Technical article covering 6 Step MRO Spare Parts Optimisation Process

1. Introduction
Under ISO55000, a company must demonstrate that it is managing its assets from the project phase to
end of life.
For the assets, e.g. spare parts, a company must:
• Demonstrate that it is managing its data (cataloguing, issue, returns, receipts, etc)
• Have procedures in place (cataloguing, initial spares purchasing, inventory man)
• Demonstrate risk-based decisions
• Demonstrate continuous improvement
In our experience the creation of MRO Spare Parts Master Data is typically done very badly at the
project phase and continues into the asset ownership phase. See attached flyer, listing several case
studies.
Poor cataloguing leads to duplicate stock, loss of time trying to find spare parts, emergency purchases,
excess stocking and hence excess costs.
Depending how bad you currently are, there is a potential for significant savings.
RAMsoft have been conducting workshops to help companies optimise and reduce their inventory for
several years.
RAMsoft have developed several tools to support reductions in inventory.
• MRO-Strip, a tool to identify duplicate line items, most companies have between 10-15%
duplicates
• MRO-OPT, a tool to optimise stock levels and to show % cost savings
• MRO-BOM, a tool to support BOM building
• MRO-Auditor, for conducting MRO Spare Parts Master Data Audits very effectively
• MRO-CleanIT, to cleanse the spare part master data with standardised part descriptions and part
numbers
RAMsoft have also developed an inventory reduction process based on the following 6 phases:
Audit
Define Process & Guides
Cleanse
Rationalise
Optimise
Measure Effectiveness
Is Your MRO Spare Parts Improvement
Programme ISO55000 Compliant?
Maintenance, Reliability & MRO Spare Parts Specialists

2. Phase 1 Auditing
The first step for any inventory improvement programme is an understanding of the company’s issues.
The scope of an inventory management audit can cover the following areas:
• MRO Best Practices (a structured questionnaire is used to evaluate best practices in managing
spare parts effectively)
• MRO Written Procedures and Guides (the documents required for each phase of an item’s life)
• Master Data Review (short description formats, nouns and modifiers, Mfg. & Vendor P/Ns,
Vendor and Mfg. names, review of duplicates)
• Inventory replenishment control parameters (an evaluation of current ROP, OQ, Min-Max, etc)
In this document, we will mainly discuss activities related to spare parts master data.
A company’s downloaded inventory data is mapped and imported to our MRO-Auditor tool. MRO-
Auditor contains over 200 saved filters and queries to facilitate the master data review by noun, etc.
A report is issued detailing the findings good and bad - remember poor cataloguing represents potential
savings.
Typical findings from our audits are:
• Short descriptions have inconsistent formatting
• Qualifiers or Modifiers are not identified
• Vendors’ names included in the short description
• Lack of attribute data in the short description, and inconsistent sequencing
• MPNs have inconsistent formatting
• MPNs fields are a mix of Vendors and MPNs
• 10-15% duplicate line items
• Inconsistent abbreviations used
• Abbreviations are not used when they should be
• Multiple suppliers for the similar material
Comments on poor cataloguing will be supported by screen shots from the MRO-Auditor tool, a typical
example is:
The above is an example of the poor cleansing delivered by a consultant.
RAMsoft do not guarantee to find all types of inconsistencies, but the most common. Only during
master data cleansing will all issues be identified.
Phase 2 Procedures and Guides
ISO55000 states that a high level strategic plan (known as a SAMP) needs to be developed. The structure
of the SAMP varies between consultants and the various maintenance associations, this is because the
ISO55000 is not prescriptive.
The SAMP developed by Ramsoft, includes two elements relative to MRO Spare Parts:
• Initial MRO Spare Parts Planning (Project phase)
• MRO Spare Parts Management (Ownership phase)

