Why You Should Optimize Your Spare Parts

Average facilities waste millions of dollars annually purchasing, stocking, and relying on vendor-based spare part recommendations. When you choose to optimize spare parts, you are ensuring that your investment in spares is well spent. Having the right spare parts in inventory for equipment when needed, reducing unnecessary spare equipment stocking, and eliminating reliance on vendor-based recommendations will provide you with the opportunity to capitalize warehouse costs while achieving best-in-class reliability.

Developing Your Spare Part Optimization Strategy

Before you begin developing a spare part optimization strategy, evaluate your current state by asking the following questions:

If something were to break, have you done an analysis to determine how fast you need to fix the equipment and return it to service?

Ensure that you have documentation of the analysis stored in an easily accessible location. Make sure to note if the analysis was performed on the entire facility or if it was performed only on a certain area.

Do you have access to the right spare parts to repair the equipment in the required time frame?

Make sure that you have access to the right spare parts electronically. This pairs back to the first week of our Weekly Cost Saving Series where we talked about digitizing existing work processes. Click here to learn more.

Have you performed a spare parts analysis to ensure you are optimizing your spare part inventory?

If you have performed an analysis, ask yourself if you are confident that you have the right spare parts in your inventory today.

Do you have a proactive maintenance program in place to help preserve the life of your existing equipment?

If so, is your program tied back to your CMMS system and is it being evergreened constantly?

After you have identified your current state, complete an Equipment Asset Reliability Assessment (ARA). If you missed week two of our Weekly Cost Saving Series where we discussed ARA’s in more detail, click here to access the full recording to learn more. After, being creating your spare part optimization strategy by identify all parts that can be used by each piece of equipment (this includes both parts that are stocked and parts that are not).

Next, develop a link between the equipment hierarchy and the spare parts inventory to ensure that each part in the inventory system is associated with the various pieces of equipment that can use that part. Then, develop a risk-based demand model on equipment to determine which spare parts (and how many) should be stocked based on safety, environmental, and economic factors. Lastly, conduct an audit of the existing inventory system to determine which parts are already included and which parts must be incorporated into the inventory system.

Return on Investment Achieved by Optimization

Optimizing your spare parts inventory means that you are putting your inventory investment where you should, when you should, without incurring future risks. It eliminates unnecessary waste in your inventory system and significantly reduces holding costs (carrying inventory and warehousing), loss of function costs that can occur during storage, and costs due to potential obsolescence as asset technology improves and renders a part obsolete.

An optimized spare parts inventory builds a level of credibility that is tangible and sustainable over time, honing your facility’s competitive edge and producing positive bottom line results. Utilizing optimization technologies and best practices to improve management of spare parts consistently produces measurable benefits and drives greater operational efficiencies.

Ultimately, mitigating risk, meeting production requirements, maintaining high safety standards, and managing costs should not be competing goals, and optimizing spare parts inventory will help you to find the balance between them.

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