Spare Parts Management

Spare Parts Management purpose is to provide “the right parts, in the right quantity, to the right place, at the right time, with the right level of quality, and at the least total cost to the organization”.

Effective management of maintenance spare parts is a critical contributor to equipment operating performance and to the cost of the maintenance investment.

The scope of Spare Parts Management therefore includes all functions from the supplier through to the point of use. – identification and coding, criticality classification, procurement, quality inspection, stocking policies, links to work planning (kitting, staging), supplier management and internal performance.

Have strategic service providers, delivering consistent performance and Service Level agreements, at the best priceSpare Parts Management mission is to provide “the right parts, in the right quantity, to the right place, at the right time, with the right level of quality, and at the least total cost to the organization”.

Effective management of maintenance spare parts is a critical contributor to equipment operating performance and to the cost of the maintenance investment.

Why Spare Parts Management?

Asset maintenance results inevitably in Spare parts consumption. The unavailability of the right parts may have a serious, negative impact on equipment availability, due to increased downtime, and on resource efficiency, due to schedule interruptions. Also, it can increase the risk of reducing the quality of goods produced, cause environmentally hazardous emissions and create a hazard to staff.

This easily leads to the accumulation of an excessive amount of spare parts, which often leads to large amounts of capital expenditure.

To avoid this reality, it is important to have a good spare parts inventory system in place. Positive impacts on business performance due to effective Spare Parts Management include:

Reduced downtime
Reduced inventory costs
Increased availability of working capital
Improved safety

Spare parts management It is a form of Risk Control; its purpose is to control the risk to business operations caused by equipment downtime by ensuring the availability of spares at optimum cost.

Spare Parts Management best practices

An accurate Spare Parts Management system allows the area responsible to be proactive and responsive to the plant. Also, they can save from 5 to 15% on spare parts inventory costs. Here are spare parts management best practices, for managing parts inventory more effectively:

Identify all spare parts – Make sure that all parts required for maintaining the asset are properly identified. If, for example, a part is required for a major overhaul, there may be several items that are purchased for a one-time use. Once the machinery overhaul is completed, there may be unused parts which have future use and should be inventoried. Other equipment in the plant may be able to use the same parts. So, rather than maintenance storing these parts without any correlation with the asset, the items should be added to the inventory control system and placed into parts inventory on the EAMS/CMMS.
Classify all spare parts – Classify the spare parts as per criticality. This classification will support the process to define an effective safety stock:have the right parts, at the right time, with the lowest possible cost at the minimum inventory value.
Utilize and Manage the Bill of Materials (BOM) – Having accurate BOMs will support the scheduled preventive maintenance (PM) that is needed on a given piece of equipment. This process will allow the generation of a work order with the scheduled date of the PM.
BOMs will make ordering parts and placing work orders simpler. Additionally, make sure that your BOMs are kept up to date, considering the asset status and modifications.
Use the work order – All spare parts that have been used have to be linked to a work order. For PM, work orders requested in advance can be pulled and staged for pickup or delivered to the requesting department. This will reduce the maintenance department’s wait time at the parts warehouse for their work order to be fulfilled. Work orders need to be created for all parts issuance so that inventory remains accurate.
In case of emergency, it would be possible to understand the historical information related to breakdowns to improve the parts in stock, when this is reasonable.
Limited access to the parts warehouse inventory – Limiting access to the parts warehouse inventory is mandatory to maintain inventory accuracy. Adopt a policy that parts inventories are “off limits” and only parts department employees have access, utilizing badge access to entry and exit points. Allowing everyone to have access can quickly make parts inventories inaccurate.
Optimize the warehouse – Centralize and consolidate parts – Having all your parts centralized (in one or satellite warehouses) and consolidated can make security easier but also makes this potentially large asset easier to control and maintain inventory accuracy.
Use an Inventory control system – By utilizing your ERP’s warehouse functionality or a warehouse management system (WMS) to manage your parts inventory will ensure accuracy and ease of managing your parts warehouse. This should be linked to the EAMS/CMMS.
Using barcodes and scanning functionality in conjunction with the system will improve the efficiency of the management processes in the parts warehouse and inventory accuracy.
Define a stock location for every part – Ensure that stock locations are created at the lowest detail, typically a bin and slot location for each SKU, allowed by your systems.
Implement cycle counting for inventory control – Cycle Counting is a Periodic inventory system audit-practice in which different portions of an inventory are counted or physically checked on a continuous schedule, related with inventory ABC classification. The usual class breakpoints applied are:
A = 10% of line items, gives 65% of turnover
B = 20% of line items, gives 25% of turnover
C = 70% of line items, gives 10% of turnover

Each portion is counted at a definite, preset frequency to ensure counting of each item at least once in an accounting period.
Some variation about these figures is usual, but significant differences can indicate problems with stock holding policy.
Standardize Spare Parts – Standardizing for spare parts management, usually means agreeing that a certain type/model of equipment will be used and with that the spare parts required for each installation will be the same. This is different to industry-wide standardization. This can contribute to improve the MTTR, the negotiations with the Spare Parts Suppliers and the stocks.
Develop Spare Parts Management Processes – Make sure that your Spare Parts Management Processes are developed as per best practices to ensure sustainability and a base for training.
Decide based on accurate data – Use quality data for decision making: develop your reports and KPI´s considering the Spare Parts Management Processes, to support the improvement and base for Spare parts maintenance budget.