This document discusses aligning classification and inventory control of spare parts as part of an integrated management process. It proposes a model to align spare part characteristics determined through classification with the selection of an appropriate inventory control model. The model involves 4 phases: 1) defining the integrated spare parts management process and objectives, 2) forecasting spare part demand, 3) conducting inventory analyses and establishing selective control policies to design the suited inventory control model, and 4) using computer applications to implement the inventory control system. The goal is to balance performance metrics through an integrated approach to spare parts management.
This Project presents a case study in inventory management of Mercedes Spare Parts of a service company. This project aimed to minimize the total costs of the inventory in the company through developing and optimizing various inventory management models of the company’s various spare parts.
World class factory equipment spare parts programs_bhut
This deck gives an overall view and the elements of what a World class factory equipment spare parts program looks like. Was presented at the 2007 annual symposium of the Houston chapter of the Society of Maintenance and Reliability Professionals.
KEY TO PROFITABILITY: SPARE PART MANAGEMENTDr. V.N. Tikku
Many companies fail not because of more consumption but due to maintenance of huge spare inventory which remains underutilized ! The presentation looks in to reasons as well as remedial actions...
This Project presents a case study in inventory management of Mercedes Spare Parts of a service company. This project aimed to minimize the total costs of the inventory in the company through developing and optimizing various inventory management models of the company’s various spare parts.
World class factory equipment spare parts programs_bhut
This deck gives an overall view and the elements of what a World class factory equipment spare parts program looks like. Was presented at the 2007 annual symposium of the Houston chapter of the Society of Maintenance and Reliability Professionals.
KEY TO PROFITABILITY: SPARE PART MANAGEMENTDr. V.N. Tikku
Many companies fail not because of more consumption but due to maintenance of huge spare inventory which remains underutilized ! The presentation looks in to reasons as well as remedial actions...
Paolo Gallibci, Electrolux presentation at Spare Parts 2013Copperberg
"Network Optimization as next step at Spare Parts Cost and Service Optimization. How to create Value?" Paolo Galli European Logistics EMA-EMEA Ops, Electrolux and Carlo Peters, Supply Chain Strategy Consultant, Buck Consultants International presentation at Spare Partns Business Platform 2013.
Fin out more http://www.sparepartseurope.com/
Increase production and profits with better availability of spare partsIMAFS
True or False: all parts are created equal? This Presentation resume the 9 keys in inventory optimization:
Parts classification
Managing service
Managing demand
Forecasting demand
Managing lead times
Optimizing inventory parameters
A good inventory optimization system
Clarifying roles and responsibilities
Policies, procedures and key performance indicators
Giacomo Squintani, PTC presenation at Spare Parts 2013Copperberg
"Spare Parts:from undervalued challengeto profit-boosting opportunity" Giacomo O. Squintani, Marketing Manager from PTC presentation at Spare Parts Business Platform 2013.
Find out more http://www.sparepartseurope.com/
Concept of inventory, need for inventory, types of inventory, Seasonal, Decoupling, Cyclic, Pipeline, Safety, Implications of Inventory Control Methods Inventory Costs: Concept & Behavior of Ordering cost, Carrying cost & Shortage cost Basic EOQ Model & EOQ with Discount
Spare Parts Forecasting using Poisson DistributionDewang Malam
Reliability data analysis provides a wide-range of benefits, including the opportunity to optimize the timing of equipment overhauls and inspections, the content of maintenance procedures, as well as the life cycle costing of sparing and upgrade programs in operating facilities world-wide. But how do we determine the number of spare parts required to stock? Which methods can be used?
For a company to continue business, the role of the Spare Parts department is very important. Whether or not the part activities are properly controlled, can greatly influence the company’s success.
The system control among other things is vitally important to the Spare Business Unit (SBU) control, for effective operation of actual SBU.
For a company to continue business, the role of the Spare Parts department is very important. Whether or not the part activities are properly controlled, can greatly influence the company’s success.
The system control among other things is vitally important to the Spare Business Unit (SBU) control, for effective operation of actual SBU.
Material management is a scientific technique, concerned with Planning, Organizing & Control of flow of materials, from their initial purchase to destination.
Inventory generally refers to the materials in stock. It is also called the idle resource of an enterprise. Inventories represent those items, which are either stocked for sale or they are in the process of manufacturing or they are in the form of materials, which are yet to be utilized.
Workflow Support for Failure Management in Federated OrganizationsRalf Klamma
Failure management for complex products (such as
production machinery) exemplifies a class of reactive workflow management tasks for which current WFMS offer few solutions. This class is characterized by great variation of tasks and cooperation patterns, the need to bring rich context knowledge to many different kinds of workplaces, and the need to interlink effective workflow execution with continuous organizational learning. In the German FOQUS project, we have prototyped and evaluated a WFMS architecture which addresses these problems through (a) the encapsulation of problem context in electronic circulation folders; (b) a semantic trading mechanism managing the flow of such folders in a
highly flexible manner; (c) a concept for process-integrated workplaces in which the necessary information is made effectively available in the usual working environment of the different kinds of users; (d) metamodeling techniques to support change in this environment.
