15th INTERNATIONAL OPERATIONS & MAINTENANCE CONFERENCE IN THE ARAB
COUNTRIESUNDER THE THEME: “SMART MAINTENANCE” CONICIDE WITH THE 15TH ARAB MAINTENANCE
EXHIBITION
TOMÁŠ HLADÍK
Logio
EFFECTIVE SPARE PARTS
MANAGEMENT
2
1) Go for preventive maintenance!
2) Eliminate process problems
3) Segment your spare parts portfolio
4) Evaluate spare parts criticality
5) Spare parts management starts with good forecasting
6) Use special methods for intermittent demand items
7) Consider the whole life cycle of your equipment
8) Implement a good information system for spare parts and maintenance inventory management
Eight rules for efficient SPM
3
Go for preventive maintenance
4
STANDARD
PLANNED
PLANNED
MAINTENANCE
CORRECTIVE
(REPAIRS)
UNPLANNED
PREDICTIVE
PROACTIVE
DEFFERED
CORRECTIVE
PLANNED PROCUREMENTINVENTORY
MANAGEMENT
Go for preventive maintenance!
80% 20%?
5
Preventive or corrrective?
Number of preventive vs corrective tasks
Donwtimes caused by failure maintenance
Total maintenance cost
6
Eliminate process problems
7
SPARE PARTS PROCESS
8
Eliminate process problems
SP NEED
IDENTIFICATION
No direct responsibility of maintenance engineers/technicians for
“their” items and spare parts levels.
REQUEST
FOR ORDER
RFO created by someone else, not the technician who requested part.
The step of RFO may not be necessary in the process.
APPROVAL
How often are orders approved? Who approves?
Approving in IS workflow or by signing a paper copy? Or both?
Approving both RFO and then issued order again?
Too many approvers, complicated procedure and hierarchy.
Approving on high levels of management.
PROCUREMENT
Insufficient information available to procurement, poor spare parts
identification – the buyer hardly knows what should be bought,
additional communication with maintenance technician is needed.
Missing or incomplete procurement specification in the IS.
9
Eliminate process problems
CONSUMPTIONSlow spare part issues in case of sudden need.
Issued spare parts are not consumed in fact. What happens then?
Consumption of external material even in case the part is on stock.
WAREHOUSE
RETURNS AND
REFURBISHED
SPARE PARTS
Refurbished parts return to warehouse while new are bought.
Accounting price of refurbished items is much higher (or lower) than
the non-realistic value of items on stock.
Problematic or impossible returns of parts issued but not consumed.
Insufficient control of parts dismantled from the maintained object
(the information system has no information about these).
RECEPTIONProblems with missing (undelivered) documentation for the received
material (certificates, declarations).
Lost spare parts documentation – only “paper-based” archiving.
WAREHOUSING
Insufficient identification of spare parts in the warehouse.
Problems to find items stored.
Inventory count discrepancies, physical stock different from
information system data.
Non-real value of stock in the information system.
Out-of-system stocks.
Sklad NDHow do you store bearings?
Sklad NDHow do you store bearings?
16
Where are the spares? An example from a large carmaker
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
01
17
3
01
89
4
01
89
8
02
89
4
02
89
8
04
86
3
04
89
3
04
89
7
07
49
4
07
49
8
08
18
0
08
88
1
08
93
6
08
98
4
09
89
0
09
89
6
12
88
4
12
89
6
13
49
0
13
49
4
13
49
8
13
75
8
14
86
3
14
89
4
14
89
8
1P
49
3
1P
49
7
1P
89
6
1P
94
3
1P
99
9
21
89
4
21
89
8
22
49
8
22
89
8
23
49
9
23
89
6
24
89
3
29
99
0
30
89
2
39
89
2
39
89
7
52
99
9
Spare parts inventory value [?]Foundry
Pressshop
Machining, enginesCental warehouse
Welding lines
Warehouses A-Z
17
SPARE PARTS PROCESS
Who is responsiblefor spares stock?
Who/how oftenapproves?
Procurementspecification missing
Insufficient sparesidentification
Are returns to warehouse allowed?
