unnecessary rogue spend.
- Cross Departmental Coordination for Safety Compliance: Establish a team approach to ensure inventory decisions align with safety and production standards. Train employees on effective stockroom organization practices and how to communicate stock levels according to your system.
- Use Color Coding: To address language barriers at some sites or to improve visual controls we recommend using color-coded bins and labels to differentiate parts, making it easier for all workers, including non-native speakers, to identify items correctly. Color-coding reduces the chance of assembly errors that could result in malfunction or accidents, improving overall safety.
MCE Inventory Management Programs Can Help
Motion & Control Enterprises (MCE) is a leading supplier of vendor-managed inventory services for industrial and manufacturing markets. We understand your inventory levels directly impact your operations and employee safety. That’s why we have curated services that include Vendor Managed Inventory, Customer Managed Inventory and Stocking Agreements tailored to your unique business needs.
Learn More About our Inventory Management Programs
VENDOR MANAGED INVENTORY (VMI)
You get full access to our VMI software and a team of technical experts. We'll help you set up dynamic inventory levels, replenishment triggers, and reporting mechanisms. These work together to identify trends and opportunities for improvement — all through our software and quarterly program reviews.
Customer-Managed Inventory (CMI)
Similar to the Vendor Managed Inventory program, except you direct product replenishment when you need it on any Apple or Android device. By setting up your own self-checkout/management system, you get access to our inventory software programming, and your dedicated MCE team members are always just a call away.
Inventory Stocking Agreements
With stocking agreements, your most crucial equipment is our top priority. MCE will assist in demand forecasting and developing estimated lead times to ensure your orders are ready ahead of time, saving you from unplanned downtime.
Let us know how we can help improve your inventory management program for better safety and profitability.