The Toyota Production System is seen by many as the origin of Lean Manufacturing – an approach to operations management that eliminates waste and as the name suggests aims to operate as lean as possible.
According to Taiicho Ohno, the creator of the system, the approach was built upon a root cause analysis technique called The Five Whys.
To use this technique you ask ‘why’ five times to help identify the root cause of a problem. Try this next time you want to determine root cause of a problem but, be warned, applying this technique correctly is harder than it seems.
With spare parts inventory management most people ask just one ‘why’. That is, why are you holding the stock that you hold?
Of course it is easy to say ‘because, the plant won’t run without it’ but, in my view that is lazy thinking and if you are serious about improving your spare parts management this is not enough.
Asking one why is the starting point for most companies and unfortunately it is also the finishing point.
To help you improve your parts justification here are my Two Why’s of Spare Parts Inventory Management:
- Understand why you need an item: Do you need the item as a consumable, for Preventive Maintenance (PM), or for use in the event of a breakdown? Understanding the purpose of the item can guide you to make better estimates of demand frequencies, that is how often you may need an item, and the demand quantities, that is, how many you might need.
- Understand why you actually will be required to hold stock of the item. This is different to why you might need to hold an item, as in the first why, because here we are considering what drives you to actually have to hold stock. There are only really two reasons why you would hold inventory:
(1) The time from when you realize that you need an item is shorter than the time to order and supply the item (I think of this as: the lead time of demand is less than the lead time of supply).
(2) The minimum order quantity from the supplier is more than you use in a single demand event (that is, they supply more than you use).
Once you understand both why you need an item and why you must stock the item you can then make far better, and better justified, decisions on the quantity to hold. This, in turn, will lead to lower working capital, greater availability, and longer lasting results.
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Posted by: Phillip Slater