5 common problems associated with incorrect or incomplete BoM data, and how to overcome them

15 October, 2018 by Iain Wood

Working closely with Asset Managers, Maintenance Managers and Engineers, we often see a huge amount of resource misuse when spare parts are sourced. This is an industry-wide issue that operating facilities experience, and it can be the catalyst for a whole host of serious problems that commonly occur but can easily be avoided.

The root cause of the identified problems often centre around Bill of Material (BoM) data within an organisation’s CMMS, which is commonly incomplete, incorrect or non-existant. This leads to distrust in the available data, and subsequently people no longer using it. Instead, people resort to relying on spreadsheets, knowledge in their own heads, and other unreliable and inefficient means.

But what can the consequences of this be, and what can be done to mitigate the risks that stem from incomplete or incorrect BoM data?

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1. Time wastage associated with part sourcing

Time wastage is the most common problem faced when the right BoMs aren’t available, and we estimate that on a typical asset, up to 50% of a Maintenance Engineer’s time is wasted searching for parts or material numbers.

This can be the result of an engineer searching tirelessly for information that is not readily available, or trying to determine if the information in the CMMS is correct, due to lack of trust.

The back and forth communications between the engineer and procurement can also take up a huge proportion of time. This is often due to miscommunication, misunderstanding, and the often-high level of pressure placed on the situation, if the spare part is required urgently. 

This is one of the key problems Add Energy is aiming to help companies solve. Our software, OptiBoM™, has been specifically designed to bridge the gap between operations and procurement, ensuring correct and current spare part information is available on demand, so that part sourcing can be executed efficiently and on time.

2. Spiralling costs associated with extended downtime and maintenance delays

Having missing, incorrect or incomplete BoMs can result in huge cost implications for an asset.

The time wastage discussed above can snowball into long periods of equipment outage. If the necessary information is not immediately available, or worse, is incorrect, it can be a lengthy process to determine what is required to fix the problem and get operations back up and running.

Downtime can be extended even further if the wrong part is ordered, which is surprisingly common.

Planned preventative maintenance can also be delayed due to inefficient spare parts management, which can also result in unexpected increased costs.

Last year, we conducted a free assessment for a client, during which we identified 7,712 missing BoMs, and the associated costs over 1 year were as follows:

  • Downtime cost: £4,000,000
  • Maintenance delays cost: £1,300,000

These costs could have been significantly reduced or eliminated if they had the right information immediately available to them.

Immediate access to spare parts is imperative - and ensuring you have the right spare, in right format, in the right place, at the right time can only happen if your foundation data is available and accurate, i.e. knowing what equipment is on your asset, and what components make up those pieces of equipment. 

This is what OptiBoM™ and the Add Energy team can support with - identifying and verifying that equipment, and building maintenance BoMs to ensure you have the right spares and at the right time.

3. Capital tied up in unnecessary stock

Many companies we have worked with have been wasting money buying and storing parts they do not need. It is extremely common for companies to not even know what spares they should be holding, or the minimum/maximum stock levels required.

Storing parts costs money - from taking up space in storage facilities, to the regular maintenance that is required to ensure the reliability of the part. And if these parts are unlikely to be required, are never used, or could be easily sourced when required, storing them is a waste of resource.

In the same free client assessment discussed above, the company’s annual cost of unused spares was £500,000. This cost could be significantly reduced if there was a clear plan for holding stock, the business had a clear understanding of what parts were critical for operations, and a streamlined system for managing spare parts was implemented.

A risk cost spares analysis plays an important part in mitigating the risk of costly lost production due to the critical equipment being unavailable in the event of a failure. Our senior consultants use the DST software tool in conjunction with their expert equipment and maintenance knowledge and client input. And the result of this is a recommendation for the optimum stock holding based on cost of equipment, risk of unavailability, and value of lost production. 

OptiBoM™ is the first step of this process, as it ensures that the foundation data is available for the critical spares to be identified – because if you don’t know what you have, how can you manage it?

4. Paying premium prices for spare parts

In our experience, many companies do not have a clear understanding of what critical spares they require, and don’t have these parts readily available in stock. Many also do not have the necessary spare part information on-hand to be able to order quickly and efficiently, and the result of both can mean paying premium prices for spare parts.

Premium prices are often associated with emergency orders, where the part is required as soon as possible to mitigate downtime - and manufacturers and vendors typically increase prices to reflect this immediate need and what they deem to be quick delivery. 

But premium prices due to last minute orders can be avoided by having access to critical information (BoMs). If you have the right information and details immediately accessible, combined with a solid understanding of what critical spares are required in stock, you can avoid these excessively high costs.

5. Equipment obsolescence 

Another major issue linked with ineffective spare part management is equipment obsolescence, where equipment is no longer available or has been upgraded or replaced.

Many companies do not realise when something has become obsolete, which can be extremely frustrating and costly for the organisation.

Being able to easily identify if equipment has become obsolete is hugely advantageous for asset operators, as it allows them to develop a strategy that will reduce the possible risks, such as extended downtime, premium prices and time wastage.

OptiBoM™ is a handy tool for identifying and managing obsolescence, as it has the most up-to-date information derived from manufacturers around equipment changes and upgrades.

Our team can also conduct annual obsolescence reviews, where all equipment is evaluated for any changes to support status from manufacturers and spares availability. High risk items are highlighted, and an action plan is created.

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Add Energy and OptiBoM™

To help companies avoid and solve the problems associated with ineffective spare part management, the Add Energy team has developed a suite of materials management solutions, including sparing philosophies, data improvement, preservation strategies and critical spares studies, as well as our BoM software OptiBoM™.

OptiBoM™ is the industry leading BoM library database, that offers direct access to over 2 million records of spare part data, and this figure is growing every day. It can automatically map in BoMs that already exist in the database, based on make, part number and manufacture information from the CMMS. These BoMs have been populated using the latest manufacturer details regarding the spares data and quantities used on each piece of equipment.

Topics: Inventory Management Optimization

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