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A simple guide to optimizing your spare parts management

12 March 2020 by Add Energy

Problems around managing spare parts are common, complex, and expensive for many organizations.

The inability to source spare parts quickly and efficiently when required can result in expensive downtime, and potentially hazardous situations, meaning that it is imperative to optimize the management of your spare parts.


The issues around spare part management have been a common theme encountered by our team during numerous asset management projects, with such issues ranging from lack of visibility of the inventory, to not knowing which spares are critical to stock, or not to stock.

As experts in enhancing our clients' materials management processes, this article shares our advice and details 5 key considerations that could help you to reduce downtime, overspending, time wastage and hazardous situations.


1. Improving the completeness and accuracy or your asset register 

Is your asset register up to date and fully populated?

A clear understanding of the equipment installed, ensuring it is accurately tagged and recorded in the asset register, is key to avoiding potential issues affecting productivity. For example, this could affect the inability to assign required spares for maintenance due to missing critical equipment information, leading to unnecessary and extended periods of equipment outage.  

If you do not have the critical information relating to the equipment, such as the tag number, equipment specifications and descriptions in the asset register, it becomes very difficult to identify which spare you need for a piece of equipment - meaning part sourcing often results in chaos when you don’t know what you need.  

Assuring your asset register is accurate, and keeping it fully populated with up to date information will allow you to have a 100% accurate digital representation of the physical asset. Not only will this provide a solid foundation for spares and maintenance to be assigned, but it will also help your planners and schedulers to assure essential spares are available to execute maintenance in an effective and efficient manner.


2. Identifying obsolete equipment within your CMMS

Obsolete equipment can be extremely costly to a business, in order to understand how it is affecting your asset, you must ask yourself 2 fundamental questions;

  • Are you able to source spares for obsolete equipment that is still functioning on your asset?
  • Do you have a plan in place for obsolete equipment that you can no longer source spares for?

Early identification of obsolete equipment can help to remedy the situation in a timely manner. Ensuring that you have a robust management of change process in place which notifies key stakeholders of these changes is only one part of the possible solution.

Part two relates to updating the CMMS with the new information relating to the equipment changes and is key to ensuring you have the correct data available in order to source the parts you need.

In identifying obsolesce early, critical decisions can be made regarding the operating and maintenance strategy of that piece of equipment. Whether this be engineering change outs of equipment or simply updating the CMMS to reflect the specification changes to the spares required.

Add Energy’s BoM software tool, OptiBoM™, is a solution to this problem that is available to the industry, which is used for providing the most up-to-date information, derived directly from manufacturers, around equipment changes and upgrades.


3. Populating your BoM data 

Another aspect to consider is the accuracy and completeness of your BoM data. Having gaps in this data can lead to time wastage and confusion. In our experience, up to 50% of a Maintenance Engineer’s time is wasted trying to determine the accuracy of information provided or searching for parts or material numbers that are not readily available, or even in the CMMS.

So, linking back to the asset register and assuring that equipment specifications such as the manufacturer, make, model and serial numbers are included in your asset register is critical. This is an essential starting point to place you in a better position for knowing what items of equipment you need to maintain or repair.

Inaccurate or missing data in the CMMS can also create significant confusion between the procurement team, suppliers and maintenance technicians, potentially leading to incorrect parts being ordered and prolonged periods of downtime. A way to combat inaccurate or missing data is to conduct a Physical Asset Verification.

Conducting a Physical Asset Verification will allow you to verify the completeness of your asset register and collect critical information such as the name plate data required for building BoMs.


4. Improving the visibility of your inventory  

Having clear visibility of the spares available to you in your warehouse reaps huge benefits for an asset. By simply counting items of stock in your warehouse and verifying it against your inventory list and critical spares register, you will gain a clearer picture of where you are, and what you need to do to mitigate risks relating to spares unavailability.

Completing this process will better position your asset to unlock efficiencies and cost saving opportunities by:

  • Understanding what you have, and where it is located to help adhere to the maintenance plan, ensuring parts can be sourced in a timely manner
  • Identifying which spares you do not have in stock and which spares are critical for maintenance and production, ultimately builds a business case for procurement to ensure the spares are purchased and stocked to comply with their demand
  • Justifying the decluttering of stock- selling off spares that are no longer required which will release capital back into your business and make it less time consuming to source the spare you need

In addition to this, optimizing your inventory and cleansing your warehouse will enable passive and active preservation requirements such as rotating equipment, lubrication and regressing, to be completed more efficiently. This helps to ensure that the equipment is fit for operations when it is installed.


5. Defining optimum stocking levels

Achieving optimum stock levels can be a complex process and leads to costly issues when it is assessed incorrectly.

Having too much stock sitting in your warehouse or asset ties up capital in parts that you may never need, resulting in financial wastage. Having too little stock can lead to unexpected or extended periods of downtime for the asset. This is even more critical when the spare part required is unique and has a long lead time often meaning it will have to be manufactured at short notice and sourced at a premium price for timely delivery to the asset.

Stock levels can vary depending on certain criteria, including but not limited to; the type of equipment and its criticality. The demand rate of the spare in question.  The complexity of the sourcing process due to remote locations (such as offshore drill ships) and lengthy importing and customs clearance processes should also be considered when assessing and assigning equipment stocking levels.  

Easily accessible spares should never need to be held in stock, if the equipment can be delivered to you within one day from its request, why would you tie up valuable space and capital by stocking it in your warehouse? An assessment of the criticality of each equipment spare should be completed to determine what the likelihood of failure is and what the risks and consequences are if you do not have immediate access to the part.

To Summarise:

In our experience, spares management issues are a common headache that most plants experience within their operational lifetime. And during a period where there are ever growing pressures to reduce costs, it is often difficult to release budget and time to fix these issues.

One solution may be to tackle your issues in bite size chunks, because in order to make a real impact, you must prioritize change based on risk, return on investment and likelihood of success. You cannot cure world hunger.

You must first ask yourself if you are confident in the quality and completeness of your foundation data, can you really rely on this data to make informed decisions on what spares you need, let alone thinking about how many you should stock?

It is crucial to focus resource on identifying critical marginal gains which can be deemed as low hanging fruit or quick wins. Small changes can make a real impact, don’t underestimate them, prioritise them.

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