Right every time. Spare part management under cost and uptime pressure

Transcription

1 University of Applied Sciences Faculty Science and Engineering Academy of Engineering & Innovation Right every time Spare part management under cost and uptime pressure Authors: R.P.Ham, Master of Engineering in MAM, University of Applied Sciences Utrecht Maintenance Manager Kerry Zwijndrecht &Tilburg Tim Zaal, Emertus Professor University of Applied Sciences Utrecht

2 Abstract Spare parts are essential in an industrial operation to guarantee high reliability and availability of equipment. Two main aspects are important in managing spare parts: Is the right spare part available (in time)? What are the stock costs of these spare parts? This raises the questions: How is the decision made to purchase spare parts? and When do spare parts add value to the business? By extending the Fc-RCM method with new developed spare part selection scheme it is possible to categorize spare parts in four different types (insurance, critical, non critical and supply) in a profitable way and select these parts on basis of availability and criticality. So that spares are available at the right time against the lowest possible stocking costs. Problem statement Spare part management has an underrated role in the maintenance function. The maintenance function operates in a constantly changing environment of uptime pressure and cost control. The maintenance function must create demonstrable value to the primary processes by maintaining physical assets against risk and lowest possible cost. This is a thin line between the two conflicting worlds of manufacturing (uptime) and finance (cost control). For spare part management Right every time! should be the slogan. This is the operating modus every maintenance department should look for. Literature study showed that spare part management is viewed from a maintenance perspective [1](Zaal, 2011), the logistic and financial cost components are not taken into account in one model. Eight Steps of Fc-RCM method Step 1: System Selection Step 2: System Boundaries Step 3: System Functions (Criticality of functions) Step 4: System Functional Failures (Criticality of FF s) Step 5: Functional critically-fmea (Fc-FMEA) Step 6: FCA Analysis Step 7: Maintenance Task Selection Step 8: Basic Maintenance Plan (new: extension with spare part decision scheme)

3 In step eight of the Functional critical-reliability Centered Maintenance (Fc-RCM) method [2](Zaal, 2011) assessment is the decision made for the maintenance activities and captured in the Basic Maintenance Plan (BMP) [3](Blanchard, 2004). Spare parts are purchased based on this outcome and no sanity check is performed if the spare part adds value to the operation or is blocked capital in the warehouse? Interviews revealed the necessity of a practical decision scheme for purchasing spare parts with added value. Aims & Objectives The objective of this study is to develop a spare part management strategy that supports the corporate and business strategic objectives of the company. This will be achieved by: 1. Developing a decision scheme when to purchase spare parts with maintenance, logistic and financial perspective. 2. Developing a model to measure spare part management effectiveness. 3. Performing a GAP analysis of the IS and SHOULD situation and identify the window of opportunity. 4. Developing a new Standard Spare Part Management strategy. Methodological Research approach The methodology used to achieve the objectives of the project is listed below: Literature review about spare part management Proposal of a Dynamic Inventory Decision Model GAP analysis of the IS and SHOULD situation, with a window of opportunity. Results The costs of spare parts are not only the purchase price, but are also dependant on two other important cost components, the logistic and financial cost component. For the maintenance cost component is the cost of spare part (purchase price) obvious, but the logistic cost by absence of that spare part, which results in Down Time can also be a huge cost driver. The Cost of Absence or Cost of Down Time is the cost of lost production when a spare part is not available. This varies in cost per factory and branch and this can be a serious cost component.

4 The financial cost component is mostly a relatively small component but an important one. The absence of a critical spare part could result in a total production stop which could end in claims of customers (cost of claim). Spare parts are blocked capital in the warehouse. For a company blocked capital is a cost driver and is not available for other investments or available as working capital. For the logistic cost component all the warehouse and procurement costs have to be identified. The Total Logistic Costs or inventory cost of spare parts is the sum of Stock Cost and Purchase Cost. Stock cost depends on the amount of space required to store all the spare parts and is normally a percentage of the item average unit cost per year. Purchase costs are the costs for the order process itself and the costs per item by order-line. Therefore in step eight of Fc-RCM [4](Zaal, 2011) a logistic and financial cost component is included; this is called Business Functional critical -RCM (BFc-RCM). See figure 1. When you combine these three cost components you can determine the added value of each spare part. Finance Cost of Capital Cost of Claim Logistic Cost of Purchase Cost of Stock Maintenance Fc-RCM Business Fc-RCM Figure 1: BFc-RCM (Ham, 2013)

