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Optimize Spare Parts with Data-Driven Reliability

Introduction to Spare Parts

Effective spare parts programs can help an organization save money by avoiding unplanned downtime and preventing an obsolete or overstocked inventory. On the other hand, poorly managed Maintenance, Repair, and Operations (MRO) can be a primary contributor to poor availability and a huge drain on an organization’s finances.

Let’s take a look at what spare parts is, why it’s important, what the limitations are, and what the future of spare parts warehousing looks like.

What Is a Spare Parts Program?

A spare parts program stocks and maintains an inventory of critical parts, materials, consumables, and specialty tools required to keep a manufacturing or processing facility operational. A clear spare parts stocking strategy is required to make sure you are not overstocking spares (and wasting money) or understocking spares and risk delayed repair times for critical assets.

Spare parts are often referred to as Maintenance, Repair and Operations (MRO) because it not only involves the maintenance and repair of production assets but also includes inventory management of tools and consumables needed to run the process.

Should the part be stocked or not?  Risk of both determining what “should be” inventoried and the preservation of these parts.

Spare parts programs have two parts:

  • The first focuses on the inventory of spart parts. Often referred to as “right-sizing,” it aims to determine what parts need to be kept in inventory, how many of each of the parts, and min/max/reorder points. It also considers such things as vendor stocking strategies (whether to have a vendor house spare parts in consignment at their facility rather than at the plant) and kitting of parts needed to perform certain tasks.
  • The second part involves the preservation of the parts stored in the warehouse. These activities are designed to preserve the parts in as new condition as possible by mitigating any damage that can occur if stored improperly. Shelf-life concerns and degradation will need to be taken into consideration (i.e. rubber products dry rotting or plastic becoming brittle) as well.

How Can Data-Driven Reliability Improve Spare Parts Optimization?

Today, facility data systems rely heavily on Subject Matter Expertise and while these resources add significant value, they can be better utilized in situations where their expertise. Data-driven reliability and  intelligence solutions, such as Spare Parts Optimization and RCM, can improve your facility’s reliability performance through a combination of engineering and data science.

Value of Spare Parts

The primary value of a robust spare parts program is having the parts available when needed, but additional benefits of this include:

  • Reduced downtime
  • A reduction of inventory leading to reduced taxes
  • Having the correct parts on hand to maintain productivity
  • Avoiding the volatility of supply chain demands and long lead times
  • Complete Equipment Parts List (EPL) / Bill of Materials (BOM)
Case Study Highlight

Achieving a 75 Percent Cost Reduction Against Vendor Recommendations Through Spare Parts Optimization

As part of its comprehensive asset management program, a new processing facility off the coast of Africa identified the need for a spare parts strategy as part of its capital planning. Pinnacle helped the facility develop a spare parts strategy that reduced the projected stocking costs by 75%.

Read the full case study: Achieving a 75 Percent Cost Reduction Against Vendor Recommendations Through Spare Parts Optimization

  • Challenges with Spare Parts Warehousing

    Many facilities are challenged with striking the proper balance of spare parts to be held in inventory. On one hand, downtime can be significantly reduced if all spares needed for a repair are immediately available. However, this practice is costly. On the other hand, if spares are not readily available, the lead time from Manufacturers or Vendors can cause production loss and may even jeopardize your facility’s regulatory compliance.

    Challenges associated with spare parts warehousing generally include:

Reliance on Vendor Recommendations

Vendors are not stakeholders in the running of your facility and will oftentimes provide a list of spare part recommendations (RSPL) based solely on the equipment package they sold you, without taking into consideration the number of similar assets, the interchangeability of similar parts between other assets or the criticality of the assets. This practice often results in overstocking, which runs the risk of high carrying costs, loss of function costs, and potential obsolescence.

Demand for a Part

At the center of spares planning is determining the demand of parts to set inventory levels. The issue with this method is that most organizations do not have a good idea of part demand, which makes it difficult to plan an optimal spare parts stocking strategy.

Improper Storage

Many organizations do not store or preserve their equipment correctly, which leads to shelf-life concerns and degradation and can cause loss of function. An overstock situation can put a greater burden on any preservation activities which could result in premature failure of the part causing additional downtime and rework

Learn more about how data-driven reliability can help improve your maintenance and operations programs.

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