Spare Parts Inventory Management – Part 1

By Kenneth J. Staller, Senior Consultant

Get a Grip on Spare Parts Inventory Management for Your Maintenance Organization

Loss of accuracy in your machine spare parts inventory will shut down your production machines every bit as fast as not having the goods you need to produce finished products. That’s why a world class spare parts inventory system for your maintenance organization is every bit as important as inventory control for your manufacturing goods and materials. It’s not an easy endeavor. But it will make life easier, more efficient and accurate for everyone that works with or purchases the spare parts that keep production online.

The nightmare of spare parts inventory control

What’s the biggest gripe of maintenance teams, supervisors and managers?

“We work hard to increase our machines’ uptime and pinpoint failures. But when we run to the storeroom we can’t find the parts we need. Or, the parts are just not there.”

Everyone affected by machine downtime shares this frustration. The problem is huge because all that downtime cost is pure profit loss.

Begin to make sense of the chaos

Want to improve how you manage spare parts inventory? Start with these questions.

What will it take to ensure that the right maintenance parts are in the storeroom when they’re needed?

What must we change to locate those parts quickly?

How do we know what parts are on hand and what needs to be ordered?

How much will you have to do?

Does your current system:

• Give detailed information on every spare part to anyone working from any of your company’s computer terminals?
• Allow your team to quickly see what is in stock and what is not? Gauge if min/max levels are correct? Know what critical spares should be ordered or obsolete spares must be purged?
• Identify redundant items? This helps your engineering team standardize parts on machines throughout the plant and reduce inventory.
• Help maintenance planners add needed parts to work orders?
• Make it easy for purchasing to replenish inventory?
• Allow purchasing managers to send a comprehensive list of parts to multiple vendors for price negotiation?
• Allow financial managers to incorporate parts costs and materials costs in their per-machine and plant-wide maintenance budgets?
• Allow engineering to see opportunities to standardize parts such as gearboxes, motors, couplings and others that can reduce different styles of the same basic spare parts?
• Allow quick look-up of parts that may be added to work orders and project plans?

Getting started: The basics

Based on your answers to the above questions, create a plan and timeline to improve. Prioritize and assign tasks. Here is a ‘birdseye view’ of the steps you’ll need to take. I’ll provide detail on the first three steps below.

Step 1

Remove all items that will never be used again. Do not skip this step. Why? You’ll waste storeroom space and future staff time handling obsolete parts for no reason.

Step 2

Evaluate all spare parts and quantities of each to determine the types and quantities of new storage racks, shelves and storage cabinets that will be required to store all the parts.

Step 3

Locate and place all ‘like’ items together in their new storage locations. Organize them in one or more storerooms (depending on facility size) on pallet racks. Determine the safe storage methods for flammable and anit-static items.

Step 4

Enter each item’s information in the plant’s Computerized Maintenance Management System (CMMS) inventory module.

Step 5

Bar code all the parts after they have been grouped and stored properly. Bar codes are essential for accurate receiving, disbursing, cycle counting and purchasing information. The CMMS not only helps you manage inventory, it ties information together for the maintenance, engineering and purchasing staff members who will use it.

Step 6

Train everyone associated with spare parts management. Define each employee’s roles and tasks.

Step 7

Regularly monitor all processes and procedures. Make sure everyone understands their roles and are working together to maintain inventory accuracy.

Rubber meets the road

Creating a spare parts inventory management program is not easy. Here are the things you’ll have to manage and the decisions you’ll need to make.

1. Get all like parts together and organized.

This first task stops most of us in our tracks. Once we take a good hard look at all the items we store as spare parts, our minds spin from all the variables. If you have limited space, it’s easy to see this is the number one reason storeroom organization doesn’t even get started.

To not get bogged down, your team must include someone with planning, organizational and logistical skills. Where are we going to store the parts? How many of each do we have? How much space will each group require?

Include people with detailed knowledge of all parts that your maintenance team use: electrical, mechanical, hydraulic, pneumatics, electronics and more. Many items look alike but are not the same OEM part number. Same-looking parts may have different functions. Time can be lost identifying parts and their usages. This is especially true for electrical and electronic parts.

2. Choose the storage methods, space requirements and layout scenarios for all parts and raw materials.

This must happen before you research, price and purchase parts cabinets, shelving units and racking.

