Effective Spare Parts Management - 8 rules
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The management of spare parts and other materials needed for realization of the maintenance process is one of the key functions in physical asset management.
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Effective Spare Parts Management - 8 rules
- 1. Effective Spare Parts Management: 8 Rules Tomas Hladik Logio s.r.o., Prague, CZ www.logio.cz
- 2. Efficient Spare Parts Management MAINTENANCE VOLUME SPARE PARTS INVENTORY MAINTENANCE VOLUME SPARE PARTS INVENTORY
- 3. 1) Go for preventive maintenance! 2) Eliminate process problems 3) Segment your spare parts portfolio 4) Evaluate spare parts criticality 5) Spare parts management starts with good forecasting 6) Use special methods for intermittent demand items 7) Consider the whole life cycle of your equipment 8) Implement a good information system for spare parts and maintenance inventory management Eight rules for efficient SPM
- 4. Go for preventive maintenance
- 5. STANDARD PLANNED PLANNED MAINTENANCE CORRECTIVE (REPAIRS) UNPLANNED PREDICTIVE PROACTIVE DEFFERED CORRECTIVE PLANNED PROCUREMENT INVENTORY MANAGEMENT Go for preventive maintenance!
- 6. Prevention or correction? Number of preventive X corrective actions Downtimes due to corrective maintenance – repairs Total maintenance cost
- 8. LIFE CYCLE OF A SP IN A COMPANY
- 9. Eliminate process problems SP NEED IDENTIFICATION There is no direct responsibility of maintenance engineers/technicians for “their” items and spare parts levels. REQUEST FOR ORDER RFO created by someone else, not by the technician who had identified the need. The step of creating RFO may not be necessary in the process. RFO APPROVAL How often are RFOs approved? Who approves? Is RFO approved by means of IS workflow or by signing a paper copy? Alternatively, are both ways needed? After RFO is approved, the issued order must be approved again. Too many approvers, complicated approval procedure and hierarchy of responsibilities. Approving on high levels of management.
- 10. Eliminate process problems PROCUREMENT Insufficient information available to procurement, poor spare parts identification – the buyer hardly knows what should be bought, additional communication with maintenance technician is needed. Missing or incomplete procurement specification in the IS. RECEPTION Problems with missing (undelivered) documentation for the received material (certificates, declarations). Only “paper-based” archiving of spare parts documentation. Problems to find documentation when needed. WAREHOUSING Insufficient identification of spare parts in the warehouse. Problems with finding items stored in the warehouse. Inventory count discrepancies, physical stock different from information system data. Non-real value of stock in the information system. Existence of out-of-system stocks.
- 19. Eliminate process problems CONSUMPTION Slow spare part issues in case of sudden need. Issued spare parts are not consumed in fact. What happens then? Consumption of external material even in case the part is on stock. WAREHOUSE RETURNS AND REFURBISHED SPARE PARTS Refurbished parts return to warehouse while new are bought. Accounting price of refurbished items is much higher (or lower) than the non-realistic value of items on stock. Problematic or impossible returns of parts issued but not consumed. Insufficient control of parts dismantled from the maintained object (the information system has no information about these).
