Up Time Magazine - December 2008/January 2009 - (Page 47) IDV occurs when your team takes more spares than actually required so that they can put some into their squirrel store. This behavior produces false data on usage and shows higher volatility than is really the case. This higher volatility then results in a need to hold more safety stock – after all safety stock is held to account for volatility. The breakout box shows a situation where induced demand volatility could increase spares holdings by 264%! 2. You Will Spend More Money Obviously, the parts in the squirrel store and the extra parts in the official store have to be paid for. Therefore, this ties up much more money than would otherwise be the case. What many people don’t consider is that this diverts funds from other and more useful purposes. Still waiting for the money to buy that tool to make your life easier? Perhaps the money is tied up in your squirrel store! 3. You Will Spend More on Your Operating Budget and Skew Your Reporting When your team removes more items from the store than they really need, the costs have to be charged somewhere. Guess where – one of your operating budgets! Not only does this limit your ability to manage and improve your reliability (with what will already be a tight or underfunded budget), but it skews your reporting of costs by bringing forward costs that you could have incurred later. In many cases you may even be paying for parts that never get used, which leads to the next point. 4. You Will Have Increased Obsolescence Is anyone really keeping track of those squirrel stores? Of course not. So, you have spent the money and when the item eventually becomes obsolete (as everything does) the squirrel stores will contain items that should have been used or should not even have been purchased! The only time they will be cleaned out is when someone decides to tidy up their squirrel store or workshop and you know that they will then just throw the parts in the trash. 5. You Will Increase Your Downtime This is perhaps the worst part of the squirrel stores phenomenon. If the ‘unofficial’ parts are held in a locker or tool kit so that only the ‘owner’ can access them, then the rest of your team cannot access them. If you have a breakdown and need that part right away, you might not be able to get to it or might not even know that it is there! The irony here is that the part was being held in order to improve service and the squirrel approach actually made things worse. The result of this scenario is an increase in ‘official’ holdings, increasing expenditure even further. 6. Your Reliability Program Will Be Endangered. As mentioned previously, when your team keeps squirrel stores they skew the data on usage. But this doesn’t just impact your expenditure. It also means that your official records will show higher demand than actual at some times and lower demand than actual at others. If you are trying to perform any sort of analysis to understand your failure patterns, this data will be useless at best, and at worst, misleading. All that money spent on reliability training, software, gadgets and cultural change could be wasted because of a failure to control squirrel stores. Unfortunately squirrel stores are almost a fixture of maintenance departments. They result from the mindset of reliability and maintenance professionals that are passionate about reducing downtime and take equipment failure personally. This drives them to hoard items that they can use later and to ‘short cut’ the system to try to improve response times. However, this approach does not work. Squirrel stores are a blight in your system and can have a significant and detrimental impact on your expenditure and your reliability program. In fact, you would be nuts to allow or endorse them. Phillip Slater is an Inventory Process Optimization Specialist and is widely known as ‘The Inventory Guy’. He is the author of a number of books, including Smart Inventory Solutions and The Optimization Trap, both of which deal directly with MRO and engineering spares inventory. For more information visit www.InitiateAction.com or contact Phillip at pslater@InitiateAction.com. www.uptimemagazine.com 47 http://www.bakerinst.com http://www.InitiateAction.com http://www.bakerinst.com http://www.uptimemagazine.com
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