This 3-day training course covers techniques for optimizing spare parts inventories and reducing costs. It will discuss improving data quality, identifying duplicates, optimizing inventory parameters, challenging vendor recommendations, and selecting the right replenishment strategies. Past delegates have achieved 60-70% reductions in inventory costs. The course uses case studies and worksheets to help attendees develop action plans to optimize their own spare parts management.

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Technical Training
MRO Spare Parts Optimisation &
Inventory Reduction
Robinsons Brewery Visitors & Conference Centre, Stockport
13-15th November 2017
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Too many companies do a very poor job in managing effectively
their spare parts. The issues start in the project phase (due to
poor processes) and continue through to the Do, Check and Act
phase.
The issues arise in the project phase and are rarely corrected in
the operation phase
This presentation highlight some of the techniques, we will
discuss in our 3 day training course.
NB. we don’t just tell you how to optimise, we give you
worksheets containing all the spares optimisation formula and
hold your hand though exercises
Introduction

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Cost reduction will arise from
Eliminating duplicates
Replacing OEM with OPM items
Identifying obsolete and other unwanted items
Prioritising purchasing
Optimising inventory parameters
Remember, the benefits from an improvement in just a single
line item, can easily pay for this 3 day course
Cost Reduction
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Benefits gained by past delegates
60 – 70% reduction in some line item class groups
Identification of duplicate up to 9,000 euro per item
50-60% reduction in average stock level
6,000 duplicates identified
Ease of identification of spare parts through better
cataloguing
Improved reliability leading to reduction in usage levels
Improved documentation
Better initial spares selection
Benefits

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Plan
DoCheck
Act
Do (Execute)
Purchase Initial
Spares
Establish
cataloging &
inventory
management in
CMMS
PDCA Effective Inventory Management
Plan
Develop strategic
plans, procedures
and guides
Improve (Act)
Optimise &
rationalise to
achieve cost
reduction
Identify Duplicates
Training
Analyse (Check)
Audit spares
management
processes,
CMMS data
quality,
inventory
effectiveness
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Course Topics
01 Introduction to Spares Management
02 Improving Vendor Spare’s Data Quality
03 Spare Part Costs
04 Inventory Cost Reduction Programme (25 tactics)
05 Building an Effective Spares Cataloguing
06 Reliability & Failure Statistics
07 Challenging Vendors Recommended Quantities
08 When to Order
09 How Many to Buy
10 Auditing Inventory Control Effectiveness

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Course Topics…Continued
11 Database Solutions
12 Dealing with High Value Spares
13 Alternative Strategies
14 KPIs for Inventory Management
Course Review and Delegates Action Plan
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Course Covers the following Stock
Reduction Tactics

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Course Covers the following Stock
Reduction Tactics ..continued
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This case study extracted from a CMMS Data Upload file shows
the spares data build to be extremely poor. To correct this poor
data build, 8 actions were recommended.
Has your data been created consistently?
1. Spares Data Quality Audit

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Under the ISO55000 a company must:
Develop a set of structured documents,
These documents must cover the life of the assets from
the project to the end of life
Assets under ISO55000 include equipment, data,
information, costs and people
Demonstrate decision making based on risk
Demonstrate continuous improvement
A framework to support the above for effective spare
management will be part of the workshop, as well as how to
ensure cataloguing consistency
2. Strategic Plans
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3. Do We Need To Stock?
We will cover a number of questions that we need to ask, before
we decide to purchase, such as:
What are the costs of not having it (infers criticality analysis)?
Is it required for a major PM or shutdown? Can we order just in time
Is it required because of failure, what is the probability of failure ?
Can we predict the failure, what is the P-F interval?, have we
enough warning to obtain the spare before failure occurs
What is our philosophy (repair, replace, recondition, use a
specialist)? e.g. mechanical seals, engine overhauls,
What is our philosophy for project material e.g. flanges, fittings, etc.
is this always to be provided by a contractor
etc

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The recommended quantities recommended by Vendors are
rarely challenged in a technical manner.
This screen shot from our TAMS software shows how this done
The 1st item in the list is only operating 50% of the time, therefore,
the calculated ADR (Annual Demand Rate) is 50% less. The
Vendor may not have been provided with this information.
4. Challenge Vendors Recommended
Quantities?
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5. Spares Criticality
As a default spares criticality is based on the criticality of the
equipment, i.e. if the equipment is critical then the spares are
critical and then reduce the criticality based on operating
context e.g. similar equipment operating that have a less
critical function
Once the spares criticality is assigned a default % service
level is selected
The service level for a spare part can be further redefined by
considering the spares demand rate

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7. Identify Duplicate Items
Example duplicates from our various data reviews.
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8. 80-20 Rule Applied to AIV
AIV is easily calculated and can be uploaded to the CMMS for
immediate benefits
Annual Issue
Value in $
Percentage of line items
A
B C
High level of
attention
Auto Generate
replenishment
orders
Some
attention

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9. Demand Codes - Why Important
Demand codes are based on the lead time demand rate
(LTDR)
The demand code is important as:
Fast movers can have a lower service level, and hence
reduced safety stock – we discuss further later
Support the obsolete programme
Slow movers need to be analysed … NEED to review if
worthwhile to reorder??
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10. Unwanted Stock Items
A poor write-off policy will result in unnecessary stock being
carried
Items that should be written of are:
1) Obsolete items
2) Damaged items through poor preservation
3) Items beyond their shelf life
4) Excess stocked items
5) Items stocked that are not covered by current repair and
contracting strategies
How effective is your unwanted stock programme?

