18.

1.

SPARE PARTS MANAGEMENT

The Problems of Spare Parts: The Problems of spare parts can be broadly categorized as under:(a) (b) (c) (d) (e) (f) Due to uncertainty about the time when required and quantity required; Due to difficulties in converting requirement estimates into provisioning quantities; Due to difficulties in physical procurement; Due to difficulties of distribution, storage and control, identification; Due to indifferent quality of supplied spares; Due to management attitudes.

Some of these are interlinked, but for the sake of clarity these problems are discussed under the above categories. Possible solutions and present state of the art of spare parts management are also brought out. 2. Uncertainty Of Requirement It is not generally realized that most problems of spare parts management including those in procurement arise out of uncertainty of requirement. Spare are required either for periodical preventive maintenance (e.g., change of all filters every few weeks) or for replacing a failed component. The requirement of the former can be assessed accurately but they are only a small percent of the total range. They are also usually quite cheap and present no problem. The repair parts are the ones that present the most problems, because they are required when failures occur; and failures occur at random times. Though, the average rate of failures, and hence the average rate of replacement, can be calculated or estimated, the exact time at which an individual failure will occur is beyond prediction. Similarly, it has also been universally observed that there is considerable variation in the number of the same spare required in equal periods of time. Typically, if the average usage per month were 5, the requirement may vary from as little as 0 in some months to as many as 10 or even more in some, though few, months. In which particular month the high (or low) requirement will arise cannot be determined. As such, the spare parts manager tends to keep on hand the maximum possible estimated requirement. Since this is always in excess of the average i.e., true requirement (the excess is called ‘Safety Stock’) the

spares stock is always excessive-some times several times the true requirement. It is not generally known that the variation above and below the average also depends upon the average usage itself. The variation is high for low usage parts and low for high usage parts. Typically, if the usage is 10 per month, the variation may, at most, be 6 to 16 i.e., +40% but for a monthly usage of 1, this may be from 0 to 3 or even 4, i.e., -100% to + 400%. Majority of the spare parts are low usage items. For very low usage items e.g., 1 in 10 years, even a stock of 1 part represents excessive stock as such parts may never be required in the lifetime of the machine and yet there is always that small chance of their requirement. The assessment of the usage rate itself is not difficult for fast moving items since usage data builds up quickly. The majority of the range of slow movers yield very little and often misleading date which makes it extremely difficult to assess their usage rate. As mentioned above, the variability of requirement for low usage items is very high. As such, judgments based on observations over a short period can be greatly in error. An observed usage of 2 during the previous 2 years may not necessarily mean an annual usage of 1. Even a true annual average of 0.5 can create such a situation. The whole problem of assessment of usage rates of spares, therefore, requires statistical aids and techniques adopted from operation research. Although the Armed forces have developed these techniques, they are not generally known to the industry. The problems are further complicated in respect of items having limited shelf life-mixtures of different makes of the same part and hence having variable life, capability of partial reclamation, intensity of usage, manufacturer’s policy of servicing repair kits rather than individual parts, extent of repairs permissible, etc. However, the most basic problem is to assess the average usage rate for a set of standard conditions and then apply local corrections. This will be possible, for most spares, if users exchange usage data. Such data banks could be built up with the manufacturers themselves, as is done in western countries. When a plant has equipment of mixed age groups, the assessment of usage rate has to be done both on engineering considerations and on usage statistics. These methods are not presently available to the industries. 3. Determination Provisioning Quantities Basically, spares are procured at three stages-firstly when the equipment is first procured, a set of spares expected to cover some vague initial period ranging from 6 months to 2 years are purchased. These are, almost always,

