Streamlining the role of software in managing spare parts and equipment can address bottom-line concerns

— By Scott Franklin

As businesses continue to search for ways to cut waste and maximize efficiency, maintenance and engineering departments are under greater pressure to streamline the management of spare parts and equipment inventories.

On a basic level, inventory control systems track spare parts location, availability and stocking levels. But when linked as an integrated module of a computerized maintenance management system (CMMS) or an enterprise asset management system (EAMS), they collect additional data and provide a multiplier effect that allows managers to achieve significant increases in effectiveness.

As with any system, both the initial setup and implementation phase and the follow-on operational phase are important in ensuring success and efficiency.

The effort involved to perform operations described here is significant. For managers with an EAMS/CMMS that still is not fully functional a year after installation, it is time to consider contracting outside assistance to complete the initial setup.

This kind of assistance includes a company that specializes in collecting, consolidating and entering data. A software vendor should be able to provide these services directly or recommend a firm to do so. Contractors can provide experienced, dedicated personnel who can complete these operations in a timely manner.

Initial setup and implementation is the process of identifying the necessary information and links, collecting and entering data, and — ideally — establishing the process and procedures for operation. This step does not apply simply to new installations. Established implementations that have not been correctly set up still might require an initial setup as defined here, which consists of three general levels: basic, intermediate and advanced.

Basic
This level includes creating parts and inventory records and equipment records. It also should include developing operating procedures for adding and removing equipment, as well as for adding, receiving and issuing parts.

Intermediate
Beyond the basic level, managers can begin establishing information specifying the reason the part must be stocked, which usually means establishing links between spare parts and the equipment or location that uses them. These include:

Identifying and linking identical equipment. This step optimizes stocking levels because, for example, three identical units generally do not require stocking three times the spare parts required for one unit. Also, a maintenance history on one unit can apply directly to other identical units. Identifying these identical units can greatly simplify access to collective information

Identifying ‘Where Used’ locations. Managers should link all parts to the equipment that requires them. This allows easy identification of obsolete parts. The primary reason for this is that without the Where Used identification, obsolete parts become permanent fixtures in a storeroom. It is generally time-consuming, if not impossible, to start with a part and ‘reverse engineer’ what equipment requires it.

Note: Where Used is a generic term for the link between a part and the equipment or location that uses it. Some EAMS/CMMS actually use the term Where Used, while others include the functionality under a different name or function.

Returned-stock procedure. A successful system requires a standard procedure for supporting returns. Of particular importance is the return of partially used kits — prepackaged collections of materials used in rebuilds and overhauls. Often, technicians use only a few items in the kit before returning it to the stockroom, where the kit is often mixed right back in with unused kits. The options are to either dispose of remaining parts or to have a special storage area or bin specifically identified as “partial.”

Advanced
Implementing advanced inventory management features requires a significant investment of time, first to setup the information and to then ensure it remains accurate. These advanced capabilities and features include:

Bill of materials. An exploded-view diagram of a piece of equipment routinely will include the manufacturer’s part number. There are some advantages to duplicating this information and hierarchy within an EAMS or CMMS. Including this information in the system can greatly reduce the time needed to identify a required part. One disadvantage is that it can be very labor intensive to enter this information, and managers must be sure there is a proactive effort to keep it accurate.

Criticality analysis. Not all parts need to be stocked as ready spares. Criticality analysis determines the parts that are truly critical to plant operations and evaluates the probability of their failure. Many critical systems and equipment have designed-in redundancy or emergency backup systems to reduce the criticality of maintaining immediate in-stock spares.

Lead-time analysis. Generally, there is no reason to stock parts that are readily available from suppliers. Once a part has been identified as critical, managers should determine how long it would take to get a replacement. A suitably short delivery time might justify not stocking the part.

Inventory level analysis. At this point, analysis should result in a decision. Maintenance managers today are held to greater accountability in justifying costs related to parts inventory levels, but they are more likely to be fired due to extended downtime or production outages that result from not having a necessary part. With this in mind, if a manager determines a part is determined critical to operations, it should be stocked unless it is readily available from suppliers or it is cost-prohibitive to stock it.

Once the decision is made to stock an item, the next question is how many to stock. Again, this decision is based upon a combination of factors:

• How many units use this part? If a piece of equipment requires two of an item, it is not automatically necessary to stock six of them because the facility has three identical units.
  
• What is the lead time to get the part? If the part is available relatively quickly, it might be necessary to have only a few on hand to get a facility through an emergency.
  
• What is the probability of damaging the part during installation or having it fail immediately?
  

Following through
Following initial setup and operation, the all-too-frequent approach to inventory management is to gradually let the system grow out of date and watch as storerooms fill with obsolete parts. But contrary to popular belief, it is possible to maintain the system accurately by establishing a procedure to control the way parts are received and issued.

Each organization — and even different storerooms within an organization —can have different receipt and issue procedures, but to keep a storeroom accurate and manageable, managers will need to ensure that the receipt and issue procedure has the following two rules:

• All parts other than consumables are issued against a work order number. All work orders should be issued against a location or equipment, and managers should watch for work orders issued against a non-specific entity, such as “miscellaneous.”
  
• All parts received include a Where Used field. Many EAMS or CMMS allow users to create rules or fields that can require technicians to fill in the Where Used field.
  

Both requirements can cause initial problems, in that additional information is required before a part can be issued or received. Early on, managers will need to closely monitor the addition of new-parts records and the issuing of parts. Notify the responsible people if a new-parts record has an empty Where Used field or if parts are issued without work orders or for non-specific work orders.

Turning a loose cannon into a cannon means applying some direction. Likewise, maximizing inventory control in facilities through the use of a CMMS or EAMS is more or less a matter of applying additional direction and control to the storage and use of spare parts and equipment.

Performing initial setup and implementation generally involves the hard work of identifying the parts needed to be stocked, as well as the reasons. After that, developing standard operating procedures and enforcing them will ensure that the system remains current and will increase the system’s accuracy and value.

Scott Franklin is information systems manager and CMMS implementation consultant at Life Cycle Engineering Inc. — www.lce.com — in North Charleston, S.C.