Recently I was helping a company develop a suite of spare parts management policies.
The process for this involves reviewing the company’s existing policies and then working with their nominated team to improve these or develop new polices, using ‘tried and tested’ generic policies as the starting point.
The Repairable Spare Parts Policy is one of seven policies that we tailored for this company.
The Repairable Spare Parts Policy – 5 Questions You Should Ask
A number of the company team members were from their maintenance/reliability function and they were brutally frank when discussing their repairable spare parts policy.
During our workshop, one of the maintenance team indicated that they always repair items if the cost is less than the cost of a new item. This surprised the non-maintenance members of the team who then started questioning this practice. They asked a range of questions relating to cost, warranties, time frames, and reliability. The answer was always the same: they only buy a new item if the cost to repair is equal to or more than the cost of purchase.
This approach stunned the other team members and they pressed the speaker on the reasoning.
The answer: ‘we have to manage the monthly budget so always take the lowest cost approach’.
Everyone agreed that this was remarkably short-sighted because there was no consideration of the cost over time, only the cost today.
Following some robust discussion the team went on to develop a new repairable spare parts policy, the details of which are specific to them so I won’t repeat them here. But here are some questions for you to consider:
- At what % of new cost should you purchase rather than repair?
- Should this ‘break point’ be greater for higher value parts?
- How do you cost in-house repairs?
- How do you track the progress of items that are being repaired?
- What influence will your current store holding levels have in the decision to repair?
Repairable spare parts are a fact of life in engineering materials and spare parts management. Developing a policy that guides repairs decision making must be a priority for any organization that is looking to better manage its spare parts costs.
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Author: Phillip Slater.