Proper planning and organized approach towards spare part inventory is one of the important components to frame out a successful asset management program. The down time of an asset gets prolonged when the required part is not available at the time of maintenance or repairs whereas overstocking the spare parts leads to increased carrying cost.

Many effective and proven strategies are there to manage spare parts in order to achieve an effective asset management. Apart from that, some of the new and innovative practices can also be thought over. Proper implementation of these strategies facilitates advanced asset management (EAM) solutions.

ABC and XYZ analyses

The widely accepted 80:20 rule indicates that approximately 80 percent of volume at any storeroom is associated with merely 20 percent of the items in inventory. It is important to track these 20 percent of items.

ABC and XYZ codes are usually used to classify these parts. The codes are allotted depending upon value or quantity of stock movement. Each code will have inherent "upper limit." The parts which cost more than $5000 are called highest value parts and can be assigned the ABC code of "A”. The fastest moving parts can be assigned an XYZ code of "X."

Automatic replenishment

Automating reordering processes results in time & cost savings. Reorder functionality suggested, generates requisitions based on reorder points (ROP) and reorder quantities (ROQ) which are stored in the inventory record. Once inventory levels for a part fall below the reorder point threshold, a suggested reorder is placed for the reorder quantity, which in turn creates a requisition. This saves time and prevents the delays and errors that can occur with manual purchasing processes.

When a simple ROQ value is not enough, an economic order quantity (EOQ) algorithm can be used to calculate the right quantity of a spare part to purchase when replenishment is needed. The EOQ can consider volume discounts, the cost of placing an order, carrying costs, and other factors.

Vendor service levels

Capturing supplier service level data within the inventory record helps bring to light the most efficient, dependable, and cost-effective vendors. The preferred suppliers can be decided considering lead times, pricing, quality, number of short- or over-shipments, how often goods are received damaged, frequency of backorders, and other criteria. Preference can be given to these vendors in the procurement process.

 

Where used

A view of where a part is used, for example on which assets a certain ball bearing is installed, is helpful to both, the plant floor and storeroom. This view is helpful for the inventory personnel to understand how frequently the part is used throughout the operation, and helps the maintenance planners to determine the item number and quantity of parts installed on an asset.

Multi-stores capability

Insight of where-used enables multi-stores capabilities to view an enterprise-wide view of spare parts inventory that is stored at more than one warehouse or off site by a third party. In multi-plant surroundings or in cases where maintenance departments are located in various areas, visibility into inventory at the various storerooms permits monitoring of parts availability and service-level agreements across the enterprise as a whole or on an individual basis

Statistical Models for Spare Parts Management

• Forecasting Erratic Demand of Consumable Spare Parts
• Spare Parts Optimization Using Poisson Distribution
• Demand Forecast for spares
• Economic Order Quantity
• Spare Parts Usage Estimation Using ARIMA Model

Benefits

• Convince management to invest into correct level of spare parts
• Find the right level of inventory in seconds
• Identify slow moving stock and plan alternative strategies