The spare parts management planning horizon is the time between when you know that you’re going to need the part and when you can get the part available for use.
In this short video Phillip Slater explains.
The Spare Parts Management Planning Horizon
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.
When it comes to deciding how many of an item to stock in your inventory, what you really need to understand is, what is the period of time that I’m trying to cover with that stock?
So, what period do I need to ensure that I have that part available for.
Now you may say, ‘Well the equipment’s there and it will be running for years, so I need to have it available for years’, but that’s not really what we mean here.
Because when we’re deciding how many to stock, we know that we can get replenishment over time. So really, what you’re planning for, what you’re trying to decide on, is how much stock do you need to have for what I’m going to call the planning horizon.
The planning horizon is the time between when you know that you’re going to need the part and when you can receive the part, when you can get the part available for use.
With spare part inventory management, understanding the planning horizon is critical to guiding the decision on whether or not to stock an item.
So, if I get notice that I’m going to need an item, and that notice is two weeks, but I know that I can receive the item in two days, then there’s no need for me to stock that item. I can plan for its use.
However, if it’s the other way around, if the notice that I get of need for the item is two days, but delivery takes two weeks, then I know I’m going to need to stock that item.
When you next have a conversation about whether to stock an item and how many to stock, make sure that you raise the issue of the planning horizon and ask the decision makers if they understand what the planning horizon is and compare that to the lead time for receipt of the item.
That’s something to think about.
Posted by: Phillip Slater