The eternal spare part dilemma
Machine failures are a daily reality in every manufacturing company. If the machine failure is due to a defective component, such as a distance sensor or a hydraulic cylinder, this part must be replaced as soon as possible – as long as the required spare part is in stock. Due to physical (storage space) and economic (storage management costs) limitations, and because of the enormous variety of spare parts, it is simply not possible to keep all parts in stock for a company’s entire machine environment. When urgently needed spare parts are not in stock, costs increase.
In individual cases, an unpredictable machine failure can cost hundreds of thousands of Dollars, if not more. Cost surcharges for the short-term procurement of critical parts are accepted in order to minimize downtime costs. In an average automobile production plant, these costs can reach to $17 million annually.
Today’s market for industrial spare parts management is characterized by isolated island solutions. Machine manufacturers try to gain direct access to the customer system by offering their own individual after-sales systems that trigger automatic orders (i.e., predictive maintenance). Traditionally, after-sales of components and spare parts account for 50-60% of machine manufacturers’ business. Due to the multiplicity of machine manufactures per manufacturing company, plant operators are forced to create after-sales networks per individual machine manufacturer. As a result, plant operators receive no transparency regarding common parts between individual machine manufacturers. In addition, operators are victims of the agency problem because they have no way of transparently comparing the prices of replacement parts needed. In addition to the prices, this leads to excessive inventories, high warehouse management costs and above-average capital commitment. Figure 1 illustrates the problem.
Figure 1: Isolated spare parts management today
The consequences of poor spare parts availability can be summarized as follows:
- High procurement costs for (short-term) spare parts orders
- High manual labor costs for warehouse and master data management
- High inventories and capital tie-up costs, as the simplest solution to hide availability problems, is the accumulation of spare parts inventories
There is, however, a better way.
Using intelligent software, SPARETECH offers a solution for the availability problem of spare parts for machines and plants. The basis for this forms SPARETECH’s industry-independent and unique product database for machine spare parts. By using innovative software and advanced algorithms, SPARETECH identifies its customers’ faulty master data and provides the correct information from the original spare part manufacturer. This not only increases plant availability and saves costs, but also reduces stock levels in the production network by up to 25%.