as per manufacturer’s recommendations. Occasionally, a prudent plant manager orders enough to last the life-time of the machine, especially if there is risk of price escalation or non-availability for various reasons in later years. More often than not, these estimates are wrong by several order of values-either too much or too few. The second stage is the regular, periodic or ‘as and when required’ replacement in the manner of buying raw materials. Neither the order point, the order quantity or the periodicity of ordering are determined on the basis of some ad-hoc rule such as to many months’ requirement. This part of the procurement process is similar to the normal inventory control of any other stores. The third stage is when the equipment is to be phased out of use or the supplier indicates that an “all time requirement” should be indicated to him. This is a last opportunity purchase and is undertaken in the same manner as the life-time procurement mentioned earlier, possibility, with an even greater margin of error. Of these, the second stage can be carried with much more precision than the other two-though very few plants realize this. In one scientific technique, the probability of excess usage over the average usage is assessed using a well known statistical low and the quantity to be provided to meet any chosen risk of running out of stock is determined. Then a decision table which allows for cost of the spare, its usage rate, and its criticality (i.e. cost of not having the spare when required) is cast, indicating the appropriate risk for various combinations of the above parameters. The quantity required to be stocked to meet the chosen risk for each spare is then simply read off from a table based on the statistical law (The POISS ON Distribution). This system, developed in the Army is now slowly finding use in the Industry (Cost-criticality analysis or ABC-VED analysis). The simple rule of so many months stock is a very unsatisfactory rule for spares because it tends to give unequal protection against stock out to spare of different usage rates. 4. Spare Parts As Materials Like all other materials, the basic questions in spare parts management are ‘when to order’ and ‘how much to order’. The most common inventory systems used by spare parts manager are the usual “Recorder Point-Re-order Quantity System” and the “Recorder Cycle System” (also known as “Fixed Review Period System”). The former is used mostly in control of spare parts in individual plants whereas the latter is common for distribution points.

At the distribution points, the usage, i.e., demand rate is usually quite substantial, being an aggregate of demands from retailers or by ultimate users and hence it has a relatively stable demand pattern (usually, the normal distribution). Safety stocks can be calculate on the same lines as for other types of material. Problems do arise from time to time when a series of unexpected failures crop up in new models of machines, appliances or vehicles introduced in the market. There are also some ‘seasonal’ type of effects caused by an aging population. These problems have not seriously or satisfactorily been tackled as yet, probably because their time of occurrence cannot be forecast, or because their effects are transitory or, most probably, because engineering actions initiated after their occurrence usually offer a quicker and a more lasting solution than what the inventory manager can take on his own. In case of aging populations, there is a changing ‘mix’ of machines of different vintages, so that there is an alternate rise and fall in the requirement of spare parts in successive periods. This phenomenon has been known, but since manual calculations are tedious, the use of this analysis for predicting such requirements has been restricted to complete equipment or expensive major assemblies (called ‘rotables’ in the airlines parlance) such as aero engines. The analysis has been used almost exclusively by the airforces and air lines of the world. With the widespread availability of computers and possibility of large scale simulations, these predictions could be extended to the other expensive and slow moving spare parts by the machine manufacturers themselves, who know their machine population in different years of service. Most manufacturers and spare parts distributors use ad-hoc judgment, coupled with any available past data on spare parts usage, to forecast future requirements. However, this data is not used very scientifically. Only recently an article has appeared in a professional journal describing how one Indian Automotive Truck Manufacturer uses exponential smoothing for forecasting spare parts requirement at the warehouses. A most waxing problem in forecasting, is that of assessing the life-time requirement of spare parts for a machine or a plant which is to go out of production. Developing countries often have to import spare parts to last the life-time of the imported machine, as another opportunity to import may not occur. If the purchase can be postponed till midlife of the equipment or later, some data on spare parts is built up and this improves the forecast, but if parts are to be bought along with the machine it becomes a problem in risk-analysis. Not much work seems to have been done in this area.

EOQs (Economic Order Quantities) can be used only where the usage of individual spare parts is substantial. This happens mostly at distribution points, or at the manufacturers’ (or suppliers’) level. At the user (plant) level, hardly 2% to 3% of the spare parts will have EOQ exceeding 1. In almost all other cases, the EOQ comes out to be fractional, so that the order quantity is almost always 1. Interaction of order quantity with safety stocks is, therefore, much greater, than in respect of other materials. Specifically, it is quite conceive able that the safety stock requirement for a typical spare part is zero, simply because the optimum ordering quantity is one or more. This will happen in case of parts with extremely low usage. It will be brought out in this paper that safety stock is the dominant factor in controlling spare parts at the plant level. 5. Safety Stocks-The Dominant Parameter The level of safety stocks of spare parts, like any other material, is determined by the pattern of demands during lead time, the cost of carrying the safety stocks, and the cost stock out which may either be measures in terms of money or as satisfaction sacrificed, spare parts, being slow moving items, almost always follow the POISSON distribution of demands (The US Army use compound POISSON distribution being the more accurate pattern, but this refinement does not seem to be worthwhile). The POISSON distribution is very skewed (lopsided) so that one requires progressively larger and larger safety stocks to give additional levels of satisfaction or assurance of availability. For fractional usages the safety stock can, therefore, be very high-even higher than the cycle stock, by several order of values. This is shown below:Safety stock required for an assurance level of Usage during lead time 9 4 1 0.01 0.001 50% 0 0 0 0 0 75% 2.1 1.4 0.7 0.23 0.07 90% 3.9 2.6 1.3 0.43 0.13 95% 5.1 3.4 1.7 0.56 0.17 99% 6.9 4.6 2.3 0.76 0.23

