Ready, Fire, Aim is Not a Spare Parts Management Plan
There is a school of thought in business and operations management that action is all that really matters. Some express this as ‘ready, fire, aim’.
Essentially this view says that it doesn’t matter about the plan, just start taking action and the plan will work itself out over time. Kind of a trial and error approach.
But what is worse than having no plan?
Having the wrong plan!
This is the situation that a US-based manufacturer recently found themselves in. Let me explain.
Silicon Valley, south of San Francisco, California, is considered by many to be the center of global innovation and particularly IT. It is home to the headquarters of Google, Apple, YouTube, Twitter, LinkedIn, Adobe, Cisco, Facebook, and Netflix.
What is less known, outside of the region, is that it is also home to a community of manufacturers involved in hi-tech equipment, electronics, cars, aircraft, healthcare, biosciences, and solar power to mention just a few.
One company in particular, let’s call them TubeFaceCar (not the real name), found itself with the wrong plan for its spare parts inventory management and this really cost them a lot more than just time and money.
How The Wrong Plan Was Developed
TubeFaceCar is in a very fortunate position because they have grown their business to the point where they can sell everything that they make.
This means that plant capacity is a major issue for them and any downtime literally has a direct impact on revenue and profit.
In response they decided to implement a TPM program to try to further reduce their downtime.
It was this program that exposed issues with their spare parts inventory management. Despite their hi-tech pedigree TubeFaceCar found that its spare parts inventory management was no longer delivering the required level of spare parts service for their facility.
Mike Kidd has led the procurement and contracts function at TubeFaceCar for 10 years and and has nearly 40 years’ of procurement experience.
This role also meant that he was in charge of the team responsible for spare parts inventory management. Despite this Mike has never had to diagnose or fine-tune a spare parts inventory management system.
He has purchased many millions of dollars of parts but, as he was soon to discover, this experience didn’t help him with reviewing and diagnosing the issues with the system. Nor did his general understanding of inventory management.
Mike’s team were all experienced professionals but the current approach to spare parts inventory management pre-dated all of them.
It evolved from an SAP update and their processes were based on the workflow required for their SAP installation. In effect the spare parts management system had been on ‘auto pilot’ for many years and up until now this had worked for them.
Until now there had not been any need to do more than procure and when necessary expedite. They all knew the system and were comfortable with its operation. The new TPM program changed all that.
In response, the team developed a list of issues that they thought needed to be addressed but the influence of these in driving the necessary improvements was uncertain.
This uncertainty was coupled with confusion when the people managing the TPM implementation made suggestions that were helpful to them but counter to the overall spare parts management goals.
3 Ways That The Wrong Spare Parts Management Plan Can Really Cost You
This confusion and uncertainty was a direct result of having the wrong plan and this, in turn, lead to TubeFaceCar feeling the full effects of the three ways that the wrong plan really costs you:
- Lost Time: Uncertainty and confusion lead to ongoing internal discussions. Constantly holding meetings to try and collect the range of views on what to do and seemingly forever going around in a loop. Their internal discussions lacked any true independence which meant that, despite all their effort, nothing meaningful was happening.
- False Starts: When they could agree on something it was usually incremental and often ineffective. This created and then dashed the hopes of the broader team relying on the spare parts, reducing confidence and morale.
- Additional Expense and Lost Revenue: With no real progress they continued to purchase spare parts that they didn’t need and found themselves without the ones they did need. This had a double-barrelled impact on profit because it increased expense while reducing revenue.
Developing the Right Plan
TubeFaceCar is used to solving problems themselves, it’s been the way that they do business. They are a company of very bright people and until now they have managed to do pretty well.
However, after they made modifications to their storeroom that were intended to improve space efficiency but resulted in making items harder to find, Mike realized that they needed a ‘circuit-breaker’, they needed an independent review of their situation, and a real plan.
This was a brave step in a company like TubeFaceCar. Mike realized that by opening up to external review and potential criticism (real or implied) they would be able to eliminate the bias to the status quo that afflicts most companies. This decision was a turning point in the development of TubeFaceCar’s spare parts management and ultimately provided a boost to their bottom line.
This decision resulted in TubeFaceCar being the subject of a Snapshot Review and the independent development of a road map for improvement, upon which they could all agree.
This agreement to the road map didn’t happen because it was done independently but rather in spite of it. During the review the team members were all keen to have their concerns heard so that they could try and influence the result.
However, the independent Snapshot Review identified issues that they had not (perhaps blinded by their own biases), prioritized the actions, and backed up the prioritization with logic and data that could not be argued.
Mike’s decision transformed the company.
They went on to implement the road map without further external support and in the process eliminated the uncertainty and confusion that had held them back in achieving their ambitions.
As a result of this plan they quickly made some very simple changes that had a major impact and had a plan for more major changes. The issue wasn’t that they could implement a change program, it was that they had the wrong plan.
The moral of the story: Like a car with a faulty starter motor, sometimes you just need an external push to get you on your way.