Enhanced workforce efficiency offers a wide range of benefits – for example, improved working routines reduce time spent on non value-adding tasks, and when efficiency in scheduling is enhanced, stores can realize significant savings in payroll costs.
The role of raw material management in production operationsijmvsc
Experience had shown that there is critical operational problem regarding raw material management in
manufacturing organisations. This has prompted the desire to embark on a conceptual analysis that will
examine the problem and strive to proffer useful suggestions. This paper intends to bring to the fore, the
salient issue of inefficiency in the practice of raw material management and its effects on production
operations of manufacturing concerns by theoretical review. The paper concludes that, should
practitioners become proactive by applying proffered solutions, efficiency will be achieved in management
of raw materials and production operations.
Paolo Gallibci, Electrolux presentation at Spare Parts 2013Copperberg
"Network Optimization as next step at Spare Parts Cost and Service Optimization. How to create Value?" Paolo Galli European Logistics EMA-EMEA Ops, Electrolux and Carlo Peters, Supply Chain Strategy Consultant, Buck Consultants International presentation at Spare Partns Business Platform 2013.
Fin out more http://www.sparepartseurope.com/
Increase production and profits with better availability of spare partsIMAFS
True or False: all parts are created equal? This Presentation resume the 9 keys in inventory optimization:
Parts classification
Managing service
Managing demand
Forecasting demand
Managing lead times
Optimizing inventory parameters
A good inventory optimization system
Clarifying roles and responsibilities
Policies, procedures and key performance indicators
Giacomo Squintani, PTC presenation at Spare Parts 2013Copperberg
"Spare Parts:from undervalued challengeto profit-boosting opportunity" Giacomo O. Squintani, Marketing Manager from PTC presentation at Spare Parts Business Platform 2013.
Find out more http://www.sparepartseurope.com/
Concept of inventory, need for inventory, types of inventory, Seasonal, Decoupling, Cyclic, Pipeline, Safety, Implications of Inventory Control Methods Inventory Costs: Concept & Behavior of Ordering cost, Carrying cost & Shortage cost Basic EOQ Model & EOQ with Discount
Spare Parts Forecasting using Poisson DistributionDewang Malam
Reliability data analysis provides a wide-range of benefits, including the opportunity to optimize the timing of equipment overhauls and inspections, the content of maintenance procedures, as well as the life cycle costing of sparing and upgrade programs in operating facilities world-wide. But how do we determine the number of spare parts required to stock? Which methods can be used?
For a company to continue business, the role of the Spare Parts department is very important. Whether or not the part activities are properly controlled, can greatly influence the company’s success.
The system control among other things is vitally important to the Spare Business Unit (SBU) control, for effective operation of actual SBU.
For a company to continue business, the role of the Spare Parts department is very important. Whether or not the part activities are properly controlled, can greatly influence the company’s success.
The system control among other things is vitally important to the Spare Business Unit (SBU) control, for effective operation of actual SBU.
Material management is a scientific technique, concerned with Planning, Organizing & Control of flow of materials, from their initial purchase to destination.
Inventory generally refers to the materials in stock. It is also called the idle resource of an enterprise. Inventories represent those items, which are either stocked for sale or they are in the process of manufacturing or they are in the form of materials, which are yet to be utilized.
Workflow Support for Failure Management in Federated OrganizationsRalf Klamma
Failure management for complex products (such as
production machinery) exemplifies a class of reactive workflow management tasks for which current WFMS offer few solutions. This class is characterized by great variation of tasks and cooperation patterns, the need to bring rich context knowledge to many different kinds of workplaces, and the need to interlink effective workflow execution with continuous organizational learning. In the German FOQUS project, we have prototyped and evaluated a WFMS architecture which addresses these problems through (a) the encapsulation of problem context in electronic circulation folders; (b) a semantic trading mechanism managing the flow of such folders in a
highly flexible manner; (c) a concept for process-integrated workplaces in which the necessary information is made effectively available in the usual working environment of the different kinds of users; (d) metamodeling techniques to support change in this environment.
Enhanced workforce efficiency offers a wide range of benefits – for example, improved working routines reduce time spent on non value-adding tasks, and when efficiency in scheduling is enhanced, stores can realize significant savings in payroll costs.
The role of raw material management in production operationsijmvsc
Experience had shown that there is critical operational problem regarding raw material management in
manufacturing organisations. This has prompted the desire to embark on a conceptual analysis that will
examine the problem and strive to proffer useful suggestions. This paper intends to bring to the fore, the
salient issue of inefficiency in the practice of raw material management and its effects on production
operations of manufacturing concerns by theoretical review. The paper concludes that, should
practitioners become proactive by applying proffered solutions, efficiency will be achieved in management
of raw materials and production operations.
