Surviving the Spare Parts Crisis. Joel Levitt
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particularly catastrophic.
• Some plant designers add in redundant equipment so that, if the main unit goes down due to a breakdown, the operators can shift to a back-up that is already in-line and ready to go.
• Carry spare parts and have maintenance people on staff who can repair the equipment.
• Contract with the OEM or a third party to maintain the asset to insure capacity.
• Rent the service from the OEM (such as renting an air separation plant from Air Products).
• Purchase business interruption insurance that covers breakdowns (if it is available).
• Borrow techniques from the risk management field to help manage production risks. Life Cycle Engineering, in Charleston, SC, calls this RBAM (Risk-Based Asset Management).
MAINTENANCE INVENTORY USAGES
Within the storeroom there are three usages of maintenance inventory: wear parts, paperwork and projects, and insurance policy or capital spares (Table 2-3). Each usage has a unique impact. However, the same part might have usage in two categories.
Table 2-3 Usages of Maintenance Inventory – Why It is Held
| Type | Description and function | Analysis and management strategies |
| Wear parts | These parts are used up or consumed. Their usage can be predicted based on past usage. Common parts such as bearings, seals, belts, wear parts, supplies, and bolts are part of this group. | This inventory is closest to a retail inventory and can be analyzed the same way by using turnover, when last used, rack jobbing, and consignment. |
| Paperwork and project parts | The usage of these parts is regulated by paperwork. This group includes preventive maintenance (PM), projects, and construction. If the PM says to change the belt monthly, then the usage of that belt will jump to 12. | Not over-ordering (minimize leftovers). Standardization (not introducing new vendors without good reason). Blanket ordering with monthly releases. |
| Insurance policy or capital spares | Expensive, hard-to-get parts for critical assets; these parts move slowly (if at all). | Risk management: rigorous analysis of need. Reliability engineering, share parts, supply contracts. |
If we break the maintenance inventory even further, we find several sub-types of parts. Table 2-4 shows another view of usage based on the driver or the reason for the usage — the basic usage of different spare parts.
Table 2-4: Detailed Usage of Spare Parts
| Type of part | Explanation |
| Critical spares | Two names for the same kind of part. Be very careful with these. If you need them and don’t have them, you could be in serious trouble (excessive downtime). You have them for the expressed purpose to NOT use them. Called RUKI (Rarely Used Key Items). |
| Insurance policy spares | |
| Standard replacement parts, stock items | The bulk of the items in your storeroom. They wear out and need to be replaced |
| Hardware | Nuts and bolts, can sometimes be consignment stock (owned, replenished, and managed by a vendor). |
| Consumables | Held in storeroom for production, like ink for labelers. |
ANOTHER VIEW BASED ON THE CONSUMPTION RATE OF THE PART
Another way to evaluate maintenance inventory is to consider how quickly the parts move.
Fast-Moving Parts
Fast-moving parts are typically used in quantity with high frequency of issues. Because they are used regularly, you can forecast their usage. Furthermore, because you are interacting with that vendor regularly, it is easier to track changes to lead time. Typically, these parts are available from several vendors; management expects high service levels and decent pricing. The fast-moving parts are most likely to respond well to statistical inventory control processes.
Slow-Moving parts
Use, stock level, order point, and order quantity are difficult to calculate for slow-moving parts due to a lack of input data. These parts are difficult to predict. According to Moncrief et al. (Production Spare Parts), there are three statements of “fact” about these parts:
• Assume you have no idea when a slow-moving part will be needed because you generally don’t know.
• No amount of inventory will guarantee you won’t have to backorder this item under all conditions.
• No amount of inventory reduction can save enough money to compensate for a lack of a critical spare.
These slow-moving parts make up most of the value of a maintenance spare parts inventory for which you cannot forecast usage. As time goes on, the lead time is either long or unknown (and companies go out of business), and they often have a high per part cost.
Figure 2-2 provides a comparison of slow moving and fast moving parts.
Figure 2-2: Parts tree
CHAPTER 3
MODERN PRODUCTION GIVES US THE TOOLS FOR MAINTENANCE PLANNING
Interchangeable parts are an old concept traceable back to standardized ship building in Carthage during the first Punic war. In the United States, Eli Whitney was credited with the idea when he demonstrated to Congress the advantages of interchangeability. He brought ten rifles to Congress built with identical parts; he disassembled the rifles and put the pieces into piles. He and his team reassembled the weapons from random parts in a few minutes.
Building any machine in the era of interchangeable parts requires a Bill of Materials. In addition, you need the tools as well as the competency needed for the assembly. These three elements — parts, tools, and competency —became the core of MRP (Material Requirements Planning). For this purpose, tools are defined in the widest way possible.
THE MIRACLE OF MODERN PRODUCTION
Think about the complexity of building a modern automobile. Thousands of parts have to be sequenced into the assembly areas with rigorous timing. Each operation requires specific tools that have specific set-ups and people with the correct skills (correct competency).
On the assembly line, the parts, sub-assemblies, and assemblies are received just in time for the specific car they are destined for. Very limited stock is stored on or near the line. To make matters more complicated still, the most modern assembly lines can run different models without setup or changeover.
Behind this complex dance is a huge infrastructure micro-managing the supply chain. The scope is large with thousands of SKUs, precise timing, and multi-modality inbound shipping including ship, rail, truck, and airplane. All, by the way, have different lead times, vendors, and development cycles.
Some say this array is the ultimate expression of the modern manufacturing world. Keep in mind that behind the assembly line is an army of people and systems to make sure part X appears at time Y in position Z (all the parts, materials, and consumables needed to assemble the part into the car).
TIMING AND TRUST ARE EVERYTHING
To make this mechanism operate, OEMs (Original Equipment Manufacturers) issue forecasts to the vendors with annual estimates of quantities and estimates of delivery dates. The vendors place orders consistent with these numbers for their own raw materials. The whole system is based on the vendors being able to deliver what is needed when it is needed. It is essential that the OEMs and the vendors trust each other so that they can share detailed sales information to sharpen the forecast.
Because