This kind of circular logic will be very expensive for this company…
What stops companies from achieving all that they could with spare parts inventory optimization? Put another way, why do companies continue to waste money buying spare parts they don’t need when the course to prevent this is so well known?
Perhaps the answer lays in the ‘Catch-22 of Spare Parts Inventory Optimization’.
Catch-22 is a term that originates from the novel by Joseph Heller. In the book the term refers to a situation where airmen could only be excused from duty if they were ‘mentality unfit’ but where asking to be excused was seen as evidence of rational thought and mental fitness.
This meant that they could not be excused. Hence there was no way out of the situation because only mentally fit people would ask to be excused and so by demonstrating mental fitness they would not be excused. Confusing, I know!
Beware The Circular Nature of Spare Parts Inventory Optimization Logic
Recently I was reminded of this confusing and somewhat circular logic when discussing a spare parts inventory optimization program. The conversation went something like this.
The company was experiencing excessive stock outs, had obvious overstocks, and hence there was a clear stock imbalance. This was interpreted by them to show that they could not undertake an optimization program as any reduction in their inventory would, in their minds, worsen their situation.
Their solution was to continue overstocking their inventory as this gave them a sense of security – as in, we know that we have lots of inventory.
However, without a rational policy on what to stock and how many to stock (which is a key aspect of longevity for an optimization program) they will continue to experience excessive stock outs, obvious overstocks, and a clear stock imbalance. Which of course to them was a clear sign proving that they couldn’t undertake an inventory optimization program…
Phew! I am getting dizzy!
This Circular Logic Will Be Very Expensive
This kind of circular logic will be very expensive for this company as they will continue to throw ‘good money after bad’ by buying inventory that they don’t need.
Then at some point in the future, much of this inventory will become obsolete and people will ask, ‘why is there so much obsolete stock’. The answer, of course, is that it is because they are buying it all today!
Sharpen the Saw as Applied to Spare Parts Inventory Management
Another way to look at this situation is through the lens of Stephen Covey’s 7 Habits of Highly Effective People, specifically, Habit #7 – Sharpen the Saw.
To explain this, Covey describes a situation where people are trying to saw a log with a blunt saw. This of course requires much more effort and takes longer than if they were using a sharp saw.
At the suggestion that they should stop and ‘sharpen the saw’ the response is that they don’t have time because they are too busy sawing! Again, this is a type of circular logic that says, we can’t do what is required to improve a situation because we are too busy dealing with our previous choice.
In both examples, money and effort are spent that could be avoided if they just stopped, tested their own logic, and sought a better solution.
Are You Stuck in the Catch-22 of Spare Parts Inventory Optimization?
How does this apply to your company? Are you stuck with a Catch-22 of spare parts inventory optimization and are you too busy to sharpen the saw? Then perhaps it is time to take a different approach to your spare parts inventory management.
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Posted by: Phillip Slater