Testing the Component Based Adoption Techniques during Runtime Configurationijtsrd
Component based Software Engineering is the most common term nowadays in the field of software development. The CBSE approach is actually based on the principle of ‘Select and Use’ rather than ‘Design and Test’ as in traditional software development methods. Since this trend of using and ‘reusing’ components is in its developing stage, there are many advantages and problems as well that occur while use of components. Here is presented a series of papers that cover various important and integral issues in the field concerned. This paper is an introductory research on the approaches, development process, various phases and assessment available in commercialized models in CBD. Dr. R. Saradha | Dr. X. Mary Jesintha "Testing the Component Based Adoption Techniques during Runtime Configuration" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-4 , June 2021, URL: https://www.ijtsrd.compapers/ijtsrd42334.pdf Paper URL: https://www.ijtsrd.comcomputer-science/other/42334/testing-the-component-based-adoption-techniques-during-runtime-configuration/dr-r-saradha
THE KEY TO LEAN PERF ORMANCE: IMPLEMENTING A DAIL Y SHOP - FLOOR CONTROL SY...IAEME Publication
Proposed this paper is a standardized shop floor control (SFC) model which has been developed to control and enhance processes improvement in both Small and Medium Enterprises (SMEs) and multinationals based in
Morocco.The key contribution of this paper is a framework, “Lean Shop Floor Control System” (LSFCS), which responds efficiently to many common Lean Manufacturing (LM), Lean Leadership and SFC requirements by regrouping four main dimensions that are standardization, visual management, daily audits, and kaizen.
Cost Implication of Inventory Management in Organised SystemsDr. Amarjeet Singh
This paper investigates the role of cost implication in
inventory management in order to improve Institutions’
Stores. The study takes a critical look at the costs involved and
the use of economic order quantity as a tool that minimizes the
total inventory costs, the time saved between the manual and
the automated operational system using a Nigerian University
Store, AYZ University (not the real name because of the
ethical issue), as a case study. The study was being guided by
the following objectives; to have stocks available when
required, to maintain accurate stock records and facilities, and
to recommend area improvement of the inventory system at
AYZ University Stores. Findings revealed that the economic
order quantity is seen as a control technique that is attributed
to determine the inventory costs and how it can be minimized.
The data collected from the store were analyzed and the
results obtained shows that the existing system which is
majorly manual based is not effective when it comes to time
management and efficiency. A new automated system,
computerized maintenance store system (CMMS) was
proposed for development and implementation for the AYZ
University Store for her end users of the store and her clients
from within and outside the University system. This would be
greatly improved in terms of both financial and time cost of
inventory management.
Unit-1Introduction to Productions and Operations managementLAKSHMI V
Introduction - Meaning & Definition – Classification - Objectives and Scope of Production and operation Management -Automation: Introduction – Meaning and Definition – Need – Types - Advantages and Disadvantages.
Much has been written about lean manufacturing and the lean enterprise—enough that nearly all readers are familiar with the concepts as well as the phrases themselves. But what about lean maintenance?
Is it merely a subset of lean manufacturing? Is it a natural fall-in-behind spinoff result of adopting lean manufacturing practices?
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1. Aligning classification and inventory control of spare parts
in the frame of an integrated management process
Marco Macchi*, Irene Roda*, Luca Fumagalli*, Flavio
Beretta**, Sammy Saba**
* Department of Management, Economics and Industrial Engineering, Politecnico di Milano,
Piazza Leonardo Da Vinci 32, 20133 Milano, Italy,
** ABB Spa Process Automation Division, Via Vittor Pisani 16, 20124 Milano, Italy
(email: marco.macchi@polimi.it; irene.roda@polimi.it; luca1.fumagalli@polimi.it;
flavio.beretta@it.abb.com; sammy.saba@it.abb.com)
Abstract: Spare parts management is an issue of outmost importance for effectiveness in manufacturing and
service companies because of its impact on system availability and continuity of operations. On the other
hand, spare parts are inherently difficult to manage in an efficient way. The present paper postulates that an
integrated perspective for decision making in spare parts management provides potentials for positive results
in both effectiveness and efficiency: a model for aligning classification and inventory control of spare parts is
presented as a lever to this end.