For fractional uses the least order quantity can be 1. This automatically includes the safety stock also, so that for very low usage the safety stock in provided within the order quantity. Even at higher values of usages, the order quantity has a strong influence on safety stock-a phenomenon peculiar to spare parts. The ABC pattern (Pareto’s law) is applicable to spare parts in more ways than one, viz., • A small range of spare parts accounts for the bulk of the usage value over a long period. • A small range of spare parts accounts for the bulk of the replacements over a period of time. Consequently, a large range of spare parts have negligible individual usage (or even usage value) over a long period. • This large range of slow-moving parts presents the most inventory control problems, such as : - A very high level of safety stock, since they must be held at a minimum stock of 1. - A very large inventory stock value, since most such parts are also individually expensive. - High obsolescence cost. Most techniques developed so far have attempted to make a realistic and, hopefully, cost-effective, combination of safety stock and stick-out cost. 6. Problem of Procurement The problems of physical procurement of spare parts start from their identification. A manufacturers catalogue or parts list giving its identification number and description is a must because, unlike raw materials, spares have a very large range and apparently similar parts may not be interchangeable. If catalogues of old machines are not available the best that can be done is to send a sample for comparison. Many indigenous manufacturers do not even prepare a spare parts catalogue for their products. Even when this is done, they cannot often give details of spare parts of ‘Bought out’ assemblies. When changes are made to the design of the parts or to be machine model, the interchangeability, or even the changes to part numbers are not included in the catalogues. All these lapses greatly increase the difficulties of identification and cause much delay

in their procurement. The cataloguing techniques used in the automotive industry are generally much superior to those used in machine tool industry. Too often, the manufacturer is more concerned with production of the machines rather than spare parts for them. In fact, the capacity for spare parts production is not even built-in the plant when the project is undertaken. Another problem from the manufacturers’ viewpoint is the economics of production. Usually, complicated parts requiring expensive machine set-ups have to be produced in large quantities (Economic Batch Quantities). However, the usage rate of such items may not justify excessive production. He, therefore, passes on part of his production costs to the consumer by recommending such parts for stocking by dealers or even users. Although, year by year, the domestic production of hitherto imported plant is increasing, the need for some, and usually more complicated than before, machines by import will continue due to increased sophistication of our products. We also have a very large population of imported plants of bewildering variety of origins, models and vintage and the problem of import substitution of spare parts will continue. These are, therefore, discussed in greater detail below. Where indigenous machine building and engineering industry exists, the spares of domestically manufactured equipment can be, and are, produced by domestic manufacturers as well. Most spare parts for imported equipment-either new or second hand, are imported, though occasionally, spares for imported machines are ordered from local machine or repair shops. But this is not very common yet. There are various reasons why import is preferred to domestic production of spares. (a) (b) Difficulty in producing technically complicated or highprecision items; Imported parts are produced in large-scale and are offered at comparatively low prices that leave little possibilities for domestic substitution at competitive prices. Drawings and designs may not be obtainable from foreign producers, or patent rights may preclude reproductions. Apprehensions of inferior quality of the locally produced itemsnot necessarily due to incompetent or careless work of the local machine shops, but perhaps due to poor quality of available raw materials, e.g., steel.

