In about 50% of organizations spare parts and materials stores reports to the maintenance organization. In about 50% of organizations spare parts and materials stores is part of the purchasing function.
One of the areas that are first attacked when an organization wants to become lean is the materials and spare parts areas.
Through reducing the value of spare parts and material kept in storage you can of course reduce costs. It is true that there are often big opportunities to lower the value in many stores, but it can also become very expensive if it is not done correctly.
One of the most common mistakes is to discard parts that haven’t been used in, for example, the past five years or more. To discard these parts based on the fact that they have not been used for a long time is way too simplified and risky and I am surprised every time I see that this tactic is still being used in many plants.
That these incorrect and expensive cutbacks happen is a result of that the people in charge of the stores often having the goal of reducing the store value, while the consequences of not having the right part in storage when the parts are needed, is a problem for those responsible for operations and maintenance.
Most stores, especially in plants that are ten or more years old, can reduce their value by 10 to 20% without negatively affecting production reliability.
To successfully, and sustainably, reduce the value of parts and material kept in stores you must focus on measures that drives down the cost, not only on reducing the store value.
You should also set up a measurable goal for this effort.
The goal could for example be “With a service factor maintained at 97 % we will reduce value of inventory kept in stores”. In this case the service factor is percent of occasions the right parts/material have been available when needed for a maintenance job.
First you obviously need to know what parts and material you have in your stores.
First do a quick evaluation of how accurate the inventory list is. Randomly choose 300 to 500 articles and compare how correct the balance is, the location in the stores is etc.
We have often found that the inventory catalogue is 70% accurate while a good value would be 98%+. Even if this accuracy value is 100% it does not mean that the stores are cost effective. Do we have the right articles? Do we have too many?
Find out how many articles exist in undocumented storages.
If the inventory catalogue and/or the plant register, including component record and spare parts documented for each piece of equipment, are not accurate and reliable, then the users will not trust that the articles they need are going to be available in the store when they need them.
This one of the reasons why people start building up their own stores. These stores can become extensive and very expensive to have. The costs are invisible. More articles are purchased before they are needed and often in greater quantities than necessary.
Moreover the articles are often stored in a bad environment where they can be damaged by corrosion, dirt, vibrations, etc. It is imperative to clean up, sort, organize and document all the articles in all these storages.
The store manager will most likely not want to take all these items back in the central stores, because this would increase stores value and take up costly space.
I sometimes call these undocumented stores emotional stores. If you have made efforts to document all these stores and then take away all parts in these stores from the people who have them, and put the parts in central stores, then you will understand why I call them emotional stores.
Decide what you are going to have in storage.
In addition to known and traditional methods and data used to decide what should be kept in storage such as delivery times, economic purchasing quantities, consumption statistics etc. it is not uncommon that information such as; risk for breakdown of a component, cost if an article is not in storage when it is needed, condition monitoring based storage, number of identical parts used in the plant equipment etc. are missing.
Then only guesses are made as to what should and should not be kept in storage.
It is important that an analysis has been done on what production equipment is critical and which components within each piece of critical equipment could cause a breakdown.
The breakdown cost compared to the cost of keeping parts in store is an important piece of information that should be taken into consideration when storage levels are decided.
With good condition monitoring you can often avoid keeping parts in storage if the so-called failure developing period is longer than the delivery time of the parts you are monitoring.
A practical example is chains and sprockets made of steel. They wear down over a longer time period, they are easy to inspect with objective methods and the delivery time of replacement sprockets and chains are often short. If you monitor wear of sprockets and chains you can order them when you need them instead of keeping them in store.
With an accurate inventory catalogue and/or the plant register, including component record and spare parts documented for each piece of equipment you will know how many identical articles are included in the production equipment.
This is necessary and important information to have when doing evaluations of suppliers’ recommendations and decisions on what to keep in stores. The absence of this documentation will lead to that you keep wrong parts and in the wrong quantities in your stores.
Standardization can also reduce storage substantially. If you have a production line with 22 or so different and critical, electrical motors you might decide to keep one of each of the 22 motors in the storage. You can often standardize by about five different motors or even just one type. Then only five or maybe just one motor is kept in storage.
What good spare parts storage looks like
A good storage does not only have a cost effective store volume. The store is closed and delivers parts where and when they are needed.
The picture shows the delivery of parts and special tools for a shut down that is going to start in three days. In the worst organizations there is a line outside the store in the morning of the shut down
Store item maintenance.
You need to keep parts you store in the right environment, free of dust, other contaminations and vibrations.
Shafts of rotating items such as electric motors and pumps shall have their shafts oriented towards the isles in the store so they can easily be rotated to avoid sagging of shafts and damages of bearings.
V-belts and other belts made of rubber and similar material shall be kept away from day light, preferably in a dark location. Bearings should be stored laying flat and turned on a regular basis.