5 Figure 2: BFc-RCM spare part decision scheme (Ham,2013) The BFc-RCM spare part decision scheme In the BFc-RCM spare part decision scheme (figure 2), specific decisions parameters for these components are available to make the correct business decision. With eight questions can be decided what the best spare part procurement strategy for each equipment is. BFc-RCM spare part decision scheme makes perfectly clear that there are four different types of spare parts, depending on availability of the spare part and the criticality of the spare part [5](Haarman & Delahay, These four different types of spare parts are: Insurance spare parts Critical spare parts Non critical parts Supply items The Added Value Inventory Management (AVIM) dashboard To measure the system effectiveness of spare part management it is necessary to measure several parameters in the three designated areas, Financial, Logistic and Maintenance. This ensures that the holistic view of spare part management is guaranteed to all cost areas which can be improved. The Added Value Inventory Management dashboard (figure 3) is

6 divided in three vertical sections; maintenance, logistic and financial parameters. The advantage is that it makes clear in what area the improvement is possible. Figure 3: AVIM dashboard (Ham,2013) The KPI s of the AVIM model will be: Insurance spare parts 100% in stock Critical spare parts 100% covered by Service Level Agreement (SLA), or when not possible; in stock on site Non-Critical spare parts 0% in stock; buy when necessary strategy Supply Items managed by Economic Order Quantity (EOQ) or via Vendor Managed Inventory (VMI) Percentage spare parts linked to equipment in Bill of Material Down time due to unavailability of spare parts Percentage cycle count accuracy Stock turnover in years Achievements 1. An easy to use spare part decision scheme to make sure that the spare part adds value to the business. This BFc-RCM decision scheme is used in step eight of the RCM assessment, and can be used as an integrated part of the RCM. No extra meetings are needed to make full benefit of this solution.

7 2. With the outcome of the BFc-RCM spare part decision scheme a holistic view is available; this is captured in the Added Value Inventory Management (AVIM) dashboard. This AVIM dashboard has again the three cost components with specific KPI s per component. When the KPI s are not met; the SHOULD situation is not met which indicates there is room for improvement. The result in the AVIM dashboard represents the spare part management system effectiveness. 3. If it appears from the analysis that Non-Critical spare part are in stock, this is an indication of unnecessary fixed work capital. Non-Critical spare part stock should be phased out as soon as possible and not be ordered automatically. This easy win is probably available in every maintenance warehouse. The inventory value for the Kerry Zwijndrecht site can be reduced with 4% by eliminating these Non-Critical spare parts. Conclusion The BFc-RCM spare part decision in step eight of the FC-RCM is the perfect sanity check to make sure that the correct spare part is purchased and add value to the business. The holistic AVIM dashboard is a visual presentation of the spare part population and gives direction for improvement when the SHOULD situation is not yet achieved. This visual presentation helps to communicate the spare part strategy to the people on the shop floor and to people of other departments. References [1]Zaal, T. M. E., Spare Part Logistic. In: S. Newton, ed. Profit-Driven Maintenance for Physical Assets. Hoorn: Maj Engineering Publishing, pp [2]Zaal, T. M. E., Developing a Fc-FMEA. In: S. Newton, ed. Profit-Driven Maintenance for Physical Assets. Hoorn: Maj Engineering Publishing, pp [3]Blanchard, B. S., Logistic Engineering and Management. 6th ed. Upper Saddle River, NJ: Pearson Education, Inc.. [4]Zaal, T., Profit-Driven Maintenance for Physical Assets. In: S. Newton, ed. 1 ed. Hoorn: Maj Engineering Publishing, pp [5]Haarman, M. & Delahay, G., Value Driven Maintenance. 2nd ed. Dordrecht: Mainnovation.