• Future requirements may need to be forecast.
• There will be regular (or maybe irregular) inventory optimization projects.
• Repairable spares require management.
• The storeroom needs to be set up and managed appropriately.
• Periodically, the descriptive information may need to be updated and restandardized.
• Stock takes will occur at least annually.
• The storeroom may adopt bar coding technology.
• There will be a need to coordinate activities and planning with both maintenance and procurement.
Part 3 is the largest section of this book and explains the key aspects of managing all of the above.
Part 4: Obsolescence and Disposal
No matter how an item was first created or how long it is part of an inventory, it is almost inevitable that at some point it will become obsolete and therefore require removal and disposal. Part 4 addresses this final phase of the life cycle by discussing end-of-life management, the last-time buy, the management of obsolescence, and the options for spare parts disposal.
Thirty years ago in that factory in the western suburbs of Melbourne, we had no road map to help us work through all this; we worked it out as we went along. It was here that I discovered that the routine approach for inventory management that we used for our raw materials and finished goods was of little use for our spare parts. We adopted the parts identification system used at the Sydney plant (we had largely the same plant and equipment). We established a storeroom function to control and physically care for the parts. When equipment was updated or replaced, we made sure that we maintained useful stock, and made the most of our limited space, by removing items that were no longer required.
The result of this, and all the work we did in maintenance, was that we not only reduced downtime by 80% (yes, really) but also achieved record financial results and transformed the plant to be the profit leader of the group. We produced one-third of the product and two-thirds of the profit. Of course, we did much, much more than organize and control our spare parts, but the success that we achieved would not have been possible without a reliable supply of quality spare parts.
Phillip Slater
Phillip Slater is a spare parts inventory management and optimization specialist with more than 30 years of industry experience. Phillip’s work has helped companies save hundreds of millions of dollars in spare parts inventory and procurement spend, while, importantly, maintaining their operational capacity and support.
Phillip started his career as a maintenance engineer, so he fully understands the need for having access to the right parts, at the right time.
As a consultant, he has provided strategic and operational advice to some of the world’s largest corporations and has helped companies in more than 35 countries solve their operational and spare parts inventory management problems.
Phillip is the founder of SparePartsKnowHow.com, an online training resource dedicated to spare parts inventory management and optimization.
For more information, please visit
www.PhillipSlater.com and www.SparePartsKnowHow.com.
To put the content of this book into action please visit www.Sparesology.com.
SPARESOLOGY®
The discipline of optimizing the physical,
financial, process, and human resource
management of spare parts.
Sparesology® is more than just ‘inventory optimization.’ Sparesology® requires an understanding of the complete ecosystem within which the spare parts are managed and seeks to ensure that all factors influencing spare parts management outcomes work in concert to achieve an organization’s goals.
The Spare Parts Management System
| SPARESOLOGY® STRUCTURE |
| 1. The Spare Parts Management System |
| Understanding Spare Parts | Finance | Policies & Processes | Parts Identification | Best Practices |
| 2. Create & Stock |
| • Deciding What to Stock |
| • Spare Parts Standardization |
| • Capital Equipment |
| • First Time Buy |
| • Critical Spare Parts |
| • Setting the Re-Order Point |
| • Setting the Re-Order Quantity |
| 3. Operations |
| • Forecasting |
| • Inventory Optimization |
| • Managing Repairable Spares |
| • Storeroom Management |
| • Data Management and Cleansing |
| • Inventory Accuracy |
| • Conducting Stock Takes |
| • Bar Coding |
| • Integrating Maintenance and Spare Parts Management |
| • Bills of Material |
| • Spare Parts Procurement |
| 4. Obsolescence and Disposal |
| • Managing Obsolescence |
| • End of Life Management |
| • Last Time Buy |
| • Spare Parts Disposal |
1.1 Your Management Systems Either Are Designed or Evolve Randomly
It doesn’t really matter what part of your business that you work in; there will be a system for addressing the key things that need to be done. In production planning there will be a way that demand and capacity are identified, prioritized, and scheduled. In procurement there will be a way that purchase orders are assessed, vendors selected, and invoices matched. In spare parts management there will be a way that decisions are made on what to stock and how many to stock. We all know this to be true because these tasks are completed on an almost daily basis.
What is less certain is whether the system in use is the most effective and efficient way to get the job done. This is because the systems that are