Up Time Magazine- August/September 2008

precision maintenance upload The Spares Stocking Policy The One Policy You Really Need, But Probably Don’t Have by Phillip Slater C ompanies these days are awash with policies. They have environmental policies, safety policies, purchasing policies, contract management policies, audit policies, corporate policies, expense policies, travel policies, maintenance policies, some even have internet usage and blogging policies. When it comes to MRO and spare parts management they often have inventory policies, stock taking policies, cataloging policies, warehouse policies, issues and usage policies, and disposal policies. Your Spares Stocking Policy will not tell you what to purchase. That is, after all, an engineering decision based on your equipment needs and selected approach to maintenance (your maintenance policy!). What your Spares Stocking Policy must do is: 1. Identify the categories (or types) of MRO inventory that you carry 2. Provide guidance on the quantity to carry and how to calculate it (based on the above categories) 3. Provide guidance on the timing of purchases (for example, with shutdown programs or routine replacement) 4. Identify storage issues and/or locations 5. Provide purchasing and/or price information Let’s look at these individually. With all this corporate ‘red tape’ why would you need (or want) one more policy? The answer to this question lies in the benefits that you get in return. Imagine an organization that spends millions of dollars on materials to support their maintenance activities. Imagine having no budgetary limits or constraints on how much they spend. Imagine a situation where the only time this is an issue is when ‘someone’ finally says ‘Hey, what’s going on here?’. Imagine that when that ‘someone’ finally notices, it is too late, the money has been spent. Sound familiar? It should because this situation describes the MRO and spare parts management of many industrial organizations today. Of course, they have budgets for actual maintenance expenditure, but not often on how much inventory they carry. The one policy that helps to sensibly control and contain this expenditure is a Spares Stocking Policy. The benefits for having a well thought out and well defined Spares Stocking Policy (that is actually implemented) include: • Preventing the excessive purchase of items • Improving the timeliness availability of items • Reducing the level of obsolescence and write downs • Faster recognition and clean up of the few items that do become obsolete. In short, a Spares Stocking Policy saves money through reduced expenditure and improves reliability through reduced downtime. Now that we see how important this policy is, let’s look at how to develop a high performing parts policy. A policy can be defined as ‘a deliberate plan of action to guide decisions and achieve rational outcomes’1. So, a good Spares Stocking Policy will provide your team with guidance on how much and when to purchase in order for you to achieve the availability you need without over expenditure. Plus, by comparing actual outcomes to the policy, you can use the policy as a key part of the feedback to identify problems and issues with inventory management. Your policy provides an internal ‘benchmark’ against which you can compare performance. Identify the Categories It is important to realize that not all Spares Stocking Policies are the same. The policy must be specific to the spare category and your situation. The key to developing your categories is that they must be MECE (pronounced mee see) – that is Mutually Exclusive and Completely Exhaustive. Let me explain. Mutually Exclusive means that each category must be independent from the others in a way that items cannot be assigned to more than one category. For example, if you used a category called Breakdown Spares and another called Fast Moving, these two categories are not mutually exclusive. A spare part could be required for breakdown repairs and, if used regularly, could also be fast moving. This confuses your use of categories and limits your opportunity to review and analyze your spares holding. You can see from this example that the categories must be linked conceptually. A breakdown category refers to an event while a fast moving category refers to frequency of usage. Mixing the concept in the definition results in poor categorization and, therefore, limits the benefits of categorization. Completely Exhaustive refers to covering all of the possibilities. Continuing the above example, if you only used Breakdown and Fast Moving, aside from not being mutuaugust/september 2008 50

Table of Contents Feed for the Digital Edition of Up Time Magazine- August/September 2008

Up Time Magazine- August/September 2008 Contents Upfront Upclose Information Technology Lubrication Infrared Maintenance Management Motor Testing Precision Maintenance Reliability Ultrasound Vibration Upgrade

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