Practical planning and management of spare parts inventory is a critical component of an effective asset management program. If the right parts are not on hand when needed for routine maintenance or repairs, downtime is prolonged. If too many parts are on hand, the enterprise absorbs excessive costs and the overhead of carrying the inventory.
There are time-worn strategies to manage spare parts in keeping with worthwhile stock management, along with some that can be considered questionable, and a variety of new and innovative practices. Here are some useful methods to consider in your tracking of spare parts:
Maintenance Planners who are not familiar with item numbers to locate the appropriate parts in a computer system will have a tough time. Nouns and qualifiers are a way of simplifying a search. A noun is a simple, meaningful name for the item, for example “pump.” The qualifier adds more detail, such as “hydraulic.” A search on this combination will bring up all hydraulic pumps in the stock item master file.
An assortment of captions and a detailed item description can provide an increasingly narrowed search that considers make, model, size, formulation, capacity, etc. If the part can be substituted with an alternate or equivalent part, that reference also should be stored in the stock record.
ABC and XYZ analyses
The generally accepted 80:20 rule illustrates that approximately 80 percent of any storeroom’s volume is associated with only 20 percent of the items in inventory. It is important to pay extra attention to that critical 20 percent.
ABC and XYZ codes are commonly used to identify those parts. The codes are assigned based on value or quantity of stock movement, and each code will have an associated “upper limit.” Highest value parts, for example those that cost more than $5000 each, can be assigned the ABC code of “A,” and fastest moving parts can be assigned an XYZ code of “X.”
Automating the thought process related to reorders has generated proven savings. Suggested reorder functionality creates requisitions based on reorder points (ROP) and reorder quantities (ROQ) that are stored in the inventory record. Once inventory levels for a part fall below the reorder point threshold, a suggested reorder is placed for the reorder quantity, which in turn creates a requisition. This saves time and prevents the delays and errors that can occur with manual purchasing processes.
When a simple ROQ value is not enough, an economic order quantity (EOQ) algorithm can be used to calculate the right quantity of a spare part to purchase when replenishment is needed. The EOQ can consider volume discounts, the cost of placing an order, carrying costs, and other factors.
Vendor Service Levels
Capturing supplier service level data within the inventory record helps bring to light the most efficient, dependable, and cost-effective vendors. Preferred suppliers can be identified based on historical lead times, pricing, quality, number of short- or over-shipments, how often goods are received damaged, frequency of backorders, and other criteria. Preference can be given to these vendors in the procurement process.