Surviving the Spare Parts Crisis. Joel Levitt
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inventory is reduced. Long downtime events cause the maintenance department to lose their uptime game, causing the company to lose money, market share, and customers.
Misalignment of accountability is a condition where you winning your game causes another group to lose their game, while the company is no better off. How is it that finance wins their game and yet they do not bear the consequences of their strategy?
If maintenance is accountable for maintenance-related downtime, then it seems that the inventory should be in their control.
The misalignment of accountability (the problem) and the realignment of accountability (solution) are both concerned with how accountability is aligned with managerial power. It is important to align the accountabilities so that the people who are responsible for an outcome have the power, funding, and tools to carry out their job. If the alignment is correct, the organization maximizes the use of resources to achieve its production and financial goals. If it is not correct, the different factions fight to optimize their own games or area, with no care for anyone else!
Who is and who should be accountable for the maintenance inventory? Furthermore, who should approve adding SKUs or removing SKUs to the inventory? Who sets the ROP and EOQ? These are important questions.
The first step is to determine the mission of the maintenance inventory. The reasons we need an inventory of spare parts are discussed in length in Chapter 1.
For now, we can answer the question “Why do we have the inventory?” simply. The inventory is a tool to boost profit or enable profit at all. (During a breakdown, no part might mean no production until the part is received). In some cases, the inventory also supplies parts and consumables for safe operation or to avoid either safety or environmental issues.
ISO 55,000 helps organizations realign accountabilities by tying all decisions to the mission. Once the organization has a mission (and vision, values) then decisions can be examined for their alignment to that mission. Uptime Elements (Reliabilityweb.com) directly calls for leadership to make sure all decisions have a clear line of sight from the decision to the mission of the organization.
Service Level Agreement
The mission is determined by top management in consultation with maintenance and operations. The expression of the mission is the service level agreement between warehousing and maintenance.
Discussions should consider how critical this plant’s product is to downstream operations, whether it contributes greatly to the company’s success, and whether this is our only plant. Based on sound economic analysis, the leadership team chooses the risk they are willing to take.
This agreement includes performance levels by part critically. If we all agree on a 99.5% service level for critical parts, then SIC (statistical inventory control) calculations based on either data or our best estimate will regulate the overall inventory level on the shelf and that determines the dollar value of the aggregate inventory. Over time, as we collect more data the “guesses” will improve.
The service level agreement does not preclude creative ways of operation. The service level might be achieved by a variety of strategies. For major, expensive, and critical parts, the service level might be achieved by vendor stocking or by plants sharing the part, as well as by physical stocking.
As we demonstrated in the discussion about point of view, everyone has a “view,” an interest, a measurement, or a key performance indicator (KPI) that they are held to. The problem with these varying views is that the overall profit of the organization suffers from decision making that favors any one limited point of view.
Accountabilities
Let’s look at some of the accountabilities of people in the storeroom and in maintenance for spare parts.
The people responsible for uptime and maintenance (maintenance):
• The maintenance department sees inventory as one of the elements needed to efficiently repair the company’s assets; it needs PM parts to avoid the need for repair. If a machine breaks down and the part is not on the shelf and not available from a vendor, the maintenance department might have to improvise to keep the plant running.
The people responsible for the storeroom (stores or supply chain):
• Storekeepers see a lot of SKUs that they must receive, store, issue, count, care for, and requisition. They have to issue the correct parts and may also have to kit jobs ahead of time.
The people responsible for buying the parts (purchasing or supply chain):
• Purchasing sees the paperwork. They may never touch or even see the part. They must contend with a large numbers of suppliers, many emergencies, and a lot of hysteria that maintenance brings to bear.
The people responsible for the funding of the storeroom (finance):
• Finance sees money tied up that they believe could be used better elsewhere.
The battles to add new parts, to increase inventory value or warehouse size, and to optimize the inventory are being fought on a daily basis. As we’ve demonstrated, the complete picture is not flowing to the people making decisions. People who are ignorant of the consequences to the company may make decisions that are short sighted and actually ignore the bad effect on the business.
RACI charts are developed for each business process. In this case the development and maintenance of the service level agreement is the responsibility of the stores people, but ultimately top management is accountable. Maintenance personnel are consulted. The RACI (Responsible, Accountable, Consult, and Inform) chart seen in Table 4-1 shows who should be making decisions, who is ultimately accountable for the decisions, who you go to for advice, and who has to be kept in the loop. The RACI chart can frequently untangle the misalignment of accountabilities. Table 4-2 provides a guide to the RACI chart. In this example, we are defining generic roles. You may choose to designate specific jobs or titles such as Plant Manager instead of Top Management
Table 4-1: RACI – Responsible, Accountable, Consult, Inform
| Responsible | Accountable | Consult | Inform | |
| Service level agreement | S | T | M | O |
| Deciding stock levels | M | S | O | |
| Which parts stocked | M | S | E |
Table 4-2: Roles for the RACI Chart
| T | Top management |
| F | Finance |
| S | Storeroom leadership |
| M | Maintenance leadership |
| O | Operations/ Production leadership |
| E | Engineering |
COMMON COMMENTS ABOUT GOOD AND BAD STOREROOMS
Table 3-3 summarizes a lot of comments that help you summarize the strengths and weaknesses of your storeroom. How many of these comments can you circle?
Did you know that the most common cause of interrupted maintenance work is no parts? Studies indicate that parts are the cause of up to 40% of lost tool time. These parts include those that are:
• Not identified ahead of time
• Not in stock, but should be
Table 4-3: How Many Can You Circle?
| Good Storeroom | Bad Storeroom |
| 1. Don’t run out of critical items! | 1. Stock-outs on critical parts when they are needed. |
| 2. Adequate storage with limited access. | 2. Parts not bought when the system says to buy them. |
| 3. Storeroom is kept clean and neat — one item per bin. | 3. |