18
Spare parts process – benchmarking
Internal best practice
19
Comparison of inventory turnover
PLANT 1 PLANT 2 PLANT 3 PLANT 4
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1 2 3 4
20
Segment your spare parts portfolio
21
Service level x locked-in capital
Inventoryvalue
90 % 95 % 98 % 99 % 100 %?
Service level / availability
What items are really important?
What items are really important?
Dominant categories C and D are typical forspares
On-hand inventory value
Consumed quantity
22
ABC analysis – on hand inventory value
Value of available inventory
23
ABC analysis – consumed quantity
In spare parts, C and D categories typically prevail
Quantity
24
Spare parts inventories segmentation – consumption frequency(in quantity)
25
Spare parts inventories segmentation – consumption frequency (in value)
26
WHEN?
HOW MANY?
WHEN?
HOW MANY?
Strategic segmentation of spare parts
CONSIDER CONSIGNATION
CONSIDER CONSIGNATION
CONSIDER CONSIGNATION
CONSIDER CONSIGNATION
BUY
BUY
BUY
BUY
CONSIDER CONSIGNATION
CONSIGNATION
BUY BACK
BUY
TYP
E O
F FO
REC
AST
CONSUMPTION FREQUENCY
27
Example of buyback application
20 pieces were purchased for turnaround in 2010 for 41.2 M CZK, but these spare parts
were not used during the turnaround and will be stored until the next turnaround in 2014.
Buy-back in this case can save 9 M CZK (360k EUR) on storage and locked-in capital cost
Between shutdowns
28
FSN and VED classification
V
E
D
F
S
N
Fast-moving
Slow-moving
Non-moving
Vital
Essential
Desirable
29
30
Evaluate spare parts criticality
Effects of failure
Production losses
Links to asset register, critical assets (RCM)
Delivery time
Repairability
Number of items in use
Maintenance planning
Part lifespan
Failure probability
Failure characteristics
Failure anticipation
Price
% cost of capital
Cost ofinventory
holdingFailureprobability
Impacts ofspare part unavailability
Leadtime andother
parameters
Evaluate spare parts criticality
31
𝐶𝑖𝑛𝑣 = 𝐶𝑢𝑛 ∗ 𝐿𝑇 ∗ 𝑓
10 000 EUR x 10% 100 EUR / day 100 days 1 per 2 years
1 000 EUR 5 000 EUR
KEEP ON STOCK
<
Criticality calculation
INVENTORY HOLDING UNAVAILABILITY LEAD TIME FAILURE RATE
32
Criticality assessment phases
Economicalassessment
Technician
Hold on stock
Potentiallycritical part
Do not stock
Advanced methodsto set optimal levels
Criticalityassessment
Technician ConsumeSell orScrap
Optimum SP stock
33
Application for criticality assessment
34
Login a heslo
35
Postupné hodnocení kritičnosti
36
37
38
39
Spare parts criticality analysis result
Criticality score
Spare parts items
40
41
Spare parts management starts with good forecasting
Quantitative methods x Common sense
Quantitativemethods
Commonsense
MAKE EFFICIENT!MAXIMIZE!
42
Quantitative methods x Common sense
Quantitative methods
Common sense
Unexplained / Random
Uncertaintyof future
consumption
Maximize
Make efficient
Minimize
43
Forecasting step-by-step
Visualisation of time seriesFor better understanding of the time series
Calculation of accuracyAbsolute and relative errors, evaluation on testing season
Calculation of forecasts using all available methods
Selection of the best methodBest accuracy and reliability
1
3
2
4
44
What forecasting method is best for spare parts?
1% 1%2%
3%5%
9%
79%
Konstantní model
Regresní model
Holtovo exp. vyrovnání
Jednoduché exp.vyrovnáníKlouzavý průměr
Winters
Forecasting není možný
Constant model
Regression model
Holt’s exp. smoothing
Simple exp. smoothing
Moving average
Winters
Forecasting impossible?
???
45
46
Use special forecasting methods for intermittent demand items
Týd
enn
í sp
otř
eby
ND
Historie týdenních spotřeb (týdny)
4 13 17 300
1
2
3
4
81 18 25 2726
32
Spare parts – intermittent demand
Weekly consumption history (weeks)
Wee
kly
spar
e p
art
con
sum
pti
on
(p
iece
s)
QUESTION: What reorder level should be set in order to ensure required availability of a spare part?
