Respond by Don to reader's inquiry...
Managing Machine Spare Parts - Cost
of Inventory verses Cost of Downtime
Hello, I am trying to find some information on budgeting
for a medium sized manufacturing plant to help justify spare parts inventory
along with yearly maintenance and general upkeep. Do you know where I can find
statistical information on "world class operations" such as inventory
of spare parts, repair costs, failure rates etc...
I have seen in the past some articles that show spare
parts spending but they did not have any reference to the size of the facilities
vs the dollars spent. What I would be really interested in some relation to the
size, complexity of the operation (machine costs) and the percentage of dollars
spent in maintaining that equipment and how the cost of maintenance increases
with the age of the machinery.
Thank you for your assistance, Terry
Sounds like you are out to cost justify spare parts,
which is one of my pet peeves. A few years back, a 'Fad' (and I don't use that
word lightly) started about "how companies could save drastically by
inventory reduction". I rank that methodology down with the "reduce
employees to save money" method. (Very low)
You see, reducing inventory to save truly works with
bulk material, but not with general machine parts. If you read one of my books
on the true cost of downtime, and review a website I have dedicated to the topic
you will get an idea of where I am coming from.
A typical scenario, a fuse, a solenoid, or even a motor is
not stocked in a facility's inventory due to a company's inventory reduction
plan. Then 3 years later, a machine goes down requiring one of them. It take
hours, a day, or even a week (for overseas parts) to get the part and return the
machine back to production.
In this hypothetical scenario, to store that part cost
from $5-$500 over that 3 year period. "The True Cost of Downtime" (TDC)
us that the machine being out of production waiting on the part cost for
per hour of downtime.
If you combine the knowledge of TDC with your log of
breakdowns / parts needed over the years and apply a TDC evaluation to existing
parts and OEM recommended spares, you should have the most cost effective
inventory management solution.
Down Time Cost Analysis - 2nd Edition Ebook - Coauthored by Mike
True Cost of Downtime - by Don Fitchett
Storerooms - Computer Based Training CBT CD
Hope this helps because there is not a mass collection
of statistical information on ("world class operations" or other wise)
inventory of spare parts, repair costs, failure rates etc... You have to go to
each machine's OEM and request spare parts recommendation list, MTBF info, and
estimate cost of repairs. The time it would take to do this for every machine
would cost more than the few dollars you would save by not stocking a particular
Another note too, as far as recommended parts list and
MTBF info from the OEM, it may likely be biased to the OEM's advantage,
not yours. That means the recommended parts list may be more parts recommended
than if a third party did the analysis on any particular piece of equipment. The
MTBF info will most likely be less than in actuality, to make their equipment
appear more reliable or just because the MTBF is based on ideal; unrealistic
Even if this spare parts/breakdown information you seek
was available for every machine in existence or most, the environment that two
like machines exist in would vary the needs much. Machine A is on ran 8 hours
per day, PMed as recommended, ran with in specs. Machine B is ran 24/7 until
break down, PM is a low priority in Machine B facility. The parts and breakdown
frequency between Machine A and B would be night and day.
Well, that is my opinion,
hope it provides some insight. Thank you for your inquiry.
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