- 20. Spare parts’ life cycle – benchmarking Internal best practice
- 21. PLANT 1 PLANT 2 PLANT 3 PLANT 4 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 1 2 3 4 Comparison of inventory turnover
- 22. Segment your spare parts portfolio
- 23. Service level x locked-in capital Inventory value 90 % 95 % 98 % 99 % 100 %? Service level / availability
- 24. ABC analysis – on hand inventory value Value of available inventory
- 25. ABC analysis – consumed quantity In spare parts, C and D categories typically prevail Quantity
- 26. Spare parts inventories segmentation – consumption frequency (in quantity) Quantity (pcs)
- 27. Spare parts inventories segmentation – consumption frequency (in value) Value (CZK)
- 28. WHEN? HOW MANY? WHEN? HOW MANY? Strategic segmentation of spare parts CONSIGNATION CONSIGNATION CONSIDER CONSIGNATION CONSIDER CONSIGNATION BUY BUY BUY BUY CONSIDER CONSIGNATION CONSIGNATION BUY BACK BUY TYPEOFFORECAST CONSUMPTION FREQUENCY
- 29. Example of buyback application 20 pieces were purchased for turnaround in 2010 for 41.2 M CZK, but these spare parts were not used during the turnaround and will be stored until the next turnaround in 2014. Buy-back in this case can save 9 M CZK (360k EUR) on storage and locked-in capital cost Between shutdowns
- 30. Evaluate spare parts criticality
- 31. 𝐶𝑖𝑛𝑣 = 𝐶 𝑢𝑛 ∗ 𝐿𝑇 ∗ 𝑓 10 000 EUR x 10% 100 EUR / day 100 days 1 per 2 years 1 000 EUR 5 000 EUR KEEP ON STOCK < Criticality calculation INVENTORY HOLDING UNAVAILABILITY LEAD TIME FAILURE RATE
- 32. Criticality assessment phases Preliminary assessment Technician Hold on stock Potentially critical part Do not stock Advanced methods to set optimal levels Criticality assessment Technician Consume Sell or Scrap Optimum SP level
- 33. Effects of failure Technical places Consequences of unavailability Delivery time Repairability Possibility of maintenance planning Part lifespan Failure probability Failure characteristics Failure anticipation Price % cost of capital Cost of inventory holding Failure probability Impacts of spare part unavailability Leadtime and other parameters Evaluate spare parts criticality
- 34. No need to pilot test How to assess criticality? 2 step or 1 step Create questionnaire Pilot test Plot results Set criticality line Create questionnaire Evaluate Set criticality line Calibrate Evaluate Re-evaluate (Validation) Not suitable for regular evaluations Less time consuming Can be made a part of process Need to calibrate Process for disagreement needed 1 step 2 step
- 35. Spare parts criticality analysis result Criticality score Spare parts items
- 36. Is it safe to evaluate in one step? 95% 5% % results reclaimed by maintenance engineers Agreed Reclaimed 0 200 400 600 800 1000 1200 1400 1600 -24 -13 -11 -9 -7 -5 -3 -1 1 3 5 7 9 11 13 15 17 19 21 Results of criticality evaluation 1 step 0 50 100 150 200 250 300 350 Results of criticality evaluation 2 step 94% 6% % results disagreed by maintenance engineers Agreed Reclaimed 2 step 1 step
- 37. 1 step evaluation in SP process I need a spare part on stock Filling a questionnaire Stock level OK? Reclaim and escalation to manager Reclaim OK Setting of stock level in IS No spare part on stock
- 38. How much time is needed? 16 minutes or less in 80% of cases Time
- 40. Login = Příjmení Heslo = Jméno Příklad: tokac miroslav Login a heslo
- 44. Spare parts management starts with good forecasting
- 45. Quantitative methods x Common sense Quantitative methods Common sense
- 46. Quantitative methods x Common sense Quantitative methods Common sense Unexplained / Random Uncertainty of future consumption Maximize Make efficient Minimize
- 47. Forecasting step-by-step Visualisation of time series For better understanding of the time series Calculation of accuracy Absolute and relative errors, evaluation on testing season Calculation of forecasts using all available methods Selection of the best method Best accuracy and reliability 1 3 2 4
- 48. Which method is the best for spare parts? 1% 1% 2% 3% 5% 9% 79% Konstantní model Regresní model Holtovo exp. vyrovnání Jednoduché exp. vyrovnání Klouzavý průměr Winters Forecasting není možný Constant model Regression model Holt’s exp. smoothing Simple exp. smoothing Moving average Winters Forecasting impossible ???
- 49. Use special methods for intermittent demand items
- 50. TýdenníspotřebyND Historie týdenních spotřeb (týdny) 4 13 17 30 0 1 2 3 4 81 18 25 27 26 32 Spare parts – intermittent demand Weekly consumption history (weeks) Weeklysparepartconsumption(pieces) QUESTION: What reorder level should be set in order to ensure required availability of a spare part?