(c) (d)

(e)

With acute shortage of raw materials local production of spares can be as time-consuming and costly as to get their import licensed. Typically, during a period of rationing strategic raw materials, the small-scale-ancillary firms are often left without any quota of essential raw materials, and if they want to continue production at all, they are forced to procure them at a higher price. Inducement for the local production of spare parts may be lacking because the import of spares is not restricted, or because the national currency is overhauled. The import of spare parts may well be just a habit developed during times of liberal import policies, and may not motivate looking for other solutions. It is always cheaper to obtain spares when the currency is considerably overvalued in relation to hard currencies. Even if there is a local machinery industry, it will not be able to compete with a foreign supply, which is artificially cheapened by unrealistic exchange rates. If the machine shops are of small scale and not locally concentrated, lack of information on the demand for spares may not interest the manufacturers to produce the item for import substituting. The lack of information, in turn, may reflect neglect of the spare parts problem by the Government agencies.

(f)

(g)

In the first two cases cited above, the indigenous producer has no cost advantage. It would be a very costly policy for the Government to force import substituting production of such spare parts. This policy would compel the Government to impose high import duties and initiate other administrative measures that are difficult to enforce. The possible outcome might be far from desirable. In all the remaining situations, indigenous producer has no cost advantage. It would be a very costly policy for the Government to force importsubstituting production of such spare parts. This policy would compel the Government to impose high import duties and initiate other administrative measure that are difficult to enforce. The possible outcome might be far from desirable. (a) A realistic exchange rate policy would bring about the true comparative advantages in spare parts production, especially if production can be

made labour intensive. The distorting effect of an unrealistic exchange rate, of course, are not limited to import of spare parts. (b) The supply of raw materials for spares is vital. In relation to the needs of raw materials for the plant this quantum is small so that quota allocations could easily be made more generous and assured for production of spare parts. (c) Dissemination of information on the local market of spare parts should be done more effectively either by Government agencies or by professional organizations, e.g., employers’ associations, or by a spare stocking agency on the regional or branch level. The agency would be particularly suited as a “clearing house” for potential purchasers and manufacturers of parts. (d) If agreements on patent rights, designs and drawings have to be obtained from foreign owners of rights and documents, the spare parts agency or a professional organization may take the initiative here too. To the extent that equipment and spare parts have to be imported, the import regulations remain a crucial point of maintenance policy. Refusing import licenses reflects underestimation of the importance of maintenance and repair on the part of the Government authorities or delaying imports by cumber some administrative procedures. A quick and unimpaired import of spare parts is essential for the full utilization of installed capacity, a problem which most of the developing countries have to cope with Refusal to grant foreign exchange for one missing spare parts may put a unit out of operation for a long time-a unit the installation of which may have cost a multiple of the price of the missing spare in foreign exchange outlays. This is saving in the wrong place. If the import of spares is not delayed by short sighted licencing policy their unnecessary and wasteful boarding and the tying up of capital will all be avoided. 7. Problem of Distribution As brought out earlier, investment in slow-moving spare parts is usually out of proportion to its utility. The problem of centralization is decentralization or distribution of spares stocks than becomes relevant. The advantages of large stock of spare parts at the plant level is that spares are quickly and easily available if needed. Down time of equipment can be kept as short as possible. This is especially important in case of heavy process type

production or continuous lines, where the cost penalty for any stoppage of operations is highest. The most serious handicap of decentralized large stocks is that considerable amounts of capital are tied up. It has been observed that many firms initially tend to keep spare parts inventories at a very low level, but after their bad experience they fall into the other extreme of hoarding whatever spare parts they are able to get. The particular conditions in a developing country such as ours induce firms to keep greater stocks of parts than is customary and necessary in similar industries in developed countries. The reasons are : (a) Severe and humid climatic conditions make for deterioration of parts that usually have not to be replaced in countries of temperate zones. Wrong treatment and overloading of machines by operators who are not sufficiently trained as well as incompetent maintenance-both more frequent in developing countries-also contribute to higher degrees of deterioration. The unreliable communication and distribution systems make it often impossible to place emergency orders for spare parts and have them delivered within a short time. If parts have to be ordered from abroad, the customs clearing retards delivery substantially; delays of ten days and more caused only by customs clearing of spare parts flown into a country are not unusual. Import licensing and foreign exchange controls prompt many firms to stock more spares than are needed. Uncertainty of future quotas makes it appear safer to utilize import opportunities fully when they are offered rather than to trust future allocation of import licenses of foreign exchange when spares would be needed. Under import control systems anticipated replacement needs, as reflected in import licenses applications, tend to be overstated. Fear of sudden changes in import regulations (e.g., introduction of new controls, higher import duties, etc.) also accounts for excessive stock keeping. It may be pointed out that it is the economic system rather than inability on the part of the managers which leads to the wasteful use of scarce capital resources, to a competition between a

