2.6 A Practical Method for Setting Spare Parts Holding Levels
10 Key Lessons: Create and Stock
Part 3: Operations
3.1 The Longest Part of the Cycle
3.2 Forecasting Spare Parts Requirements
3.3 Inventory Optimization
3.4 Managing Rotable and Repairable Spares
3.5 Storeroom Management
3.6 How to Achieve 100% Inventory Accuracy—a Preventive Approach
3.7 The Practical Application of Bar Codes
3.8 Materials Data Management and Cleansing
3.9 Integrated Maintenance and Spare Parts Planning
3.10 Spare Parts Procurement Issues
10 Key Lessons: Operations
Part 4: Obsolescence and Disposal
4.1 Obsolescence and Disposal Is Part of the Life Cycle
4.2 Managing Obsolescence
4.3 Managing End of Life and Last-Time Buy
4.4 Spare Parts Disposal
10 Key Lessons: Obsolescence and Disposal
References
Commonly Used Acronyms
Index
In December 1958, a writer named Leonard Read published an essay titled, “I, Pencil: My Family Tree as Told to Leonard E. Read.”1 This essay was written from the point of view of the pencil and details the complexity and range of functions and processes required to create the seemingly simple object of a pencil. These functions and processes start with the growing and harvesting of the wood, the development of the “lead” (which is actually a complex process involving graphite, clay, water, and other elements), through to the logistics and planning to bring everything together and then deliver the pencil to the user. The essay talks about the absence of any single mastermind “forcibly dictating those countless actions,” and yet the pencil comes into being and pencils have been used for hundreds of years!
The concept of the “invisible hand” (or lack thereof) could be applied to almost any modern item, but in the context of this book, let’s think about spare parts. Even the simplest of spare parts, say an O-ring, has come into the possession of its end user through an extraordinary and complex chain of people and processes. The nitrile rubber that is used for some types of O-rings is a synthetic compound manufactured from a base of propylene (derived from petroleum or natural gas) as a copolymer. The process includes a range of additives and catalysts. The appropriate form of nitrile is later manufactured into O-rings through a process of extrusion, injection molding, pressure molding, or transfer molding. The O-ring is then packaged, handled, shipped, stored, distributed, ordered, shipped again, processed into a storeroom, stored again, requested, issued, transported, and finally used. Supporting this activity is most likely a mind-boggling number of people, applying a range of computer software and using internal company policies and processes at potentially dozens of different companies along the way. In addition, there are supporting activities from managing, controlling, directing, and even cleaning the container ships on which the product at its various stages is moved, through to the work of accountants issuing and processing invoices and paying wages.
As with the premise of the essay “I: Pencil,” it is impossible to believe that any one person has the insight or know-how required to control or manage the entire process involved in the life cycle of an O-ring.
But what if we shorten the horizon and only consider the processes and management required to get from the wholesale distributor to a company through to application and finally to end-of-life disposal? Surely that would be simpler? Simpler, yes, but, except in the most rudimentary of organizations, still too complex for any one person to know or understand all the steps and processes involved. This shortened horizon in the life of a spare part includes:
• Identifying the need for the part
• Deciding whether or not to stock it in the company inventory
• Deciding how many to stock
• Creating the software to manage and control the procurement and inventory
• Entering the details into that software
• Placing an order
• Organizing the logistics
• Receipting delivery
• Entering the item into the storeroom system
• Correctly storing the item
• Processing the documentation and paying for the part
• Planning and scheduling its use
• Arranging and executing the logistics to get the part into the hands of the right person at the right time
• Installing into the equipment
• Monitoring the physical condition over time
• Repairing when appropriate (and managing that process)
• Determining when it is beyond its functional life or otherwise obsolete
• Removing the part from service
• Responsibly disposing of the part
• Recording the disposal as required
In an organization of any reasonable size and complexity, this list of activities will involve a wide range of personnel over a long period of time. Many of these people will never know each other. Even those who work at the same company at the same time may never meet. They will never discuss their actions relating to a spare part and their role in its journey. And so this seemingly simple task of procuring and managing a spare part is not only more complex than many people realize; it also involves the coordination of the decision making and actions of people who will never meet.
That is why I have written this book. While there are many good books on inventory management in general and some on spare parts in particular, to the best of my knowledge there are none that deal with the entire life cycle. Even my own book, Smart Inventory Solutions,2 deals primarily with spare parts inventory optimization as the core content.
The aim of this book is, therefore, to address the key issues confronting people during the life cycle of spare parts inventory management, from establishing a systemsystem for management, to physical ml management, to final disposal. For the sake of both readability and (relative) brevity, this book does not address every conceivable issue, policy, or process. For example, while bills of material (BOMs) are mentioned, there is no discussion on their creation (and in any case BOMs are primarily a maintenance tool). Nor does this book address issues such as software creation and selection, accounting, maintenance, logistics support analysis, or spare parts interchangeability records, except as required when they directly impact spare parts decision making. No doubt that this will disappoint some readers.
As with “I: Pencil,” there is no mastermind that oversees the entire spare parts management process, and so perhaps this is not only why the process fails so often but also why those failures are not so readily recognized by those involved in the system. For example, here are just a few of the common