Spare Parts Management Indicators

Torbjörn Idhammar, IDCON INC

There is a saying: “What you can’t measure, you can’t improve”. The saying are not necessarily always true, but it is interesting, because I think a derivative of the saying is true: “What you measure, is usually what you get.” Spare parts management indicators can help with inventory value and cost of keeping spare parts and materials. (Training will help.)

Reducing Inventory Value

It is common for plants to have a lot of focus on reducing inventory value. Inventory value is one of those numbers that acts like salt in a wound for corporate accountants. No, it doesn’t matter if it’s high or low, it always hurt to look at the number. Most of the time we don’t know if the number is too high or too low, we just know we want the number to be lower.

Cost of Keeping Spare Parts and Materials

The cost for keeping inventory is usually an estimated number, often called “inventory interest” (or similar), that varies from 10-40% depending on company accounting rules. The cost included storeroom, storeroom personnel, depreciation, etc. If you have a spare parts and materials inventory value of 10 Million, it costs the company 1-4 Millions (10-40%) a year to keep that spare parts and materials inventory.

The Problem

Since it is common that inventory value is the only number the plant really cares about, it tends to get reduced. But, anyone can reduce inventory value very easily, IF it’s the only thing that matters. I can tell you to scrap all spare parts right now bringing your spare parts and materials inventory to zero. But the consequences will be devastating to production since we don’t have any spare parts.

Measure a “Counterweight”

Spare parts inventory value is important, but to effectively reduce spare parts inventory value, the “counterweight” has to be measured as well. The counterweight to inventory value can be “stock-outs” for example (times we get the spare part needed divided by total request for spare parts). When stock outs go over around 4-5%, you will start seeing signs of people not trusting the store room. These signs are spare parts in supervisors office, satellite stores, spare parts in crafts peoples toolboxes etc.

Other Spare Parts Management Indicators

Other indicators that may be valuable for store room control are:

IRA – Inventory Record Accuracy
Turnover rate by Part
Number of Returned Parts to Stores
Service Level (inverse of stock out)
Critical Spares stock out

How to Fix the 70/30 Phenomenon

When you ask front line supervisors or team leaders if all people in their teams are performing to the same standards or if some are doing more work and achieving more results than others, you will often get the same answer. All over the world, the most common answer, after some analysis, verifies that about 30% of the people do 70% of the work.

Zen and the Art of Managing Maintenance

Unfettered expression and spiritual satisfaction? How does this relate to managing a maintenance department, especially one in the U.S. Postal Service? Open your mind. Take a page from the Zen Buddhist monks who preach: When you are quiet and listen, you become aware of sounds not normally heard. USPS maintenance leaders are listening and beginning to understand that maintenance success doesn't come through closed minds and closed doors.

Why do maintenance improvement initiatives fail to deliver? (Hedgehog or Fox?)

It is not uncommon that many reliability and maintenance improvement initiatives fail to deliver expected results. Why is it so? Some of the most common causes I have observed include:

Why Maintenance Improvement Efforts Fail

Why do improvement efforts fail or perhaps not sustain the gains? There are many reasons, but those most often stated are “lack of commitment” and not “following the process”. But why is there lack of commitment, and why aren’t processes followed? Here are a few of the reasons that I’ve seen:

TPM and RCM: Whirled Class

When a piece of production machinery broke down at the Whirlpool plant in Findlay, Ohio, several years back, it was accepted practice for the machine operator to call maintenance and then sit back and wait for the problem to be fixed. Critical information and knowledge was not shared between the operator and maintenance technician. Like many companies, these workers were stuck in traditional roles - operators run the machines, maintenance fixes the machines, and the two do not cross. As a result, productivity opportunities were missed.

Where Do Maintenance Professionals Come From?

Many managers are unaware that best-in-class companies routinely design-out maintenance at the inception of a project. That, clearly, is the first key to highest equipment reliability and plant profitability. Whenever maintenance events occur as time goes on, the real industry leaders see every one of these events as an opportunity to upgrade. Indeed, upgrading is the second key, and upgrading is the job of highly trained, well-organized, knowledgeable reliability professionals.

TPM and Tecate: The New Translation

The true translation — might it be proper to say a new and improved translation? — is being used today by Cervecería Cuauhtemoc Moctezuma, one of the largest brewers of beer in Latin America. Known throughout this company as Mantenimiento Alto Desempeño (MAD), or translated as High-Performance Maintenance, the concept of TPM is alive and well at the company's six plants in Mexico. Perhaps the best example is at CCM's brewery in Tecate, located a short drive from the U.S.-Mexico border on the Baja California peninsula.

Spare Parts Management Indicators