(b)

(c)

single firm’s gains and losses and the overall economic gains and losses of the country. Where conditions in manufacturing processes require prompt availability of spare parts, the system of decentralized stock keeping of spares has many advantages no other system offers. If this system is chosen, it is necessary, however, to do everything to realize optimum-stocking levels, that is to say: (a) Operators and maintenance workers should be well trained to work with the equipment so that breakdowns are minimized. (b) Communication and distribution systems for spare parts should be improved. Much could be gained by facilitating and accelerating the customs clearing of spares imports. (c) Control of spares imports should become less arbitrary and should be freed from lengthy administrative procedures. Less capital will be tied up if stock-keeping of spare parts is centralized. The higher the centralization, the smaller the inventories needed for every kind of spares, because a sort of “insurance principle” comes into effect. From this point of view, the highest degree of centralization, i.e., central stock keeping at the national level, would be most preferable. Other arguments in favour of centralizing stocks are: (a) (b) (c) A central agency has better information of possible suppliers of spare parts both at home and abroad. Orders for the domestic fabrication of spare parts can be pooled and production thus rationalized. Spare parts for older models that are no longer produced are better identified; central stock-keeping makes their availability much easier. Administration of import licenses and customs clearing is facilitated and accelerated.

(d)

The smooth functioning of central stock-keeping is, however, dependent on a number of conditions which have to be met in order to avoid damages to the economy which are more serious than any possible gains:

(a) The communication system must be well-developed; it must permit the prompt placement of orders. This is very important. (b) Management of the central stocks must have excellent professional standards. Accurate book keeping and inventory control should be a matter of course. Moreover, the men in charge of planning the inventories and purchasing the parts must be qualified technicians familiar with the technologies in the various industries. (c) Sufficient facilities for rapid transportation of ordered parts must exist both from the suppliers of these parts to the central stock and from there to the manufacturers who demand them and these facilities must be available irrespective of monsoon, droughts, and the other seasonal effects. The actual situation, however, is still far from complying with these conditions; the communication and transportation systems have bottlenecks of one kind of the other; besides, the distances within the country are enormous by foreign standards. Yet, the most crucial point seems to be to master the administrative task of such a central agency securing the supply for so many and different firms. Even in a small industrial sector, the centralization of stocks will require a highly sophisticated management. The best way to run efficiently a central agency for spare parts might be in the form of a commercial enterprise, e.g., as a purchasing and storing cooperative or agency. The individual forms must have confidence in this agency as a prompt supplier. Quick supply, in turn, is only possible for the agency if it has secured access to spare parts, be it by imports or local production. The main role of the central agency would be to rationalize the storage of spare parts, and thus to save scarce capital. The central agency, if conceived as a public authority and endowed with the power to control and approve the individual firms’ orders for spare parts, would be in danger to turn into a super-bureaucratic institution that is an obstacle rather than a promoter of economic investment, maintenance, and replacement of capital. The experiences of European countries and here under the regime of rationing and controlled supply during World War-II and the early post-war years may be worthwhile taking into consideration. The experience of a large steel mill in the public sector in a rather advanced developing country may also illustrate the point: “The handling of the orders placed by the individual plants with the purchasing department in respect of urgently required

spare parts and accessories threatens seriously the production operations. In some cases urgent requisitions of the plants were not forwarded by offices, which are not in a position to judge the necessity or urgency of the purchases. Repeated requests of the plants were unsuccessful.” The difficulties at the level of a national central agency for spare parts supply would multiply, compared to those arising at the level of a single firm. From the proceeding discussions it appears that a central stocking of spare parts at the national levels is likely to be rational policy only for specialized or small industrial sectors, for an industry which is not too diversified, or large Government departments like P&T, Railways, State Road Transport, Airlines etc., which have a captive communication network. Even then complete centralization should not be aimed at; inexpensive parts that are needed frequently are better stored at the individual plant as are the important spares for continuous production. The central stock would assume the role of a “wholesaler”, a general purchasing agency; it could be run privately or by a public authority whichever would be more appropriate within the context of the economy; it should, however, be run on a commercial basis. In all other cases the odds seem to be more in favour of a modified solution to establish central stocks of spare parts at the regional level. This solution would be similar to the central stocking at the national level in a small country. The distance between the various firms and the regional spare parts stock are shorter; transport problems are reduced, the difficulties for management decreased. The qualifications and limitations that were outlined when discussing spare parts stocks at the national level will, of course, apply here, too. Generally speaking, central stocks of spares at the regional level are a reasonable compromise between easy availability of spare parts and the tying up of as little capital as possible. One problem that may be better solved at the national than at the regional level is the allocation of orders for domestic spare parts production. If preference is given to those machine shops which are within the region (to reduce communication and transportation problems), capacities become unevenly utilized between the different regions, unless machine shops are evenly distributed, too. Central stocks of spares at the branch level can be established for the country as a whole or on a regional basis. Splitting up regional stocks of spare parts,