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11. Lead Time
Lead time has a big effect on stock levels and costs, most
CMMS populated data shows the vendor time to deliver and
not the total lead time from highlighting a need to order until
the items are on the shelf available to be issued
Reduction in lead time will lead to:
Reduction in safety stock
Reduction in Reorder Point
Reduction in stock-holding levels
Reduction in inventory (stock-holding) costs
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12. Optimise Inventory Parameters
The diagrams below show the opportunities to identify
excessive costs.
Note the Calulated values for ROP and Max stock infers
optimised values
Act
Max
Cal
Max
Excess
Holding
Cost
Act
ROP
Cal
ROP
Excess
Holding
Cost
Cal
ROP
Act
ROP
Stock-
Out Cost

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Opportunities to Reduce Costs
Buying too frequently Buying too many & excess
holding stock
Cal
OQ
Act
OQ
Excess
Buying
Cost
Act
OQ
Cal
OQ
Excess
Holding
Cost
Here are similar models for order quantities
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Ths example from a Pharmaceutical company shows excessive
stocking. The metric is the Number of Years of Stock.
We calculate this value at line item value
Inventory Control Parameters Audit

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The following chart shows how safety stock levels increase
rapidly when the Service Level is too high
Excess Stocking
% Service Level
Safety Stock
Level
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This case study shows that the proposed changes to the
replenishment parameters reduces the actual average stock
level $ value by over 50%
Optimisation & Stock Value Reduction
Proposed
£15,600
reduction in
average
stockholding
value

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The default replenishment strategy is the Reorder Point Policy
(a fixed order quantity). Although many call this a Min-Max
For this policy to be valid, the EOQ has to be greater than the
lead time demand rate (LTDR):
When this condition exists as shown below, then a more cost
effective replenishment strategy is required
13. Select Right Replenishment Strategy
Other options to be considered are:
Min-Max (Variable order quantity)
Constant Vendor Quantity
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Challenging stocking of slow movers, is based on indirect
costs
14. Identifying & Challenging Slow
Movers

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Evaluating Insurance Spares Decisions
RAM software such as Reliasoft’s
Blocksim is ideal to support
decisions whether to stock high
value – long lead time items
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16. Standardisation, e.g. avoid
multiple OPMs
In this company, where we conducted a rationalisation study,
there were spiral wound gaskets stocked from 5 different
vendors.
This policy typically, lead to duplicate line items:
Flexitallic
James Walker
Lamons
Garlock
Cefilac

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Interchangability Bolts
This example shows how often we don’t know the full details of
the part when we do our cataloguing.
It is possible there will be duplicates usually 12-15%
SAP # Short Description
1356731 BOLT,DBLE HEX HD. F/3" BALL VALVE
1356730 BOLT,DBLE HEX HD. 3" BALL VALVE M1025-3
1352851 BOLT,DBLE HEX HD. DANIEL P/N 555-44-112
1345084 BOLT,DBLE HEX HD. FISHER P/N 1U625631192
1352840 BOLT,DBLE HEX HD. DIVERTER P/N M1225-2
1352843 BOLT,DBLE HEX HD. 3/8"x3/4" DANIEL METER
1352833 BOLT,DBLE HEX HD. 2" BALL VALVE
1352836 BOLT,DBLE HEX HD. 3" DIVERTER VALVE
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Case Study Ring Type Joints (RTJs)
Case study, this is what can be achieved by scandalisation and
rationalisation programme, a 70% reduction in line items
Initial Findings - 163 SAP Line Items
RTJ Types – R_Oval and Octagonal, BX and RX
Material - Soft Iron, Carbon Steel, SS304, SS316
Reduction achieved through:
Removing Duplicates
Combining R Type Oval & Octagonal
Combining SS304 & 316
Transferring unwanted items, i.e. Soft Iron, Cast Steel

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19. Monitoring Issues & Stock Balance
It is essential to monitor:
a) The number of issues per year versus the estimated annual
demand rate (ADR)….
We will show a number of examples where poor reliability has
influenced the number of items used significantly
Equally we could have situations where reliability has
improved and we can then reduce the ROP
a) The stock balance and if always above the safety stock level,
then the desired service level can be reduced. Note: the
criticality will remain the same
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20. Root Cause Analysis
RCA/RCFA is a big topic on its own
There are many approaches to RCA:
5 why
Cause and effect or why tree
Sequence of events and
Additional techniques including failure analysis to support
the data collection phase
We will show two case studies where actual usage was
significantly more than estimated and had not been highlighted
through monitoring

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23. Database Solutions
Database solutions support more effective analysis for:
Initial spare part planning & procurement
Data cleansing and cataloguing
Spare part inventory parameters analysis
BOM development
Spend Analysis
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Want to Learn More?
Next Training Course:
Venue: Robinson Brewery and Visitors Centre, Stockport, UK
Date: Nov 13-15th 2017
For more information contact dave@ramsoftuk.com
David Thompson
Senior Consultant (maintenance, reliability & spares)
Ramsoft (UK) Ltd
Lancs, UK
www.ramsoftuk.com
www.linkedin.com/in/davidthompsonreliability
External Tutor & Project Supervisor in Reliability at Robert Gordon University
Over 50 years experience in Maintenance, Reliability and Spares and in diverse
industries

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Future Courses
Asia
Jan 17-19th Miri, Sarawak
Jan 22nd – 24th Hanoi, Vietnam
Jan 29-31st Bangkok, Thailand
For more information on the above Asian courses contact:
Harn@petro1.com.my
For on-site courses contact:
dave@ramsoftuk.com
Middle East
Dec 17-21st Define Management Consultancy & Training