With all spare parts, at some point, you will have to make a decision about your last time buy.
This need comes about in several different ways but the decision is still the same: What will be the final quantity of that part that you are going to purchase?
Phillip Slater explains in this short video.
Last Time Buy and Spare Parts Management
Video Transcript
Hi, my name is Phillip Slater, and for the next couple of minutes I’d just like to give you something to think about.
It is almost inevitable that at some point in time spare parts will become obsolete.
Now, one of the ways that they can become obsolete is that they become commercially or technically obsolete, from the vendor’s perspective.
The vendor may have a new product, a new style, a new type. There may be changes in technology.
But essentially the outcome is the same, the Vendor gives you notice that they will no longer be supplying that particular part that you hold.
Now, at that point, you have a decision to make and that is, what will be your last time buy?
What will be the final quantity of that part that you are going to purchase?
It can be quite complex to review things like the install base, the quantity that you require, the past history, the future expectations, the lifetime of the equipment. There is a whole range of issues that you need to consider and that’s far too complex for this short forum.
However, here’s one tip that will make it much easier for you to make the right decision.
You need to split the last time buy quantity into two sections. One is, how much you are buying for your operational needs and how much you are buying as safety stock.
Now the benefit of breaking the decision into these two components is it gives you transparency over the decision.
So, you can evaluate whether you’re actually holding too much for your operational needs and too little for your buffer stock, or vice versa.
But it’s the transparency that makes the technique work. And that will prevent you from buying too much as part of your last time buy.
That’s something to think about.
My name is Phillip Slater.
Our Obsolescence Risk Calculator can provide guidance on where risks might exist and where further investigation or planning may be needed.
You might also be interested in the article titled The Management of Spare Parts Inventory is Different – Here’s 8 Ways
Posted by: Phillip Slater