Keywords: Spare parts, integrated management process, classification, inventory control.
hardly present in literature. Nonetheless, they think that
1. Introduction
the adoption of an integrated perspective is one of the
Effective management of spare parts is essential to many main lever for improving the overall performance (in
organizations since they represent an important resource terms of effectiveness and efficiency) of spare parts
to ensure system availability and continuity of operations. management in companies. This paper shares a similar
But spare parts are inherently difficult to manage in an mindset, therefore it aims at contributing to fulfill the
efficient way: their inventories may consume a significant needs for an integrated spare parts management. A main
portion of the capital investment in a company. Hence, in assumption to this end is that a close attention should be
many organizations in the manufacturing, services and provided on the distinct characteristics pertaining to the
defense sectors, there are opportunities for cost savings by spare parts, different from other types of materials.
engaging in more efficient management of spare parts
The general function of spare parts is in fact to assist the
inventories (Diaz and Fu, 1997). Indeed, the objective of a
maintenance staff in keeping equipment in an operating
company should be to achieve effectiveness, without
condition. This means that the policies that govern the
losing efficiency. How to deal with such an objective?
spare parts dynamics are different from those that govern
The advent of ERP (Enterprise Resource Planning) other types of materials such as the raw material, work-in-
system, and more specifically of CMMS (Computerized process and finished goods from a manufacturing plant.
Maintenance Management System), has favorably Spare parts are often characterized by stochastic demand
contributed to spare parts management, by supporting the with irregular patterns; further on, it is normally observed
creation, archive and share of structured information on that the rates of consumption for some parts are very high
MROs (Maintenance, Repair and Operations) items and for some others are very low; some parts are
(Labib, 1998). On the other hand, the knowledge behind characterized by low purchasing costs, while many others
their proper usage is still retained in the human mind. In have high or very high purchasing costs; last but not least,
fact, managing spare parts is not just a technical problem procurement lead times are differentiated and they may be
which can be resolved by installing a specific ICT tool. It high, especially in the case of specific or on order parts. A
rather requires an ‘engineering’ way of managing better insight on peculiarities characterizing the spare
maintenance processes and of integrating the several parts can be found in several studies in the scientific
activities involved: this motivates the need for systemic literature such as, for example, Kennedy et al. (2001) and
actions, to support an integrated perspective for decision Cavalieri et al. (2008).
making in spare parts management (Cavalieri et al., 2008).
The core objective of this paper is the definition of a
Nonetheless, as stated by Bacchetti and Saccani (2011), a
model which allows aligning the spare parts characteristics
major problem talking about spare parts stands in the
– analysed thanks to a spare parts classification – with the
paucity of research with such a systemic perspective.
subsequent selection of the inventory control model. The
These authors argue that an approach integrating spare
alignment can be envisioned as a requirement for making
parts classification, demand management and forecasting,
an integrated spare parts management system. The paper
inventory management and performance measurement is
presents a proposal to this regard. Section 2 firstly defines
2. the integrated management process of spare parts and its Spares’ demand forecasting is then an important phase –
objectives, it then focuses on the importance of aligning phase 2 of the process – to proceed with the next phases.
classification and inventory control of spare parts. An Special techniques are generally required for MROs since
analysis of the state of the art is undertaken in Section 3 a large portion of them are characterized by either
by focusing both on the existing classification methods intermittent or lumpy demand. The outcome of this phase
and on the inventory control models abundantly discussed is the achievement of demand information (demand size
in literature. Section 4 presents the model proposed in and pattern), a relevant input for inventory control.
order to support the alignment: the model is developed
Thereafter, the inventory analyses, carried out on the basis
and then clarified by a short example. Section 5 finally
of different peculiar characteristics of the spare parts, such
discusses an agenda for future researches fulfilling the
as annual consumption value, procurement lead time, unit
gaps still existent in this proposal.
cost and frequency of use, help a company in establishing
2. Problem statement suitable policies for selective control – step 1 of phase 3 –.
This also helps in focusing further efforts on the operative
2.1 Integrated spare parts management process
layer, to design the suited inventory control model – step
An integrated management process can be defined as an 2 of phase 3 –, thus systemizing the ordering procedure
approach that considers the different phases involved in and also achieving, as a managerial goal, an optimum level
the process in order to get a holistic vision of the whole of the inventory, with adequate balance of the trade-offs
stream of activities, with the objective of controlling them in the target set of performances.
globally for granting the achievement of the desired final
The application of computer-based applications (e.g., a
results. This is quite a general definition. Accordingly, the
CMMS) for processing spare parts information and for
management process of spare parts can be organized as an
operating spare parts control system is then needed for
integrated stream of activities leading to the management
the organization and ensures timely operational actions
decisions (e.g. how many spares to keep in stock, how
for an efficient and effective spare parts management –
many and when to re-order, etc…), with the objective of
phase 4 of the process –.
granting the achievement of a target set of performances.
The integrated process, as given in Figure 1, is derived Last but not least, policy test and validation is intended as
from Cavalieri et al. (2008) and consists of five phases. the last phase – phase 5 of the process –. This should help
orienteering toward a continuous improvement approach:
each selected policy should be tested, reviewed and, if not
valid, modified, going back to previous decision making
phases.
2.3 On the alignment between classification and inventory control
As it emerges from the previous section, spare parts
classification and demand forecasting can (and should) be
Figure 1. Integrated spare parts management process related to inventory control (Boylan, Syntetos, 2008).
