Software

Integrating maintenance and spare parts management

David Berger describes the critical areas of integration that yield maximum benefit.

By David Berger, P.Eng., contributing editor

In Part I of this multi-part column, an argument was made in favor of running spare parts management as a fully integrated module within your CMMS, as opposed to integrating to a separate and distinct software package such as a corporate ERP system. For similar benefits, it was also suggested that those responsible for spare parts inventory, such as stock keepers, should report to the maintenance organization, and spare parts procurement specialists should report at least dotted-line to the maintenance department. This is to improve the accountability for optimizing key measures such as service level, inventory level, obsolescence, and response time.

In this column, we continue to explore optimization through integration of maintenance and spare parts management modules. Described below are critical areas of integration that yield maximum benefit.

Master data

Fundamental to integrating maintenance and inventory management modules is the sharing of master data. For example, each piece of equipment may have a standard list of spare parts recommended by the manufacturer to keep on hand. When the scheduler begins to schedule a given work order, this standard parts list, or some subset, can be seen from within the work order scheduling screen. For parts relevant to the job, the scheduler can then determine, from the same screen, whether parts are in stock, reserved, on order, or in transit. This level of integration can be very difficult or expensive to achieve if the maintenance and inventory data are resident in two separate software packages.

Some packages can display a complete hierarchy of equipment and parts using an indented and hierarchical format, similar to the manner in which MS Windows Explorer displays nested and hierarchical devices, folders and files. The more advanced CMMS packages have a drag-and-drop capability so that users can easily move components and parts from one asset to another, assuming they have administrative rights to do so. Other sophisticated packages have built an interactive interface between the hierarchy in one window and a graphic parts book in another window. As you double-click on hot spots to drill down within the graphic, you can observe the equivalent movement in the hierarchy and vice versa. A few packages display the master data or historical cost data in another window, which dynamically changes as you move up or down the hierarchy or between the graphic layers.

Another integration dilemma is to what level cost data should be kept current. In order to estimate accurately and report on the cost of completing a work order, the cost of spare parts must be obtained from some database. Even if maintenance and inventory control modules are fully integrated within the CMMS, there is still the issue of what amount was actually paid to the vendor by accounting. Perhaps there was a disagreement between what was ordered, what was received, and what was invoiced. Will the inventory cost data reflect the actual cost paid?

The benefit from achieving this level of integration is not worth the cost of doing so because the variances over the course of the year are typically small. Maintenance can still make effective management decisions, even if the equipment history reports show costs that are potentially out by a few percentage points. Accounting and finance, however, require absolute accuracy for financial reporting.

Another complication for those companies that choose to separate maintenance and inventory management modules lies in defining and controlling which parts are:

  1. not kept in stock and do not appear on the parts master (handled through a direct purchase)
  2. not kept in stock but appear on the parts master (for faster retrieval of header information such as manufacturer’s part number)
  3. kept in stock and appear on the parts master (controlled by min, max, reorder point, reorder quantity, lead time)
  4. kept in stock like a part but also comprise an asset to which work orders are assigned and for which equipment history is tracked (rotating assets).

It’s difficult and expensive to determine which parts are required for a given job, provide an estimate of work order costs, purchase the parts, and track equipment history accurately for parts used internally or by outside contractors, if maintenance and inventory control modules are not properly integrated.

Planning

When a planner creates a job plan for, say, preventive maintenance work on a given asset, it should include a list of parts required. When the work order is then initiated, it should automatically check and reserve stock or launch a purchase request for non-stock parts. This is easier to do when maintenance and inventory control modules share the same system.

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Scheduling

David Berger, a Certified Management Consultant (C.M.C.) registered in Ontario, Canada, is a Principal of Western Management Consultants, based in the Toronto officeDavid Berger, a Certified Management Consultant (C.M.C.) registered in Ontario, Canada, is a Principal of Western Management Consultants, based in the Toronto office. David has written more than 200 articles on a variety of topics such as maintenance management, operations management, information technology, e-commerce, organizational design, and strategy. In Plant Services magazine, he has written a monthly column on maintenance management in the United States, as well as three very extensive reviews of maintenance management systems available in North America. David has done extensive work in the areas of strategy, information technology and business process re-engineering. He can be reached at david@wmc.on.ca.
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As described above, the scheduler should be able to view and reserve standard parts from within the work order screen. Ideally, the stock keeper should then kit those parts and deliver them just in time to maintenance personnel at the job site or have the parts available for pickup as per the maintenance schedule. If the schedule is in peril because parts are not yet available for kitting, then either the scheduler needs to adjust the schedule or someone must expedite the parts so that they arrive on time. To accommodate all elements of this process requires a more advanced level of integration between maintenance and inventory control modules.

Issuances and returns

Another point of integration between maintenance and materials management, both organizationally and with respect to software applications, is how to control spare part issuances to maintainers and returns to stores. This is especially problematic with open or unsupervised stores. Accountability must be made clear, and procedures must be established governing who is allowed in stores, who is responsible for information capture, how data is to be captured on which application, and how best to account for various transactions. If the process is onerous or accountability is uncertain, possible consequences are that book inventory rarely matches reality, maintainers hoard parts, work order costs are not accurate, and there is no corporate learning so mistakes are repeated.

Serialized parts

When parts are serialized, there is a trade-off between increased workload in entering and tracking serial numbers and better information. Benefits are improved traceability of spare parts especially when they are reused, better expiration management when expiry dates are entered against a serial number, and lot control for stock rotation and better vendor management. Serialized parts can also help in failure analysis, as tombstone data such as vendor name and date of manufacture can be tracked and correlated to a given problem or cause code. Furthermore, work order history can be traced to a given part to see if there are emerging patterns or trends.

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Thus, having maintenance and inventory control modules within the same application is ideal if these benefits are important to you. The scheduler is then able to select from a pool of serialized parts presented within the work order screen, stock keepers can pick and issue the appropriate part, and maintainers can reference the serial number on the work order. A complete move history can be tracked, as parts move from stores, to an asset, to an internal cost center such as machining, to an external vendor such as a painter, to stores again at a different value, or to a different asset.

Rotating assets can be handled in a similar fashion. They are serialized and essentially treated as both an asset and a part. As an asset, work orders collect labor, material, and other costs against them. As a serialized part, rotating assets sit in stores with a reorder point, reorder quantity, and lead time. Move history is also tracked for rotating assets.