Subject Area: Spare Parts Inventory Management Secrets
The Reality of Spare Parts Inventory Management
One of the little acknowledged issues with spare parts inventory management is that for many companies they really don’t know what they have and/or why they have it.
How can that be you ask. Don’t most companies use some kind of enterprise software such as SAP, JD Edwards etc. to keep track of their inventory and guide their spare parts inventory management?
Well of course they do and most likely the software knows what they have but the people managing and using the inventory don’t. And that is not surprising if you have an inventory of thousands (or even tens of thousands of items). After all who could possibly remember all that.
As to why it is stocked, well often that is anyone’s guess and the response to this enquiry usually goes like this:
‘Because, you know, the item was, like, stocked years ago by that guy who used to be in charge of the storeroom. But he’s moved on (promoted?) and, well, we are sure that there is a good reason.’
So it is entirely likely that at the operational level, at the level at which companies make day-to-day decisions on inventory holdings, most companies really don’t know what they have or why they have it.
But, hey, just so long as there isn’t too much downtime that doesn’t matter right?
Two Uncomfortable Secrets of Spare Parts Inventory Management
Well I think that it does matter because this situation leads us to the two big uncomfortable secrets of spare parts inventory management.
These are the two secrets that no one wants to acknowledge and almost no one will admit to:
- Your spare parts inventory is in worse shape that you think, and
- Your team doesn’t know how to fix it.
Painful, I know but almost universally true.
How can I be so sure – because I see this week in and week out.
Recently, an Engineering Manager in South Asia said to me, ‘Wow, I didn’t realize that we had so many of those items’: when talking about the 10 years supply they held of more than a dozen high value items.
The week before an inventory manager from China said, ‘We are finding things that the maintenance team didn’t know we held.’
In North America it was ‘We didn’t realize that we can buy those items locally’ (and so hold less stock).
In Australia, ‘How did we end up holding multiple units of some many max=1 items?’. (That is, they were holding 2, 3 or even more of items with a (planned) stock maximum of 1.)
And so on it goes.
The Next Step
But discovery is only half the story.
The next step with your spare parts inventory management is to take action and reduce the holdings of items in a smart and systematic way. This means looking at planning, procurement, vendors, stock levels, logistics, processes, attitudes and behaviors.
There is no one-size-fits-all solution.
And, usually, delivering a sustainable solution that ensures that you stock the right stock in the right quantities (and nothing more) means re-training your team.
It means giving them the know-how and the tools to do the job that you need to have done. Without that how can they acknowledge, let alone do anything about, the two big uncomfortable secrets of spare parts inventory management?
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Posted by: Phillip Slater