Focus on Reliability

Good Spare Parts Inventory Management – A Lucky Shot or a Well Thought Out Process


Many times, we are asked to visit organizations with a view to identifying where the biggest challenges to a successful maintenance and reliability lie. Quite often we are shown where the problems lie but there is no real understanding of ‘why’ they exist. There is one situation that arises in pretty much every organization in some form or other and that’s a disconnect between maintenance and the procurement or storeroom functions. There are many variations on who does what in this function and even who owns what, far too many for me to go into every scenario, so for the sake of this blog I’m going to treat them as three separate functions and you can fit them to your situation.

It’s not unusual to find in our discovery meetings, that maintenance is blaming procurement and stores for not having the parts that they need on the shelf at the same time as procurement and stores are complaining about having to expedite purchases or rush parts in overnight. So, as I said, they could point out the problem - sitting across the room -but they had no idea as to the ‘why’ of the problem and they didn’t understand that they were actually talking about the same issue! When we dig deeper into the challenges the typical organization face, we ask about their inventory management policy or procedures and who is involved in developing and updating them. The answers we get vary from – ‘we don’t have anything formal’ to ‘procurement own the process’ to the ponderous ‘it’s done automatically by the system’. Very rarely do we hear that maintenance, procurement, stores have developed them collaboratively, or that they have well defined and agreed to process flows that show how inventory management is carried out. Worse than this is when we ask how the success of inventory management is measured, it’s not unusual to find that the success of inventory management is not tied directly to the performance of any of the departments – downtime because of lack of spare parts is just lumped in with the rest of downtime and so is hidden – cost of expediting and rushing spares is not even identified as a separate line item even though the cost of this rushed delivery is greater than the cost of the part purchased! This lack of focus on the results of poor inventory management practices allows the situation to exist without anyone addressing the causes of the problems.

To have an effective inventory management system then the three functions that make up the system need to be involved in deciding how things should be done – supply (procurement) – holder (stores) and end user (maintenance). There need to be a common vison as to what the system is supposed to achieve something like ‘Ensure that the right parts are available at the required time for the lowest cost’. Now everyone needs to understand what this means and the roles they should play in the process. Often, we see that procurement only read the last part of the vision, ‘the lowest cost’, and miss out on ‘the right parts’ and think that by purchasing cheaper, inferior parts that fail prematurely they are meeting their obligation – not realizing that these failures often prompt the expediting or rushing of the next batch of spare parts that they hate. Maintenance sometimes feel it’s OK not to plan or schedule the work in advance or if they do, don’t see the value in kitting for work orders and then get upset when they go to the maintenance storeroom only to find they don’t have the spares they need for the job and so they either have to start the ‘rush’ process again of even worse, and I’ve experienced this more times than I care to remember, ‘put it back together and see if we can limp along until the part comes in in a few days!’. This should point the maintenance group in the direction of the vison statement of ‘available at the required time’ and prompt them to be proactive rather than reactive and ensure they have the resources to complete their work. Obviously, the maintenance department may not be responsible for there being no parts on the shelf and it really is the responsibility of the stores to ensure this by reviewing the CMMS or whatever system they use to order the parts as required. (We will discuss how we arrive at this in a future blog).

Once everyone has agreed to the vision or outcome they desire and the parts they play in achieving them, then how you are going to measure the success will be the next step and there should be clear connection with achieving the common goals. These goals need to be developed collaboratively so you don’t fall into the trap of aiming for goals that drive the wrong behaviors – procurement have to reduce inventory holding so they buy cheap knock-offs, stores don’t want to have to report on too many stock outs and so they stack the shelves with costly spares and maintenance get fed up off being hit with downtime because they don’t have the right spares so they decide to ‘squirrel’ away parts and build their own unofficial stores. To ensure that there is no misunderstanding about who is responsible for doing what, process flows should be developed depicting all of the steps along the way from when, how and why a PO is written, through how it is received and stored to how it is issued, and the process starts again.

Everything we have talked about so far has been to set up the scenario and environment to build the successful Inventory management system but what exactly do the workings of the system look like? What is ROP or ROQ and how do they work - are they different from max and min? What is ‘fixed order quantity’ and how does it differ from ‘fixed time period’? How should we classify spare parts and why would we do that? How often and what should we be auditing in the stores? How do we set the stocking levels? What exactly is shelf life and what part role does it play? How can we use the CMMS to give us more information on the challenges? Is Kanban something different?

Over the next few blogs, we will answer all of these questions and more as we discuss the options that you can choose to give you the best inventory management system you can have………….. for you!

#maintenance #reliability #mro #spareparts #materialsmanagement #storeroom #criticalspares 

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Topics: Maintenance Storeroom Stockroom Shutdowns and Turnarounds Maintenance and Reliability Storeroom/ Materials Management materials management training