Figure 1 envisions a continuous improvement approach, This work focuses on the potentialities for improvements
starting from phase 1 to 5 and back, as well as a number which may be reached not only through a dedicated
of sub-steps required along the process in some phases. inventory control policy implementation, but thanks to a
better alignment between the spare parts classification and
According to the best practices cited in literature, the the selection of the most adequate inventory control
management decisions in all the phases should be made model. The basic assumption is that the spare parts
having in mind a systemic perspective, and adopting a classification has to respond to the need of considering
differentiated approach, where different kinds of spare the spare parts characteristics in order to define the
parts are treated with different demand and inventory criticality of each item / class of items. This phase allows
management techniques (Boylan, Syntetos, 2008). to consequentially define which is the best inventory
2.2 Objectives of each phase of the integrated process control model to be used in order to manage the specific
item / class of items. The idea is then to create a
Part codification and classification – steps of phase 1 of mechanism that helps mapping the spares’ characteristics
the integrated process – help the organization minimizing with the most proper inventory model applicable for their
the duplication of spare parts stocking thereby reducing management. As far as the demand forecasting phase
inventories, aid the accounting process and facilitate the regards, this work does not consider this specific aspect.
computerization of spare parts inventory control systems To those interested, Syntetos and Keyes (2009) carried out
and, most of all, allow identifying different classes of spare a recent review of spare parts forecasting literature.
parts basing on their peculiar characteristics. In particular,
the identification of peculiarities is an important task since 3. State of the Art
it enables to differentiate the spare items, with the goal to 3.1. Classification of spare parts
characterize the so called ‘criticality’: this is a leading well
discussed concept in spare parts management to drive Criticality of spare parts is probably the first feature that is
subsequent decisions and, in fact, the inventory control pronounced by the spare part logistics practitioners while
may be decided driven by it. enquired about specific item characteristics (Huiskonen,
3. 2001) and the classification step aims at categorizing the literature to this end are often too complicated and limited
spare parts basing on it. Since both quantitative and due to computational efforts (e.g. the use of a linear
qualitative factors (e.g., price, lead time, specificity, stock optimization model): limits have to be considered when
out costs, severity, etc.) may be considered as criteria for implementing the method in industry. Among the several
assessing criticality, the methodology to be followed for methods from literature, the AHP is proposed in this
implementing such a phase deserves special attention. work as a proper method for spare parts classification
and, looking ahead along the integrated management
If the traditional methods for classification were based on
process, for aiding the alignment of classification and
single classification criterion (see traditional quantitative
inventory control. AHP is one of the most quoted MCIC
ABC-Pareto analysis) or on pure qualitative considerations
method when referring to spare parts, since many years:
(see VED analysis, categorizing spares into Vital, Essential
Gajpal and Ganesh, 1994 is one of the first example of
or Desirable items), more recently there has been a trend
use of AHP for spare parts classification, to characterize
showing that researchers started to assess the necessity of
their criticality. A part from its consolidated use, two
considering more than one criterion and both quantitative
aspects were taken into account to further motivate its
and qualitative factors. Indeed, the discussion in literature
selection: (i) the simplicity, in terms of computational
is bringing to the actual remark that a well-structured
applicability of the method; (ii) the adaptability to the
classification of spare parts cannot be based neither just
needs to assess criticality, by taking into account several
on one single criterion nor on qualitative judgments only.
factors, both quantitative and qualitative ones.
The need for a multi-criteria inventory classification
(MCIC) started to be disclosed in the research literature. Briefly, the AHP consists in a decision-support procedure
In fact, only a proper multi-criteria classification can lead for dealing with complex, unstructured, and multiple-
to the definition of critical spare items which reflects the attribute decisions. It is a powerful tool to find out the
real priorities, given to different criteria. A selection of relative priorities or weights to be assigned to different
meaningful research works about MCIC classification criteria which characterize a decision (Saaty, 1990).
methods is proposed in Table 1. The table summarizes an Focusing on the scope of classifying spare parts basing on
in-depth analysis of literature done as a preparation of this several criticality criteria, three basic steps are needed for
paper. The reader may consider, for details on different using AHP.
classification methods, the study by Molenaers et all.