- 51. TýdenníspotřebyND Historie týdenních spotřeb (týdny) 4 13 17 30 0 1 2 3 4 81 18 25 27 26 32 Bootstrapping Bootstrapping = random sampling from history of consumptions. SP consumption for lead-time period is sampled from history Sample 1: Consumption in 6 weeks = 5 pcs WeeklySPconsumption Weekly consumption history (weeks) Example: SP lead time is 6 weeks
- 52. Bootstrapping Vzorek 2: Spotřeba za 6 týdnů = 0 ks TýdenníspotřebyND Historie týdenních spotřeb (týdny) 4 13 17 30 0 1 2 3 4 81 18 25 27 26 32 Sample 2: Consumption in 6 weeks = 0 pcs Weekly consumption history (weeks) Sparepartconsumption(pieces)
- 53. Bootstrapping Vzorek 3: Spotřeba za 6 týdnů = 12 ks TýdenníspotřebyND Historie týdenních spotřeb (týdny) 4 13 17 30 0 1 2 3 4 81 18 25 27 26 32 Sample 3: Consumption in 6 weeks = 12 pcs Weekly consumption history (weeks) WeeklySPconsumption
- 54. Bootstrapping Vzorek 4: Spotřeba za 6 týdnů = 2 ks TýdenníspotřebyND Historie týdenních spotřeb (týdny) 4 13 17 30 0 1 2 3 4 81 18 25 27 26 32 Sample 4: Consumption in 6 weeks = 2 pcs Weekly consumption history (weeks) WeeklySPconsumpiton
- 55. Četnostispotřebvjednotlivýchintervalech (zesimulace) Spotřeba během LT – intervaly (ks) 0 5 10 15 60 000 0 30 000 Kumulativnípravděpodobnostspotřeby 100 % Example of 100 000 simulations of SP consumption Target: SP availability (Service level) = 99% OPTIMUM INVENTORY= 9 PCS Consumption during leadtime (pcs) Cummulativeprobabilityofconsumption Frequenciesofconsumption (fromsimulation)
- 56. Bootstrapping application – a case study 99.9% availability Original inventory: 17 000 EUR (49 pcs) Spare part lead-time: 32 days Recommended inventory 29 pcs 10 000 EUR Savings 7 000 EUR Intermittent demand
- 58. Life cycle thinking: Consider the whole life cycle of your assets
- 59. Life cycle thinking: Consider the whole life cycle of your assets
- 60. Bermuda triangle of asset management Life cycle thinking: Consider the whole life cycle of your assets
- 61. PROCUREMENT MAINTENANCE RENOVATION COST PROFIT? PROFIT MAINTENANCE CREATES VALUE! ASSET LIFE CYCLE
- 62. Asset life cycle (Kari Komonen, EFNMS EAMC) INVESTMENT UTILIZATION $$
- 63. PROCUREMENT MAINTENANCE RENOVATION COST PROFIT? PROFIT MAINTENANCE CREATES VALUE! ASSET LIFE CYCLE
- 64. PROCUREMENT MAINTENANCE RENOVATION COST PROFIT? PROFIT MAINTENANCE CREATES VALUE! ASSET LIFE CYCLE
- 65. PROCUREMENT MAINTENANCE RENOVATION COST PROFIT? MAINTENANCE CREATES VALUE! ASSET LIFE CYCLE PROFIT
- 66. Efficient spare parts management Conclusions
- 67. Efficient spare parts management – 8 rules Preventive maintenance Processes without problems Segment your SP portfolio Assess the criticality Good forecasting Special methods for intermittent demand items Asset life cycle Good information system
- 68. Good information system for spare parts management Quantitative methods Common sense Unexplained / Random Maximize! Make efficient! Minimize! Forecasting Inventory levels Ordering Input of technicians and procurement Criticality analysis Forecast accuracy and reliability
- 69. Efficient Spare Parts Management MAINTENANCE VOLUME SPARE PARTS INVENTORY MAINTENANCE VOLUME SPARE PARTS INVENTORY
- 70. Thank you Tomas Hladik Logio s.r.o. Prague, Czech Republic www.logio.cz hladik@logio.cz +420 731 151 276