How do you determine exactly what constitutes best practice with spare parts inventory management?
One problem with ‘best practice’ is that while it may be possible to define a ‘best practice’ for almost everything that you do, implementing these practices may not actually make any difference to your overall results.
Another problem is that discussions on best practice are usually not objective – for many people best practice comes down to their own personal experience, even though that experience will, by definition, not be universal.
A third problem is that people like to identify numbers that are easy to calculate and compare.
Thus, for many people a ‘best practice’ comes down to a number or a ratio, such as inventory value as a percentage of the economic replacement value of the plant.
This metric is not only pointless, but also dangerous.
Pointless because it fails to consider the different circumstances of different plants. These range from location to maintenance maturity.
Dangerous because the focus on things that don’t influence the spare parts holding decisions (such as economic replacement value) don’t drive behaviours to ensure the correct level of inventory given the circumstances.
To overcome these problems, we developed an approach that identifies which actions make a difference with spare parts inventory management in terms of producing better inventory management outcomes.
This approach is based on reviews of hundreds of storerooms and correlating outcomes in terms of inventory levels, stock turns, and stock outs. This approach gives unique insights into what works and what doesn’t work. Not just what some companies are doing better but what actually makes a difference.
Here is one major finding:
a strong focus on transaction control and physical infrastructure is a ‘necessary but not sufficient’ condition for achieving better inventory outcomes.
This may surprise those who think a best practice is all about a clean storeroom and transaction control. It isn’t.
What is need to both those things PLUS the disciplined execution of specific practices.
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If you found this valuable and you want to dive deeper into this topic, our ‘Must Know’ spare parts management course is reopening soon.
The goal of this course is to teach you the absolute ‘must know’ information, tools, and techniques required for effective spare parts management.
These are simple, effective, step-by-step strategies and tools to help you make better decisions and generate improvements in spare parts management.
This course provides the fundamental know-how for people who are engaged in spare parts inventory management on a day-to-day basis.
You can read more and pre-register for the course HERE.