47
Týd
enn
í sp
otř
eby
ND
Historie týdenních spotřeb (týdny)
4 13 17 300
1
2
3
4
81 18 25 2726
32
BootstrappingBootstrapping = random sampling from history of consumptions.
SP consumption for lead-time period is sampled from history
Sample 1: Consumption in6 weeks = 5 pcs
Wee
kly
SP c
on
sum
pti
on
Weekly consumption history (weeks)
Example: SP lead time is
6 weeks
48
Bootstrapping
Vzorek 2: Spotřeba za
6 týdnů = 0 ks
Týd
enn
í sp
otř
eby
ND
Historie týdenních spotřeb (týdny)
4 13 17 300
1
2
3
4
81 18 25 2726
32
Sample 2: Consumption in6 weeks = 0 pcs
Weekly consumption history (weeks)
Spar
e p
art
con
sum
pti
on
(p
iece
s)
49
Bootstrapping
Vzorek 3: Spotřeba za
6 týdnů = 12 ks
Týd
enn
í sp
otř
eby
ND
Historie týdenních spotřeb (týdny)
4 13 17 300
1
2
3
4
81 18 25 2726
32
Sample 3: Consumption in6 weeks = 12 pcs
Weekly consumption history (weeks)
Wee
kly
SP c
on
sum
pti
on
50
Bootstrapping
Vzorek 4: Spotřeba za
6 týdnů = 2 ks
Týd
enn
í sp
otř
eby
ND
Historie týdenních spotřeb (týdny)
4 13 17 300
1
2
3
4
81 18 25 2726
32
Sample 4: Consumption in6 weeks = 2 pcs
Weekly consumption history (weeks)
Wee
kly
SP c
on
sum
pit
on
51
Če
tno
sti s
po
tře
b v
jed
no
tliv
ých
inte
rva
lech
(z
e s
imu
lace
)
Spotřeba během LT – intervaly (ks)
0 5 10 15
60 000
0
30 000
Ku
mu
lati
vní p
ravd
ěp
od
ob
no
st s
po
tře
by
100 %
Example of 100 000 simulations of SP consumption
Target: SP availability (Service level) = 99%
OPTIMUM INVENTORY = 9 PCS
Consumption during leadtime (pcs)
Cu
mm
ula
tive
pro
bab
ility
of
con
sum
pti
on
Freq
uen
cies
of
con
sum
pti
on
(fro
m s
imu
lati
on
)
52
Bootstrapping application – a case study
99.9% availability
Original inventory: 17 000 EUR(49 pcs)
Spare part lead-time: 32 days
Recommended inventory
29 pcs
10 000 EUR
Savings
7 000 EUR
Intermittent demand
53
Bootstrapping in spare parts management information system
54
Minimum level 2 pcs
55
Life cycle thinking:Consider the whole life cycle of your assets
PROCUREMENT
MAINTENANCE
RENOVATION
COST
PROFIT?PROFIT
MAINTENANCE CREATES VALUE!
ASSET LIFE CYCLE
56
Asset life cycle (Kari Komonen, EFNMS EAMC)
INVESTMENT UTILIZATION
$$
57
PROCUREMENT
MAINTENANCE
RENOVATION
COST
PROFIT?PROFIT
MAINTENANCE CREATES VALUE!
ASSET LIFE CYCLE
PROFIT
58
59
Efficient spare parts management Conclusions
Efficient spare parts management – 8 rules
Preventive maintenance Smooth SP processes
Segment your SP portfolio Assess criticality
Good forecastingSpecial methods for
intermittent demand items
Life cycle thinking Good information system
60
Good information system for spare parts management
Quantitative methods
Common sense
Uncertainty
Maximize!
Make efficient!
Minimize!
ForecastingInventory levels
Ordering
Input of technicians and procurement
Criticality analysis
Forecast accuracyand reliability
61
Efficient Spare Parts Management
MAINTENANCE VOLUME
SPARE PARTS INVENTORY
MAINTENANCE VOLUME
SPARE PARTS INVENTORY
62
Thank you
Tomas HladikLogio s.r.o.Prague, Czech [email protected]