(1) The description of the decision problem with a hierarchical
(2011) as a general review.
structure. Within this context the problem’s structure can
MODEL ADVANTAGES DRAWBACKS be presented as it is in Figure 2. The main element is the
Bi-criteria It introduces more than It is considered too
approach one criterion, hence it much demanding if
final objective of the problem, at the top level of the
enlarges the capability more than two criteria hierarchy, which is the calculation of an overall criticality
of traditional methods are adopted (this is due index for each spare item. The criteria to be considered
(e.g. by a joint ABC + to high computational
VED analysis) complexity) for calculating the criticality index itself are defined at the
AHP-Analytic It is a multi-criteria It requires judgments to middle level and finally the modes, which each criterion
Hierarchy Process decision supporting a be expressed by an
method for calculating expert (i.e. subjective can assume depending on its value (high, medium, low),
an overall criticality judgments) are set by the definition of proper ranges (for the values).
index
ABC-fuzzy It allows considering A practical applicability
classification nominal and non- is difficult (this is due to
nominal attributes high computational
complexity)
DEA (Data It computes the weights It is considered too
envelopment for the criteria by an much demanding if the
Approach) – optimization method; number of spare parts
Weighted Linear this allows to overcome to classify is high (due
Optimization problems connected to high computational
method with subjective complexity)
judgments
Single overall score It is simple to use When the number of
of an inventory criteria is large, it is not
item –calculation an easy task for a
by skipping decision maker to rank Figure 2. Structure of the classification problem
optimization all the criteria as it is
required. (2) The use of pair-wise comparisons is carried on to estimate: i)
It is only applicable for
continuous criteria the relative weights (reflecting the given importance) of
measures each criterion comparing to the others and ii) the relative
importance of the modes, given each criterion, with
Table 1. MCIC methods: advantages and drawbacks
respect to the overall criticality (e.g. the higher the price of
It is important to underline that a common issue of spare the item is, the higher its overall criticality will be).
parts classification with a multi-criteria perspective is the
(3) The integration of weights in order to obtain an overall
identification of the relative importance of criteria: hence, importance (weight) for each criterion reflects its contribute over
the MCIC methods comprise either algorithms, models,
the overall criticality definition of an item, both in term of
approaches or also rules of thumb for deciding the relative relative importance with respect to the other criteria and
weights (measuring the relative importance) of the criteria
of its mode implications.
defining the overall criticality. The proposals from
4. (4) The calculation of the overall criticality index as the sum of criticality index, as previously described. In this way, not
the criteria’s weights obtained in the previous step. only a proper classification based on the overall criticality
index can be implemented, but also a useful input for the
The use of AHP in order to classify spare parts and to aid
next step of inventory control is available: that is what we
the alignment of classification and inventory control is
call the ‘criticality profile’ of the spare item / class of
presented further in this paper.
items which, according to the AHP procedure, simply
3.2 Inventory control models results from the hierarchy reflecting the problem under
analysis and, in particular, it is the decomposition of the
When one considers inventory control models, he/she overall criticality index into its component criteria taking
naturally associates them to the stock sizing problem. An into account their overall weights which comprehend
inventory model has in fact a clear impact on the stock both the importance and mode’s implications. In the radar
level reached during plant operation. The general scope of chart of Figure 3, the criticality profile of an item is
stock sizing is: ‘to find the smallest integer number of represented, where Ci are the decision criteria.
spare parts which must be stocked, so that requirement 0,05
C1
for parts from the installed base, during a cumulative 0,04
operating time T, is met with a given probability R’ 0,03
(Birolini, 2004). To this end, different alternatives of
0,02
C5 C2
0,01
inventory control model can be decided. 0,00
An inventory model is usually characterized according to
two main parameters, used for controlling the stock level
(Cavalieri, 2008): (i) a criterion (x) that specifies the
C4 C3
conditions under which a new order of spare parts should Figure 3. Example of a criticality profile of an item
be issued; (ii) a reference point (y) for the quantity to be
As far as the criteria to be considered, given an in-depth
ordered. Inventory models can be classified with the
taken analysis from both literature and industrial survey
couple (x, y), where both x and y can assume different
(Roda, 2012), five criteria have been selected as the most
values depending upon the type of inventory review (i.e.
proper ones for MROs classification: Lead Time, Price,
periodic or continuous review) and the optimal order size.
Turnover Rate, Stock out cost and Specificity.
Literature is full of proposed inventory control models
After the implementation of the AHP methodology, the
but each of them seems to be presented, in most of the
spare items are then classified with respect to an overall
cases, without an explicit connection with the peculiarities
index, which takes into account more than one criteria,
of the spare parts for which it is recommended to be
and the items’ criticality profiles are also available. It is
applied to. No or few works in fact speak about the
now possible to carry on with the next step dealing with
applicability of the inventory control models they present,
the selection of inventory control models: the idea is to
referring to spare parts different characteristics. For this
assign the proper control model to criticality profiles; to
work concern, 4 inventory control models are considered
this end, the applicability conditions for each control
and studied in their applicability: (i) the continuous review,
model are analysed, in order to fit the inventory models
with fixed reorder point (r) and fixed order quantity (Q),
features with the criticality profiles.
referred to as (Q, r); (ii) the continuous review, with fixed
re-order point (s) and order-up-to level (S), referred to as 4.2 Applicability of inventory control models
(s, S); (iii) the periodic review, with fixed ordering interval
(T) and order-up-to level (R), referred to as (T,R); (iv) the The idea at the basis of this paper is to find proper models
continuous review and order-up-to level (S) in a one-for- to manage stocking and purchasing of maintenance items,
one replenishment mode, referred to as (S-1, S). considering that within a stock there are several different
classes of spares, each one with their own peculiarities. In
Specifics about the algorithms on which the models base particular, by referring to the categorization of the actual
on are not presented in this paper: plenty of literature stock of a company, resulting from the classification step,
works can be found about this issue. On the other hand, a this step now aims at the selection of the best model to
discussion is herein presented for what concern their manage each class of spares / each critical spare item. A
applicability: this aims at providing a better focus on the framework is required to this end which, acting as a meta-
alignment of the outcomes of spare part classification and model, allows to relate different inventory control models
the selection of inventory control. to different characteristics of the spare parts.
