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Uptime Insights – 5- Materials Management for Maintenance

Materials management for maintenance purposes is often a big mess. When I visit operations (doesn’t matter what industry) I often hear complaints from maintainers that they cannot get the parts they need, when they need them. Sometimes, their supply chain (warehouse, inventory, and purchasing management) are indeed a mess, but more often than not maintenance planning is also a mess, and there is usually (almost always) a lack of integration between planning and supply chain.

Without parts and timely provision of materials to meet maintenance schedules, many jobs can’t be done and certainly not on time, when needed.

There’s little point in planning and scheduling work if you can’t rely on materials management for maintenance to provide the parts when you need them.  Likewise, there’s little point in trying to reduce inventory costs if you aren’t planning and scheduling. If you want any level of performance in maintenance, then you need to have a functioning storeroom and supply chain behind it. More so, you also need excellent integration between the two.

Do your maintainers have stashes of parts and materials outside of the storeroom and uncontrolled by your inventory management personnel (stores)? Do you hear complaints that work is delayed or held up, or takes long because of parts and materials problems? Do your maintainers do a lot of purchasing? Are your planners’ busy sourcing and chasing parts? Do your maintenance supervisors, superintendents, foremen, and maybe even your trades get involved in parts procurement? These are all signs of trouble. You need materials management for maintenance, not by maintenance!

In one particularly poorly maintained operation, just about all work was reactive to breakdowns. I found that they also had a really well-run warehouse, great inventory management practices, and competent personnel who really did know what they were doing. The maintainers had “magpie stores” (a.k.a. shadow inventory or squirrel stores) all over the place. That uncontrolled inventory was their first go-to for parts. Its total value was estimated to be more than the value of inventory in the storeroom. There was a lot of direct purchasing and rush deliveries (it was also a remote location so you can imagine the cost of that). Maintainers were running their own off the books, “just-in-case” inventory, they blamed stores for never having what they need, and purchasing for being unable to supply in a timely manner. I asked the stores manager in this large operation why that was happening. His answer, “they don’t plan anything”. He was right too!

Top performers don’t delay or halt work because of a lack of parts.  When it happens it’s largely a failure of the planning and work management processes but it can also reflect on materials management. Maintenance, repair, and overhaul (MRO) materials usually make up a small portion of most companies’ material inventories but the bulk of the inventory transactions.  These parts and materials usually represent a small portion of your inventory investment but they can be critical to whether or not you are able to run your plant.  Individual parts can be of any value, they are purchased and used in small quantities, they are often slow-moving but hard to source, they are essential to getting planned work done as planned and on schedule, they can result in a lot of costly downtime, and there are a lot of them.  Managing MRO materials is a big and very important job that cannot be done just by your supply chain personnel.

Many maintenance organizations struggle to achieve consistency with a weekly planning cycle. They are far from achieving reliable parts supply. Planning for materials isn’t something you can do with a weekly planning cycle. That only works for those items you have in stores or can acquire quickly. However, if you don’t have that, then you will be in trouble.

A week is seldom enough to source many but the most used parts. Many of your needed parts require much longer planning horizons that need to be considered and taken into account. Maintenance stores are not like a grocery store that is full of fast-moving items that move off the shelves in large volumes. Calculating quantities required on hand the same way that grocery stores do it, won’t work.

You have different types of maintenance and different types of demand. Some predictable, some not. For preventive (proactive) work you can predict with confidence exactly what you will need and source for “just-in-time
deliveries. Grocery store calculations will work fairly well. You also have a degree of reactive maintenance where demand is less predictable. For those, you need a risk-based approach that considers probabilities of the demand arising and the risks associated with the item being unavailable.

Demand forecast is the start. Preventive maintenance demand equals the frequency of the tasks requiring the items. Repair driven demand (whether it is reactive to a breakdown or identified in advance with condition monitoring) is tied to the failure frequency. If some of those repair parts have short lead times, then using the warning window that condition monitoring provides for procurement, will work. If the lead time is longer though, you will need to carry stock. How much? Once demand is known (forecast), then the supply chain needs to find a source and determine lead times. With those, and using the right mathematical algorithms for calculating stock levels, it is possible to forecast which materials can be sourced on-demand (just-in-time) and which must be stocked.

You may have some items that have very low usage, and extremely long lead times, or a low level of confidence that the item will be available long into the future when it may be needed. The sparing algorithms may suggest zero stock because of the low risk, but you may not be comfortable with that. For instance, the risk of failure and downtime may be very low, but if the costs of that downtime are very high, you may want the item on hand anyway. You will need to decide to carry it, or not. If you do, then you are carrying “insurance” spares. Like insurance, you buy it because you don’t want to suffer the severe consequences if the failure event actually does occur. You hope you don’t need to use it, but you are prepared if you do.

If you’ve done all that – which requires a whole different level of planning than most maintenance departments provide, then you need to make sure those materials get where needed and when needed.

Integrating materials management processes such as store issues and returns, receiving notifications and purchasing with the shorter term (weekly) maintenance planning and scheduling process is critical to success. There’s no point ordering materials for a rush job if the parts arrive only to sit on a shelf because maintenance doesn’t know they are there.  Worse still, if the job is urgent and maintenance works outside the normal procurement processes and double-orders to meet production demands. Maintainers should not be allowed to purchase anything other than tools and some services. The rest should be up to the supply chain.

Information sharing and data management is important to having the right numbers of the right parts on hand, to ordering in economic quantities and to providing a high level of service to meet demand for needed maintenance parts. The internet has become a valuable tool in enabling e-business transactions that speed information flow and purchasing transactions minimizing the wait for some parts, but it only helps if the parts being ordered online can be delivered when needed.

The key to success is to have maintenance, inventory and supply chain management working together. In both departments you will need some understanding of reliability and probabilities to achieve what is described above.

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