according to the various industrial branches, into independent stock-keeping units may be economical, provided the preconditions of good communication and transportation are met. Specialized spares stocks for individual branches may reduce the technical and administrative standards, which are required when keeping large general stocks for all industries. But certain derogations should not be overlooked; if an industry is not regionally concentrated, the choice would be either to keep fewer stocks, thus rationalizing the storage problems but creating transportation and communication problems, or to keep a larger number of stocks within good reach of all firms but giving up possible capital savings in storage. Regional spare parts stocks on the branch level would be favourable if industries are regionally concentrated; they would be very economical if different kind of industries are concentrated in different regions. 8. Local Manufacturing of Spare Parts Sometimes it might be impossible to raise the necessary foreign currency for the purchase of spare parts from the manufacturer of a plant or machine. Also, other circumstances might justify a local manufacturing of spare parts. Thus, manufacturing of spare parts for high quality machinery, at least heattreated parts, parts machined to close tolerances, gears, hydraulic components, pneumatic components, electric and electronic components, bigger parts of steel or cast iron, ball and roller bearings and similar machine or plant components will demand highly skilled craftsmen and high quality machine tools, as well as supply of suitable raw materials. Another important fact is that drawings and process descriptions for the manufacturing is not very often supplied by the manufacturer, and obtaining it becomes especially difficult after the original purchase contract is signed. This information is of great potential sale value to the manufacturer if it is patented or has secret design and manufacturing features. Another fact is that local manufacturing of spare parts in many cases is more expensive than purchase, even if the manufacturers usually demand a rather high price compared to the real manufacturing costs. A manufacturer, however, usually is in a position to be able to manufacture more than one part at a time and also has the necessary special tools, jigs, fixtures, suitable machine tools, etc.

If local manufacturing of spare parts is the only solution, the machine or plant should be carefully analyzed to establish which spare parts are needed, and what technical data is needed to facilitate the manufacturing, e.g., raw material, tools and facilities and their cost. The necessary extra purchases and the entire organization of the local manufacturing must be established and considered as a part of the proposed investment for the machine or plant. If these additional facilities are not planned, the whole base for the initial investment is false. If the plant or machine is bought and installed, production may come to a halt, because the necessary maintenance cannot be performed. The analysis of requirement of facilities is sometimes difficult, because the knowledge about the proposed plant or machine might be insufficient. An open discussion with the manufacturer, with other buyers and users or consultants with experience of maintenance, would be helpful and necessary to clarify the importance of spare part supply. 9. Problems of Range Identity and Quality There are just too many spare parts as compared to other materials. A plant of moderate size having a few machines has to stock thousands of spare parts whereas even a multi-product plant may require only a few raw materials. The sheer size of range throws a tremendous load on the controlling actions of the management. In the final analysis, spare parts are handled in a routine manner at the lowest level in management, more often than not, by store clerks, unless a computer is used. Raw materials are required continuously and are easily identified. It is almost impossible for a store man in the plant to identify all the thousands of spare parts lying in their inventory for months or years without my issued. Parts get mixed up, lose identity tags or recognition marks and become any body’s guess as to which part was meant for which machine. Often, machines no longer exist in the plant but the parts continue to remain in storage for want of identification. For the average plant it is almost impossible to check the quality of each of the variety of spare parts that is needed. Only users such as Arm Forces, Railways, P & T and other major users can afford these quality checks. The average plant has to guard against spurious spares. Whereas effects of inferior raw materials are usually detected even by a primitive quality control organization in a plant, the effects of spurious

