Efficient Plant December 2017 - 28

feature | maintenance efficiency
to plan for some inventory items. Consumables
such as lubricants and fluids, for example, are purchased as a function of use over time. Other items,
though, are not so easy. What about expensive, yet
infrequently used parts that tie up working capital?
Which parts can have the greatest impact on operations if they're not immediately available?
Two techniques are helpful in making decisions
that ensure efficient use of capital and maximum uptime. The first technique, Pareto analysis, identifies
the 20% of parts that drive 80% of business risk, i.e.,
those that have the greatest potential impact on production output. Priority is also given to parts
that are most difficult to replace, either
because of rarity or long lead times.

Good inventory
decisions have
great impact
on equipment
availability.

Pareto analysis also creates
a benefit of identifying high
parts usage that may benefit
from root-cause failure analysis.
Often, such parts can be repaired or
re-engineered to specifications that exceed OEM standards, making them better
suited to the manufacturer's unique environment. Improving part reliability reduces TCO.
The second technique, ABC analysis, is another
important tool. ABC is about cycle-count control
and use of working capital. "A" items (ideally, about
10% of the total) are business critical in nature,
"B" items (about 20% of the total) are of moderate
importance, and "C" items (about 70%) are relatively
unimportant. Stratifying parts lists along these lines
will help optimize cycle counts and re-order points,
thereby minimizing carrying costs.
It's important to note that results will vary
according to a company's operating and financial
priorities. Countless manufacturing plants run 24/7.

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In such cases, where downtime costs can amount to
many tens of thousands of dollars, the company will
gladly pay carrying costs to support operations and
lower risks. Other enterprises have extra production
capacity and hoard their working capital. These
operations are willing to take on the risk associated
with lower-volume inventories.
Site Optimization. Just as important as "which"
parts to keep onsite, is "where" those parts should
be stored. In some operations, the parts storeroom
is hundreds of yards away-or even outside the
plant itself. It may not be practical to maintain a
storeroom close to the action, but staff utilization is
certainly something to consider.
Locating critical parts for quick access can save
many dollars over the long run. Here again, the
80/20 rule is useful. Place the most frequently used
and critical parts close to their applicable machines,
securing them under lock and key if necessary. For
less-important parts, it may be possible to store
items offsite, especially if multiple plants operate the
same pieces of equipment. Common naming conventions and parts numbers can help in this regard
by enabling parts with similar uses to be located and
delivered quickly. Such a practice supports continuous improvement and TCO analysis.
SLOB Inventory Disposition. In many facilities,
substantial capital and valuable storeroom space
are consumed by slow-moving and obsolete (SLOB)
parts. Ridding a storeroom of SLOB inventory
starts by looking at turns. If parts are slow moving,
expensive, and not mission-critical, consider maintaining them at another plant or with the supplier.
When factory equipment is replaced or re-designed, MRO components can change and become
obsolete. In these cases, resell, recycle, or scrap the
orphan parts. Brokerages can help in many cases, by
buying old parts and reselling them-often capturing some value for the plant.
Vendor-Managed Services. A sometimes-overlooked strategy is to fully leverage vendor services.
Strong supply partners will often voluntarily stock inventories of parts with long lead-times. Making use of
this service, as long as deliveries are quick, will reduce
needless inventory "insurance investments."
Asking suppliers to hold stock will also help keep

DECEMBER 2017

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Table of Contents for the Digital Edition of Efficient Plant December 2017