The framework considers, according to the proposal of
4. Model Definition
this paper, the ‘criticality profiles’ of the classes of spares
/spares as to drive the selection. Hence, an analysis of
4.1. Using AHP in spare parts classification as a tool for alignment applicability conditions of each inventory model has been
As far as the classification step concerns, the objective is undertaken to build the framework, driven by the
the definition of a criticality index for each spare item / elements measured in the ‘criticality profiles’. In particular,
class of items. Once the criteria to be considered in the the aim has been to identify the peculiarities of the items
decision process have been defined, by using the AHP it is to which an inventory model best fits, based on the theory
easy to determine the weight that each of them has on the already presented in literature references plus additional
final assessment of criticality and to calculate the overall considerations logically derived by a deductive process
5. initiated from the inventory control models’ properties and can be easily found in the market (i.e., mid to low
themselves. specificity).
For what concern the (Q, r) models, it is widely stated and 4.3 Model development
approved in literature that they are implementing policies
By structuring the reasoning presented in the previous
for fast or normal moving spare items: Gelders and Loony
subsection it is possible to finally define the framework:
(1978), for example, empirically demonstrate the classical
this is materialized as a matrix able to guide the decision
EOQ model as appropriate for normal and fast moving
about which inventory control model to be used for a
items; Porras and Dekker (2008) also present the (Q,r)
particular item’s criticality profile, by referring to the
model with normal approximation of the demand as a
mode assumed by each criterion for that item (Table 2).
suitable model for items with high turnover rate. As far as
the lead time concerns, these models are usually applied in C1 C2 C3 C4 C5
Lead Price Turnover Stock Out Specificity
case of long lead times (Fera, Lambiase, 2010). Since they Time Rate Cost
are based on the continuous review, these models enable (Q,r) Mid/long High Mid/high Mid/low Mid/low
to keep the average stock level lower than in the periodic (s,S) Short High Low Mid/high Mid/high
review: they are then preferable for high price spare items,
(T,R) Mid/short Low Mid/low Low Mid/low
because of the resulting lower holding costs. Thereafter, in
practice, the (Q,r) models are normally mentioned for (S-1,S) Long High Low Mid Mid/high
managing either consumables or generic materials (that is,
materials characterized by low or, at most, mid specificity). Table 2. The framework to select inventory control
Further on, no particular concern is given to the stock out models starting from the classification outcomes
costs: it can be deduced that low/mid stock out costs can
be considered as the applicable characteristics. The selection will be guided by the criticality profile which
identifies the most critical criteria for a certain item and
The (s, S) model is based on the assumption that demand which are the ones to be considered first in the selection
behaves as a Poisson distribution; the (S-1, S) model is a of the model. The following steps may be considered: (1)
particular case of (s,S) model, with an underlying Poisson consider the criterion with the highest value in the
demand distribution as well (Feeney and Sherbrooke, criticality profile composition; (2.) look at its mode (high,
1966). These models are globally proven in literature as medium or low); (3.) by using the framework, select the
the best choice for slow moving items. Moreover, the models which can be used for such criterion’s mode
models are usually preferred for spares with high price. In (scroll the criterion column and select the rows where the
particular, (S-1, S) model is the most appropriate when value in the cells corresponds to the mode assumed by the
demands and order costs are relatively low, and the spares’ criterion); if the models (rows) selected are more than 1,
prices are high (Rose, 1972), especially when the lead time go to step 1, else stop.
is long. On the other hand, the continuous review of the
(s, S) model fits well with items characterized by a short 4.4 An example
lead time (Duchessi et al., 1988). In practice, these models
A short example in order to clarify the usage of the model
are usually mentioned for stocking specific materials (that
developed in the paper is herein given. After using AHP
is, materials with a mid/high specificity) and in case of
for classifying the components of the combustion system
mid/high stock out costs (this is mentioned especially for
of a mining truck’s engine, the overall criticality index
the case of (s,S)).
obtained for each of them allows to identify the most
The (T,R) model is run in the common use particularly in critical one, that is the fuel tank. The radar chart in Figure
companies not utilizing computerized control. This is also 4 shows the criticality profile of that item.