3. The main reason for poor cataloguing, is that the cataloguing process is not documented in the project
phase, which includes CMMS population.
Even when a so called consultant has carried out the cataloguing or the cleansing the final quality is
poor. Unless you document all the rules and build criteria the cataloguing will not achieve a high quality.
Remember under ISO55000 you must demonstrate the management of data and that means how the
data is populated in the CMMS consistently
During the data cleansing phase, RAMsoft can prepare documentation that supports consistent
cataloguing in the future.
Documentation can include:
• Guides and rules used during the cleansing
• A list of all abbreviations
• Type guides to cover the type of spares stocked and the naming convention
The screen shot below, shows a typical Type Guide for Shaft Bushes.
Phase 3 Cleansing Master Data
The scope of cleansing will vary from company to company and will be CMMS dependant. For example,
Maximo users typically describe their spare parts using up to 75 characters, while SAP users are limited
to 40 characters. This means a SAP user must use many more abbreviations to describe a spare part.
RAMsoft using their MRO-CleanIT tool can clean up your master data. Using standardised descriptions,
a) located in a look up table when matched to a MPN and b) a table containing template descriptions,
when that MPN is not an exact match.
One of the reasons for duplicate stock is manufacturers & vendors use different naming conventions,
e.g. see for stainless steel A2, 304, SS, they could be all the same but used in MPN then you would not
be able to identify these. Therefore Phase 2 is essential, you must clearly identify your naming
conventions.
Benefits of cleansed master data are the identification of potential duplicates, ease of finding spares,
identification of standardisation and rationalisation opportunities and hence inventory reduction.
The following example shows the current part description and the cleansed description.

4. Phase 4 Rationalisation
Rationalisation is about reviewing your material and seeking inventory or cost reduction opportunities
Companies who have proceeded to the cleansing and rationalisation phases have achieved up to 60-70
% reduction in line items (for some material) by:
• Standardising part descriptions and MPNs
• Removing duplicates
• Standardising on the material specification
• Reducing the number of manufacturers
• Removing stock that is not fit for purpose (wrong specification)
The screen shot below shows that this company stocked 23 different manufacturers of bearings.
Rationalisation covers many of the 30 tactics, we cover in our 3 day workshop, including:
• Classifying the criticality of each spare
• Assigning classifications for ABC, HML, XYZ and demand classes
• Identifying OPMs and APMs
• Reducing stocking locations
• Conducting RCA for A items
• Conducting Spend Analysis
• Challenge stocking of slow movers
• Etc.
Further cost savings may be possible by proceeding to Phase 5 MRO Optimisation
Phase 5 Optimisation
Optimisation supports ISO55000 by making decisions based on risk, we set a Stock-out risk for each
spare part based on the item’s criticality. Opportunities for reducing inventory are identified by
determining the optimum ROP and OQ and then the most appropriate replenishment strategy.
Optimum ROPs are determined by:
• Assigning a service level to each spare part based on its criticality
• Identifying the true lead time (company plus supplier)

5. • Determining the average demand rate
RAMsoft propose three main replenishment strategies:
• ROP a fixed ROP and OQ
• Min-Max, a variable OQ to bring the stock level to a maximum
• Constant Vendor Delivery, based on JIT concepts
Costs savings are identified by looking for potential cost savings. Prioritisation is based on differential
financial value between the current average stock level and optimum average stock level.
The case study below is an example, where the optimum values are not appropriate, the options are
then to a) increase one or more control parameters, so that they are not the optimum values or b) move
to a different replenishment strategy. In this example a) was the best option.
The Author
David Thompson holds a B.Sc. (Hons) in Mechanical Engineering and has spent his entire career over 50
years in maintenance, reliability and spare parts management.
David has been a certified trainer in both Reliability and RCA for leading USA companies.
David has worked in many industries Steel, Mining, Utilities, General Manufacturing, Food & Beverage,
and Oil & Gas and worked in over 36 countries
David has conducted over 40 workshops on MRO Optimisation and Inventory Reduction including
CMMS data builds. He has conducted numerous audits of MRO Master Data and conducted optimum
inventory parameter evaluations.
David has developed procedures and guides to support effective CMMS inventory build and
management.
Workshops offered
• MRO Spare Parts Optimisation and Inventory Reduction
• MRO Spare Parts Master Data Auditing & Cleansing
Contact details:
David Thompson
MRO Spares Parts Consultant/Trainer
Ramsoft (UK)
Summerseat, Bury, BL0 5QW, Manchester.
dave@ramsoftuk.com
www.ramsoftuk.com
http://uk.linkedin.com/in/davidthompsonreliability
Ramsoft (UK). 23 Waterside Road, Summerseat. Bury, Lancs, UK. BL9 5QW