Effective Spares Management from Cradle to Grave

Duration - 4 days


Many companies do a bad job of managing their inventory effectively.There are many reasons for this, but it usually starts with bad submission of vendor data, cataloguing and selecting initial spares.
This practical 4 day workshop covers aspects related to reducing inventory and costs of spare parts and is supported by case studies, software and practical exercises to aid understanding. The techniques allow you to immediately apply them in the workplace.
There are very few courses conducted that deal with the practical issues of spares cataloguing, optimising spares and stock reduction. After this course, delegates will leave the workshop with tools and techniques that they can immediately apply in their own companies and start to reduce costs.
This workshop focuses on reducing the inventory. This is an area often overlooked.

An MS Excel Analysis worksheet containing all formulae will be provided to conduct an audit of current inventory parameters.

Two analysis techniques will be covered; first using probability for normal operating and consumable spares and the second using simulation (modelling) techniques for high value spares with logistic issues. The course is of particular benefit to companies who:

  • want to audit their spares data quality
  • need to upgrade their CMMS
  • want to reduce inventory levels and costs
  • comply with ISO55000

Many case studies will be shown including reduction of 50-70% in line items


Section A Introduction and Initial Spares Processes

Topic 1: Introduction to Spares Management

Delegates' issues
Common issues in inventory management with real examples
Where we incur excess costs
Benefits of improved inventory management
Terms and definitions used in the workshop

Topic 2: Improving Spares Data Received from Vendors

RSPL/SPIRs, their purpose and why they are submitted incorrectly, principles good spares cataloguing to ensure zero duplicates, and ease of searching
A critical review of a typical RSPL form and the associated procedures sent to vendors
Examples of good and bad RSPL
10 rules for effective use of RSPL
Proposed improved format for an electronic RSPL

Topic 3: Challenge Vendors Recommended Quantities

How to calculate estimated annual demand rates based on spare reliability
Case studies where actual consumption has exceeded initial estimates

Topic 4: Effective Cataloguing

Introduction and detailed examples of an 8 step cataloguing process, i.e

  • Defining naming formatting
  • Developing spare type guides to ensure consistent part naming
  • Developing rules for Mfg's Part/Nos, dimensions, abbreviations
  • Define strategies i.e. who to buy from OEMs, Vendors, specialist company
  • Develop a set of cataloguing best practice manuals
  • Create upload file and quality checks
  • Benefits of commercial cataloguing software

Many examples collected from our numerous studies will be shown

Topic 5: Completing the CMMS Spares Build

Spares class and type codes
Spares attributes & purchase descriptions
ABC and other classification and why do we have them
Unit costs

Section B Inventory Control

Topic 6: Spare Part Costs

Different costs used in the stock management process, e.g. buying, holding cost, item cost, issue cost, penalty cost, total costs, average costs and weighted average costs
Discussion on how to deal with transport and shipping costs

Topic 7: Reliability Concepts and Spares

Introduction to reliability theory including the bath tub curve and different distributions, Normal Exponential
Weibull parameters for high value spares
Effect of maintenance strategy on the spares usage
Why is the P-F interval important?
The Poisson distribution and the effect of varying lead Time Demand Rate (LTDR)
Explanation of service levels
Effect of combining criticality and demand rate

Topic 8: When to order? Setting Re-Order Points, Safety Stock

Using the Poisson distribution to set re-order points based on lead time, annual usage and criticality and the typical issue quantity
Exercise - setting re-order levels

Topic 9: How many to order? Determining the EOQ

How to determine the economic order quantity using both a formula and a tabular approach
The effects of ordering too many or too few
Evaluating whether discounts are worth accepting for higher quantities
What to do if the EOQ is not practical

Topic 10: Establish ROP, Safety Stock and Order Quantities for Initial Spares

Converting annual demand or 2 year spares quantities into inventory control parameters
Using the top down analysis worksheet

Section C Stock Optimisation

Topic 11: Inventory Cost Reduction Programme

Introduction to the 21 step inventory reduction programme, tactics including

  • Audit CMMS spares data quality
  • Challenge the decision whether to stock and who pays
  • Establish spare criticality and service levels
  • Apply the 80-20 rule to AIV, Item Cost, Stock Holding Cost
  • Identify duplicates
  • Reduce internal lead times to reduce stock holding costs
  • Standardisation
  • Different strategies, min-max, reorder point control, constant vendor delivery
  • Replace OEM parts and precautions to be taken
  • List issues and make a plan

Topic 12: Audit Current Inventory Effectiveness

Evaluate service levels; compare existing with those parameters in the Inventory Management System
Different KPIs such as Safety Stock-Turnover Ratios, Issue Rates, Annual Issue Value, Stock holding value

Topic 13: Database Solutions

Demonstration of an MS Access Based Application to simplify the analysis. The database holds the CMMS downloaded data in one table and all non CMMS data required for the optimisation analysis in another table

Topic 14: Alternative Inventory Strategies

Alternative strategies including Constant Vendor Delivery
What to do if the EOQ is not valid
Evaluating whether discounts are worth accepting for higher quantities

Topic 15: Evaluate Policies for Insurance Spares

Consideration of planned and emergency purchases, holding costs and costs of lost production and the probability of failure
Demonstration of RAM software to conduct the analysis

Section D Management Processes

Topic 16: Auditing Inventory Management Plans & Processes

Scope of audits
ISO55000 and Inventory Management
Introduction to auditing and benchmarking
Conducting an inventory management process audit

Topic 17: In-depth Auditing of a Business Processes

Reviewing procedures Planning the scope of the audit
Conducting the audit
Identifying the issues and corrective actions
Using the self audit tool

Topic 18: KPI Reporting System

Purchasing & Inventory KPIs
Performance management system

Course Review and Delegates Action Plans