frequently seen when the spare items are ordered from the
C1: LEAD TIME
0,4
same supplier, or require resource sharing. Because of the 0,3
periodic review, this model leads to higher stocks, then 0,2
C5: SPECIFICITY C2: PRICE
higher holding costs, than the continuous review: this is a 0,1
reason why the (T,R) model can be better justified for low 0,0
price items. With higher stocks, mid to low turnover rates
are expected for the model: this depends on the demand
rate, not high with maintenance materials. Differently to C4: STOCK OUT
COST
C3: TR
the ones above, in this case the order quantity is not fixed
Figure 4. Fuel Tank’s criticality profile
but the inventory level is restored to its maximum value
each replenishment period: this approach is simple and
usually applied for not very critical parts in term of stock From the criticality profile (see Figure 4) and the criteria
out costs. In practice, the periodic review can be justified modes assumed by the item (see Table 3), it is then
also for what concern the lead time: with mid/short lead possible to select the inventory control model, by using
time, the periodic review is acceptable, while not being the framework (of Table 2).
forced to implement a computerized control to keep C1 C2 C3 C4 C5
stocks under a continuous review. This is often Lead Price Turnover Stock Out Specificity
Time Rate Cost
accompanied by the fact that materials are quite generic Long High Low High Mid/High
Table 3. Fuel Tank’s criteria modes
6. Starting from the criterion with the highest weight in the capacity, European Journal of Operational Research, 97: 480-
overall criticality index (i.e. the lead time) and following 492.
the algorithm presented in the previous section, the (S-
Duchessi P., Tayi G. K., Levy J. B, A (1988) ;Conceptual
1,S) model is selected as the most proper one.
Approach for Managing of Spare Parts, International Journal
5. Conclusions of Physical Distribution & Logistics Management, Vol. 18 Iss: 5,
pp.8 – 15
The major problem, for the framework developed in this
paper to be more consistent and solid, stands in the Feeney G. J., Sherbrooke C. (1966), The (S-1,S) Inventory
paucity of research with an integrated perspective on spare Policy under Compound Poisson Demand, Management
parts management: as evidenced from literature review, an Science, Vol. 12, No. 5, A ,Sciences, 391-411
approach integrating spare parts classification, demand
Fera, Lambiase Nenni (2010), A Proposal for Estimating
forecasting, inventory control models and performance
the Order Level for Slow Moving Spare Parts Subject to
measurement is hardly present in literature. In order to fill
Obsolescence, iBusiness, 2, 232-237
this gap, in this work a deductive process has been used
with the aim of handling the few information from Gajpal P. P., Ganesh L. S. (1994), Criticality analysis of
literature about differentiated ways of managing spare spare parts using the analytic hierarchy process,
parts in the most consistent way in order to obtain the International Journal of Production Economics, Vol. 35, Iss 1-
framework. Of course, this methodology is useful to 3,pp 293-297
create the basis for the definition of a model; building of
more theory is necessary to define a complete and robust Gelders L.F., Van Looy P.M. (1978), An Inventory Policy
framework. In particular, detailed and focused empirical for Slow and Fast Movers in a Petrochemical Plant: A
investigations are required in the next future for validation Case Study, The Journal of the Operational Research Society,
of the framework: case studies and proper testing, such as Vol. 29, No. 9, pp. 867-874
with simulation, to verify the adaptation to a real setting Huiskonen (2001), Maintenance spare parts logistics:
of the framework, will be required. This will help studying Special characteristics and strategic choices, International
different scenarios and validating models, considering also Journal of Production Economics, Vol71, Iss1-3, 6, pp125-133
the dynamics in the application in a real industrial world.
Kennedy, WJ, Patterson, JW, Fredendall, LD. (2002) , An
Acknowledgments overview of recent literature on spare parts inventories,
International Journal of Production Economics, 76(2): 201–215.
This paper grounds on a research supported with the
project “Dote Ricerca applicata: MeS-MaM - Metodi e Labib A.W., (1998) World-class maintenance using a
Strumenti per la riduzione dei costi di gestione dei computerised maintenance management system, Journal of
Materiali di Manutenzione” (in English: Methods and Quality in Maintenance Engineering, Vol. 4 Iss: 1, pp.66 - 75
tools for the reduction of cost of spare parts). The project Molenaers A., Baets H., Pintelon L., Waeyenbergh
was funded by Regione Lombardia (Lombardy Region) G.(2011), Criticality classification of spare parts: A case
and ABB Spa Process Automation Division. The authors study, International Journal of Production Economics (to be
would like to thank the other persons that contributed to published).
the project, namely Eng. Federico Curcio formerly M.Sc
student from Politecnico di Milano and Eng. Salvatore De Porras, Dekker (2008), An inventory control system for
Angelis project manager from ABB Spa Process spare parts at a refinery: An empirical comparison of
Automation Division. different re-order point methods, European Journal of
Operational Research 184 pp.101–132
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