spares are delayed considerably; even if such a spare fails early it is not easy to blame the quality for the spare part, in view of the naturally high variability in a period-to-period requirement of even serviceable spare. It is only for a fast moving spare part that the spurious nature is identified reasonably early. 10. Management Attitude Spare parts management provides some very challenging theoretical and practical problems. Though advances in the theoretical side are not as extensive as for the general class of the materials, some notably penetrating analyses have been done in recent years. Then why is it that these have so little impact in the actual management of spare parts? The lowing reasons have been responsible for this state of affairs; (a) Spare parts are considered as just one of the various classes of materials used by a plant. The materials manager is usually concerned most with the ready availability of raw materials. In terms of daily consumption and problems caused by non-availability of even one of them, they have much greater and immediate nuisance value than any other type of material. In any case, spare parts are just too many, too specialized and too complicated to forecast or control. He, therefore, takes the path of least resistance and leaves their management to a relativity junior person. (b) Spare parts are not considered to be a problem of the elite in the plant, i.e., the production or operations people. Supply of spare parts in time and in the required quantity, is a service to the maintenance dept. and the maintenance dept. itself is a service to the production/operations dept. spare parts. Therefore, they are a service to a service, and derated in importance accordingly. (c) The spare parts manager has no access to a high-speed computer (not even an adding machine, at times) which will calculate the many inventory parameters for a maddening range of spare parts; he has no access to a high-brow analyst to help, explain or solve his unique problems or to a high level official in his own organization who will try to spend some time in trying to understand the limitations under which he works; or even to an understanding maintenance engineer who will not snub him by saying “it is your job to get me what spare part I want and when I want it”.

(d) Most maintenance engineers take the same attitude to the spare parts manager’ as the production people take to the maintenance engineer. They do not understand that the role played by an engineer in managing this material is greater than in the management of any other material. Unless the engineering profession (particularly, maintenance engineers) take seriously to a study of this aspect of materials management, there is no hope for any satisfactory improvement in this area. Fortunately, it is easy for an engineer to understand the problems and the involved statistical analysis, on account of his background. Engineers would make excellent spare part managers. It has been the experience that engineers participating in maintenance management training programmes understand connected spare-parts management problems and their solutions much better than non-engineer participants in materials management programmes. This is not to derate the latter, but the fact is that spareparts management involves a great deal of engineering knowledge, engineering judgement and familiarity with statistical concepts than commonly available to a materials manager. (e) Finally, the theoreticians have also done very little to help the spare parts manager. A study of several erudite papers appearing in operations research or management science journals (almost all literature on spare parts problems seem to appear in mathematical journals) which attach, and sometimes offer, solutions to some specific problem, shows that there is a big gap between these people and the poor, lowlevel spare parts manager, in fact, one often wonders whether they even know of each other’s existence. What the spare-parts manager needs today is simple thumb rules. Until the average plant can afford to share computer time, manual computations are going to be the rule. Even with the computer, the engineer’s judgement will still remain a subjective element which will strongly influence inventory decisions. It seems, then, that whatever the organizational pattern, the spare parts management at the plant level is best done by a person with engineering background. An advantage for posterity will be that the problems are likely to be spelled out more clearly to the theoretician by such a person. In any case, he and the maintenance engineer can talk the same language and to that extent their work will be easier. In very small plants, the maintenance engineer will have to act as an adviser (he should be trained in basic materials management) if the plant cannot afford an engineer manager for spare parts. It would be too much for the maintenance engineer to be also a spare parts manager.

As one moves further away from individual spare parts consuming units (e.g., a factory) the problem of management becomes more like that for other materials and the need for influence of engineering judgement become less urgent. At the level of a central warehouse, the problem is almost purely a materials management problem; an engineer’s assistance may only be required when the demand pattern of a particular spare parts being to show unexpected and unexplained deviations. It is unlikely that all the theoretical problems of spare parts management will ever have a complete solution. What is now required is a clearer definition of the existing problems, their discussion in journals devoted to materials management, rather than to operation research, so that specialists in the field can take up worthwhile problems and offer solutions consistent with the capabilities of the people who are going to use these, with facilities and time available to them. Also, the engineering profession should joint hands with the materials manager to develop the science of spare parts management.

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