Spare Parts Management

In manufacturing plants that own a huge number of equipment, supervising the spare parts correctly and in a timely manner is a difficult task. Usually, spare parts are categorized into two main groups – fast moving and slow moving parts. Fast moving spares are those that are usually required, and slow moving spares are those that are hardly ever required. The managers come across in difficulties to keep track of the spare parts used and determine future demand manually. The main objective of this project is to create a database management system that will help the managers with the process of super vising spare parts.

Preventive maintenance is very important but failure cannot be able to eliminated. To avoid failures spare parts play a vital role. Failure statistics are useful in calculating spare parts for preventive maintenance and breakdown maintenance also.

Spares can be classified as per service level/under stocking cost.

• Regular spares – The spare parts required regularly and in substantial number. Both reliability and per unit cost of these items are
• Service level = Ku/Ku + Ko, Ku = Opportunity cost of under stock of one unit Ko = Opportunity cost of overstock of one unit.
• Insurance spares – An insurance spare is a spare part that you hold in your spare parts inventory, that you would not expect to use in the, normal life of the plant and equipment but if not available when needed it would result in significant losses.
• Capital spares – capital spares are spare parts which, although acknowledged to have a long life or a small chance of failure, would cause a long shutdown of equipment because it would take along time to get a replacement for them.
• Rotable spares – Rotable items are generally thought of as items of plant or assets that periodically are changed out for repair or overall.

Spare Parts Management System

It is a set of principles, policies, procedures, guidelines, and tools that enable a company to identify procure, control, account for, and dispose of spare parts.

Spare parts inventory management

Spare parts inventory management shares many traits with standard inventory management, but requires an extra layer of cost consideration.

Whether a maintenance and repair organization (MRO) is internal to a larger business, or providing maintenance services to an external customer, efficient spare parts inventory management plays a critical role in reducing costs and maximizing customer service.

For this example, we will look at an internal MRO to a production facility. These five steps collect the information you need for executing effective spare parts inventory management.

• Step #1: Understanding existing (or projected) consumption – Because repairs happen due to system failures, rather than as part of a production plan, many logistics professionals overlook consumption predictions. Depending on the age of the MRO, spare parts consumption can be based on either actual historic consumption, or projected based on equipment manufacturer preventative maintenance recommendations and fleet records of other system owners.
• Step #2: Calculating system failure costs – In-stock levels and the size of your on-site inventory should be directly linked to costs of system failure or “down time”. Every machine in a production facility plays a role. Some have redundancy, like the multiple fork lifts in a warehouse, while others act as a single point of failure for the whole building, such as an automated full-building outbound sorter.
• Step #3: Estimate soft cost impact of out-of-stocks – It is a picture familiar to many industry professionals: parts hoarded in toolboxes, a spare motor under a desk in the maintenance supervisor’s office, or the “secret stash” closet with thousands of dollars’ worth of parts. Reducing inventory dollars on the books as part of spare parts inventory management can lead to an off-books rise in inventory costs. You are guaranteed these behaviors will start when your out-of-stock rate in your frequently requested spare parts inventory reaches 4-5%.
• Step #4: Work with vendors for cost-reduction and in-stock improvement – In many instances, leveraging vendor relationships will allow you to reduce your overall inventory dollars and keep better in-stocks. Rather than using your own time and resources to monitor spare parts usage, establish reorder points, and project parts required for preventative maintenance, the manufacturer can often provide you a starting point for your stocking levels. In the best cases, you can find vendors willing to provide spare parts inventory management on a consignment bases: you pay only for parts consumed.
• Step #5: Calculate costs (hard and soft) of expedited orders – It is sometimes impossible to maintain a spare parts inventory for every contingency. The key is to establish an expedited spare parts ordering process and understand the costs involved. This allows subordinate managers and maintenance person to make good decisions on what to expedite and what to order on standard orders.