Modern storage options like Stanley Vidmar or Lyons style cabinets are the absolute best way to store small to medium size parts. They maximize the quantity of parts the cabinets can store per square and cubic foot of space. They also provide a simple way of assigning computer locations for each item (e.g. Cabinet 3- Drawer C = C3-DC) so they can easily and efficiently be found. Mezzanines are important to maximize available storage space. Storing vertically is an excellent way to gain floor space, especially for lightweight items such as light bulbs, drive belts, insulation and more.

How will you manage multiple storage locations for parts and raw materials? Typically, you’ll store large parts like fans, gearboxes, motors and other large items on numbered pallet racks. Smaller parts like bearings seals, electronic and electrical parts are stored in multi-drawer cabinets in a ’storeroom’ that is enclosed with fencing, walls and doors for control of the parts. In very large plants there can be multiple pallet rack areas and possibly multiple storerooms. We will discuss these areas in more detail later.

Think about electronic parts, which may need anti-static storage compartments. How do we store flammables? What items need refrigeration? Must we consider expiration dates? How do we store bulk oil and other lubricants? The list continues, including items not typically considered a spare part but that must be monitored for min/max quantities.

Should you choose a portion of the storeroom for large maintenance tools (such as big hammer drills) that are signed in and out by maintenance staff?

I’ll explore more considerations and steps for storage planning in Part 2 of this article.

3. Get all parts entered into the CMMS, properly and accurately.

Before entering any data, establish a description protocol for each part. This process must be followed exactly the same for every part entered. Assign a team member with excellent, accurate computer and typing skills for this job.

The part naming process establishes what the part’s written description will be. It is extremely important if we want to do part searches easily and accurately. The following is an example of a part naming process just for (4) bearings:

Bearing, ball, 1-1/2”, Steel
Bearing, ball, 1-1/2”, SST
Bearing, roller, 1-1/2”, Steel
Bearing, roller, 1-1/2”, SST

This type of wording, spacing and punctuation for the item function, style, size, material type and more must be followed for every part in the storeroom, every time.

These standards help us find parts quickly and easily in the CMMS. For example, if we search for ‘bearing 1-1/2’, we will get all the above to show up, regardless if they are ball or roller type or Steel or SST. Follow the same description process for all bearings. Then, when we search for the word ’Bearing’, all the bearings in the system will show up on our list in order of size and type.

You’ll need to enter other data into the CMMS for each part: the OEM part number. Model numbers. Vendor information. Where the part is used in the plant. Min/Max quantities for inventory. Any other information that will help your maintenance, engineering, purchasing and financial teams.

It’s likely that 99 percent of the items in our storerooms will be inventory-controlled parts. But there may be some that are not. What happens if a part should be saved in the storeroom because it is usable in the plant, but we don’t want to replenish it when the quantity goes to zero? We still enter all the part’s data for the part into the CMMS. But we leave the Min and Max quantities at “0”. In the future, we’ll be able to look up the part for its very important purchasing details. But the CMMS will not generate an automatic request for the item to be purchased as stock replenishment.

Inventory accuracy is everything

If your CMMS tells you there are six of the part you need in Cabinet 6-Drawer B of Storeroom X, and you go to retrieve the parts, six of them better be there. What happens when someone looks up a part in the computer and it’s not there? Or the quantity doesn’t match what the computer shows? Or it’s in the wrong location? When these things happen, confidence in the new system goes to zero and frustrations grow instantly. Your parts information in the CMMS must be super accurate so purchasing can reorder parts when the quantities get low. The most important reason for maintaining accuracy of information in the CMMS? We need the parts to be there when a machine is down.

4. Practice continuous improvement – even after you think it’s all done.

Some believe that after all the above work has been accomplished and everything is organized, neat and tidy, it will stay that way. They believe all maintenance people will follow parts retrieval instructions and complete the proper computer transactions whenever they take a part out of inventory. They believe that people won’t move things around in the storage area. They believe people will always follow the correct protocols when they bring parts back to the storage areas that they didn’t need for a work order.

I can assure you that with all the finest people and intensions in place, this will never happen. I truly love maintenance trades people and I could not have more respect for them. But they are human. They are in a hurry. Their focus is on getting machines repaired and back up and running.

Stuff happens and we don’t live in a perfect world. Regardless, accuracy must be maintained. How? A proper computer transaction must take place 1. Whenever an item is added to inventory. 2. The quantity is increased or decreased, and 3. When an item is moved from one location to another.