At a chemical plant years ago, a maintenance technician made a hasty repair to a pump. The required repair part was not available, so the technician performed the unscheduled maintenance with another part of similar appearance. But the materials of construction were not rated for the pump’s performance, and the pump housing ruptured, spewing 1,300-degree oil into the atmosphere.

Fortunately, the chemical plant was able to mitigate the environmental damage and no one was in the immediate vicinity when the life-threatening accident occurred. But the incident was a harsh wake-up call. The factory couldn’t just hope the right parts were around. It needed an effective strategy to maintain its maintenance and repair inventory.

Maintenance technicians are often under tremendous pressure to get production up and running after an outage. Unfortunately, this burden can lead them to take harmful shortcuts to complete emergency repairs. Although the risks associated with breakdowns are often financial, poor inventory maintenance can also cause environmental and safety risks.

Optimize your MRO stocking strategy

Maintenance efficiency can be expressed as the ratio of scheduled maintenance to breakdown maintenance. Planned maintenance consists of all planned and scheduled activities (PM, PdM, corrective etc.) while breakdown maintenance consists of emergency work, reactive work and work during outage/repair that is unplanned and requires immediate reaction. A good goal follows the 80/20 rule: 80% planned, 20% broken.

MRO inventory refers to critical supplies, spare parts, and other materials required for routine maintenance, repair, and operations. If you’re optimizing MRO inventory, you’ll need to determine a few things before considering the overall impact of your maintenance team’s scheduling capabilities. Your Inventory Optimizer:

  • Dynamically assign criticality to your spare parts?
  • Do you have a “where used” feature to link spare parts to their appropriate assets?
  • Consider asset/equipment criticality in overall spare part criticality determination?
  • Calculate a moving average total duration instead of just relying on the specified runtime?

It is important to know how critical each part is before applying forecasting algorithms and cost models. Tools designed for the manufacturing, service, and retail industries have forecasting algorithms that focus on supply and sales data rather than asset and work order data. These algorithms do not consider criticality and the business risk associated with criticality, which is critical to MRO inventory warehousing strategies. I like this analogy: if a grocery store runs out of bread, there is almost no interruption in business and the store does not close. In most industries, however, the unavailability of certain parts can extend outages or potentially stop operations altogether.

Planned versus unplanned maintenance and the impact on husbandry strategies

If you effectively plan and schedule 80% of your maintenance activities, the planned parts should be ordered and available within the specified lead time. Proper planning provides a clear signal for the demand for spare parts, which eliminates the need for stocks for planned work. In this way, planning reduces the need to stock, maintain and manage spare parts. As such, you should stock enough parts to cover 20% of unplanned work.

It is important to track spare parts purchases against scheduled and unscheduled maintenance. In addition to achieving an 80% scheduled work ratio, companies should consider whether the scheduling window adequately accommodates the supplier’s lead time. If parts cannot be delivered on time, maintenance may be forced to use spare stock to continue operations. When the reserve stock is depleted for scheduled maintenance, operations are at risk in the event of an accident. A depletion event often results in an increase in inventory, which creates a ripple effect that increases maintenance budgets, reduces profit margins, increases space requirements, and leads to redundancy. Today’s surplus is tomorrow’s potential waste.

It is important that planners have access to an inventory optimization tool that calculates total lead time (including order request time, weighted average supplier time, and delivery time). Having visibility into total lead time allows planners to fully execute their planned maintenance and have the correct parts available within the lead time window. If your planning isn’t efficient, you’ll end up holding more inventory for longer periods, even with an inventory optimization tool. Forecasting algorithms will adjust stocking strategies to include all consumption (unplanned and planned), instead of planning and sourcing according to demand and maintaining stocking levels suitable for 20% of unplanned work. Over time, this practice leads to more obsolete, obsolete inventory.

Keep your maintenance planning efficient by understanding the total turnaround time for required parts. Keep your inventory optimized by stocking for unplanned, urgent work. Find an inventory optimization tool that’s designed for the unique requirements of maintenance activities, and you’ll be able to put the right metrics in place to ensure success.

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