After my career at the Air Force, I am now sharing my knowledge and experience as a consultant at Gordian with service and maintenance managers in various industries. I experience that few realize that stock management for spare parts differs so enormously from the generally known and available stock management methods and techniques. As a result, many service and maintenance organizations still encounter numerous problems with the timely availability of the correct spare parts, despite high stocks of them.

Spare parts and system availability go hand in hand

The direct relationship between the timely availability of spare parts and system availability (in this example the deployability of aircraft) becomes clear from the simple numerical examples below. A technical system is "Up" (it works, green in the picture below) or "Down" (it does not work, red in the picture below). During the time that a system is down, maintenance is carried out or the system waits for it. That waiting time is caused by not having one of the following immediately available: People, Resources, Methods or Materials1.

In the normal situation in the picture below, half of the 'Down' time (28% per year) consists of waiting for materials (14%) and the other half of actual maintenance (14%).

Click Image to Enlarge

Now imagine that we can reduce the waiting time by 50% through better availability of spare parts. Then the uptime of the technical system increases by 5% from 72% to 77%. 

One stock management is not the other

The management of stocks for service and maintenance differs substantially from the well-known and used methods because:

• the demand for spare parts is low and therefore (a.o.) unpredictable, 
• spare parts are sometimes critical and / or repairable, 
• delivery and repair leadtimes are long and unreliable, 

• prices can be very high. 

Just compare the demand for packs of coffee in the supermarket with the demand for any part (petrol pump, starter motor, alternator, etc.) in a car garage.

The (standard) stock management techniques and systems that are taught during training and are available in ERP and stock management systems are aimed at items such as coffee. Demand is predictable based on past demand, returns are virtually non-existent and delivery leadtimes are stable. Stock for coffee is a trade-off between stock keeping costs and order costs given a specific demand. This does not apply to spare parts. That stock decision is based on completely different things; there are many more uncertainties.

Maintenance management systems also do not take these characteristics into account. This is resolved by entering manual min and max levels.

Gordian has already published a lot about a better balance between the availability of spare parts and the required stock2 and we will repeat that only briefly here. We create the right service or maintenance stock by taking the following measures:

• Distinguish between spare parts for planned (preventive) and non-planned (corrective) maintenance. In generic stock management comparable to the distinction between dependent and independent demand.
• Segmenting spare parts for maintenance that cannot be planned: relatively inexpensive, fast-moving consumables require different settings and techniques than relatively expensive, slow-moving and repairable items.
• Applying more appropriate statistical models and demand forecasting techniques.
• Taking into account unreliable delivery and repair leadtimes (common in service and maintenance).

We have helped organizations more than 100 times, based on transactional data from ERP or maintenance management systems, to improve the availability of spare parts, at (much) lower stocks and at lower logistics costs. These savings are not the "theoretical" costs, but actual "cash-out" savings.

Keep improving with a continuous improvement process

Before even thinking about interventions, it is necessary to create awareness about the improvement potential. Therefore, always start with a scan and quantify the improvement potential. As soon as there is realization of a great business case, you continue: depending on the maturity level of stock management, you implement project-based improvement processes. One of these is the implementation of a suitable stock management system for spare parts (for service and maintenance). Such a system is based on and includes a fully closed Plan-Do-Check-Act cycle, which continuously improves stock management for spare parts.

Have you been triggered and do you realize that you use a coffee stock management system for spare parts? Then contact us. I would like to make you aware of the opportunities that still exist. There is a good chance we can significantly increase system availability at lower stocks and logistics costs.

Jürgen Donders

Experience expert