Do you have the right spares in stock when your equipment fails? Do you have too much of the wrong spares and need to write off part of your inventory each year? Spares are a requirement, yet a pain for many organizations. Why are they a pain? They typically are not managed with the level of rigor that all other materials groups are, but they need to be.
So where does one start when trying to get their spare parts program organized? Well, any spare parts program is made up of many different aspects. When all aspects are working together, the spare parts program ensures the right spares are available, in the right quantity, at the right time.
Spare parts are kept on site typically for one of two reasons; unexpected failures, and poor work management practices. We can all agree that some failures are unpredictable and in those cases, we should have the right spare parts on hand to enable a quick repair.
In other cases, spare parts are stocked to perform routine Preventive Maintenance (PMs) and planned work. If a work management program is in place, and effective, one could argue that the need to stock extra parts can be eliminated.
So, the first step to fixing a spare part program is to ask yourself, why are we stocking this part? Is it because of an unexpected failure, or are we compensating for a poor work management program?
Once the reason for stocking the spares has been determined, the right data is needed to ensure that the stock levels are managed correctly, spend leveraged and that there are no duplicate parts in the storeroom. The right data can be broken down into a few specific types;
All of this data is critical to the management of the spare parts and should be controlled by a governance process to ensure it is accurate and consistent.
When you walk into your storeroom, what do you think of? A junk drawer in the kitchen or an auto parts store? The storeroom should be organized in a way that allows easy access to the commonly used parts (think nuts, bolts, Loctite, etc.) and controls access to the more important or expensive parts.
Also, the parts are organized by the class (or type) of parts. You don't have headlights for a car in section and headlights for a truck in another. All lights are in the same section. So why are storerooms constantly organized by machine and not the type of part? This makes parts hard to find and can lead to duplicate parts.
So, when setting up your storeroom, think of your local auto parts storeroom and model your storeroom after the store.
Most stocking levels are determined by the craftsman thinking he will need 3 to do a job, so he asks to have six stocked. The storeroom staff then double that min to arrive at a max. As you can imagine, this leads to an extremely high level of extra or unnecessary stock in the storeroom.
The right way to calculate the level of spares is to use Data (see above). The min, max, safety stock and criticality can be calculated with a few basic formulas;
- Minimum Stock Quantity (Min) = (usage per year / 365) x Lead time
- Maximum Stock Quantity (Max) = Minimum quantity + Economic order quantity (EOQ)
- Economic Order Quantity = √(2DS/H)
D = Usage per year
S = Ordering cost per order
H = Inventory carrying cost
- Safety Stock = (maximum lead time – normal lead time) x normal consumption rate
- Normal consumption rate = expected annual usage / 365
- Criticality can be determined by using a basic risk matrix;
1 – 2 = Do not stock
3 – 12 = Setup stock
15 – 25 = Setup critical stock
There are much more advanced formulas and techniques available, but if most organizations use this basic approach, the savings realized across the storeroom would be tremendous. Data-driven decision-making trumps gut feel any day.
Spare parts, like most other materials, have a limited shelf life. If that shelf life is exceeded and the parts are used, it has the potential to impact reliability. Take a V-belt for example. If a V-belt is hung up on a nail and left there for two years in the sunlight, the V-belt will develop a weak spot from hanging on the nail and the rubber will degrade due to the UV light. If this belt is installed, how long will it last?
Spare parts also require maintenance. Yes, you read that right. Take for example large motors, should have their shafts rotated on a regular basis to prevent flat spots from developing on the bearings. If this is not done, the larger motors can be installed with a defect and lead to a premature failure.
The best way to make sure that your spares are preserved in the best possible way is to follow the manufacturer's recommendations. Without any manufacturer's recommendations, the storeroom can follow these basic rules of thumb;
Keeping spare parts in good condition is not difficult, it just requires a little bit of forethought.
"You Can't Manage What You Don't Measure," and this is true in the storeroom as well. Do you know what your stock turns or stock-outs are? How much stock hasn't moved in the past 18 months?
When looking at storeroom performance, there are any different aspects to consider, so if you are not currently measuring anything, pick a measure or two to focus on that area. For example, if the craftsmen are complaining that the storeroom never has the right parts, but there is a large amount of stock in the storeroom, consider looking at stock turns.
However, when picking the proper performance measures, be sure to select a balancing measure as well. If you choose to focus on stock turns to evaluate if you have the right stock, be sure to balance with stock-outs. This way the storeroom is still being managed in a way to deliver service.
While the article above is not an in-depth step by step guide to transforming your storeroom, it should prompt you to think about what could be done differently in your storeroom. I encourage you to pick one of the topics above and think about what changes you can make.
Remember, to find success; you must first solve the problem, then achieve the implementation of the solution, and finally sustain winning results.
For more from James, tune in to the Rooted in Reliability podcast.