Spares Management Software
Ben Stevens - OMDEC
Repairable & Non Repairable Spares
• High cost critical spares are expensive and
difficult to forecast
• Issues are:
–
–
–
–
–
Levels of availability and reliability required
Cost
Failure rate forecasts
Repair times
Lead times
• Value Proposition
SMS optimizes stock levels, reduces sparing
costs and Increases reliability
Useful Definitions
• Interval Reliability: Probability of not running out of
stock at any moment over a specified period of time
(even if no immediate demand)
• Instant Reliability: Never run out of stock when one is
wanted
• Non-Repairable Spare: Element which cannot be
repaired and reused.
• Repairable Spare: can be repaired – either in-house
or externally
SMS Overview
Optimization criteria
Non-Repairable
Spares
Repairable
Spares
Interval Stock
Reliability
Instant. Stock
Reliability
Optimal
Cost
Minimization
Requirement
Spares
Availability
Stock
Supportability
Remaining
Life
Benefits of SMS
• Balances spares requirements with cost and reliability
• Easy to use - Runs on Windows laptop/desktop – minimal
training needed
• Based on proven algorithms -- Developed by University of
Toronto
• Sales and Support by OMDEC -- Comprehensive User manual
• Experienced in industry – numerous case studies
• Uses commonly available data
• Multiple Availability and Reliability Parameters
• Easy and early detection of systemic errors, extreme values
• Minimization of spares allocation for given Reliability level
• Not duplicated by standard office automation tools
• Provide planning horizon for replacement of current stock
• Placement of final orders for discontinued parts
• Maximum supportability interval for current stock
• Optimizes procurement planning
# items in
service
Repairable Spares
failures
time
stock
failed units
repaired units
Repair
shop
Dofasco Steel Said…*
• Focus is on high value, capital spares – both
repairable and non-repairable
• Brought decision logic to the finance (zero stock)
versus Operations (infinite stock) debate
• Introduced
-
Required availability
Required reliability
Unavailability Cost
Equipment Management Procurement Requirements
• Aligned sparing/procurement decision with equipment
reliability Business Process
* IMEC Conference 2006
Business Challenge #1
How many spares do I need to achieve x% Reliability
• It’s budget time – How many should I plan for?
• Demand for output is up – I need higher reliability so
what is my spares buy?
• Re-Order time is here, lead time is 18 months; do I
have enough spares to maintain my reliability for that
time frame?
• If I have too many in stock, can I sell some without
compromising reliability? How many?
Business Challenge #2
What is the right spares level to minimize cost….
• If I reduce spares levels to the minimum cost level,
what is the effect on reliability?
• Supply lines have changed, my outage costs have
gone up; what is the impact on reliability?
• How much does my reliability increase if I add
another unit of spares?
• How much do I need to spend on additional stock to
achieve the level of reliability I need?
Business Challenge #3
Will the current level of spares give me the required
reliability during my planning period
• I’m setting my five year capital plan; do I need to add
more spares?
• What level of reliability will I have at the end of my
planning period based on the current lavel of spares?
• The end of period reliability level is too low; how
many spares do I need to add to achieve the right
level? What is the cost?
• If my current stock exceeds the number required for
my needed level of reliability, how many can I sell?
Business Challenge #4
The manufacturer has advised I have a 24 month lead
time on my capital spares item.
• Will my current level of spares give me the required
reliability during this lead time?
• What level of reliability will I expect in the period
before the new stock arrives?
• What is the cost if I run short?
• What should my order quantity be?
Dofasco found….*
Item
No
Asset
Manager’s
Recommendation
Value of
Asset
Manager’s
Recommend
ed Buy
1
Buy 2
$204,000
Reducing Buy by $102,000 decreases
Reliability by only 0.7% to 99.25%
2
Buy 4
$156,000
Reducing Buy by $39,000 decreases
Reliability by only 1.3% to 98.4%
3
Buy 2
$52,000
Reducing Buy by $26,000 decreases
Reliability by 10% to 87.4%
* IMEC Conference 2006
SMS showed
SMS Case 2
• Mining company has 62 electric motors on their conveyor
systems
• MTB Replacements of motors is 3000 days (8 years)
• Planning horizon is 1825 days (5 years)
• Cost of spare motor is $15,000
• Value of unused spare is $10,000
• Cost of emergency spare is $75,000
• MTT Repair a motor is 80 days
• Cost of plant downtime for a single motor is $1000 per day
• Holding cost of a spare is $4.11 per day (10% of value of
part/annum)
• Question - How Many Spares to Stock?
SMS Case 2 Results: Repairable Parts
Randomly failing motors
$600,000
1. Interval reliability (never run out): 95%
reliability = 7 spares
$500,000
2. Cost minimization: = 6 spares
$400,000
3. Instant reliability (always one when
wanted) : 95% reliability = 4 spares
$300,000
4. Plant Availability at 99%: = 2 spares
$200,000
5. Plant Availability at 95%: = 0 spares
$100,000
$0
1
2
3
4
5
Case Study 3 Planning Horizon Comparison –
Electronic Components
Given the current
stock level, how long
will it last?
Case Study 4 Spares in Stock Comparison
Electronic Components
10000
With the current
MTBF, how many
units do we need?
# Units - Log scale
1000
100
10
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Line Replaceable Unit (LRU)
Original Number of Spares
Number of Spares for 95% Reliability as per SMS
20
Case Study 5 System Reliability Profile
Manufacturing plant
100
Reliability (%)
90
80
70
60
50
With the current Stock
levels and MTBF, what
is our reliability?
40
1
2
3
4
5
Time
6
7
8
9
10
Case Study 6 Manufacturing Plant
Question: How many spares - What reliability level
% Reliability
100
98
96
94
92
90
1
2
3
Number of Spares
4
Case Study 7 Steel Mill - Fume Fan Shaft
Spares Provisioning Optimization Project
•
•
•
Part = fume fan shaft used in a blast furnace
Decision: how many spares?
Complications




Part has long lifespan (25-40) years
Long lead time (22 weeks)
If part fails, results are catastrophic (loss estimated $6 million
per week)
Inventories are trying to be minimized
SMS – Quantify the risk in not having enough spares
How many spares? – Fume fan shaft
Note – no significant
difference in reliability
between 1 and 2 spares
MTBF Vs Reliability with 22 week Lead Time
100.5
100
Reliability
99.5
0 spares
99
1 spare
98.5
2 spares
98
97.5
97
0
5
10
15
20
25
30
Mean time between failures
35
40
45
Case Study 8 Haul Truck Components
Case & Optimization criteria
Optimal Stock
level
Associated Values
Interval Reliability
(goal = 95%)
15
Reliability = 98.05%
Stock cost $45,000
Instantaneous Reliability
(goal = 95%)
10
Reliability = 97.53%
Stock cost $30,000
Availability
(goal = 99%)
6
Availability = 99.14 %
Stock cost - $18,000
Cost minimization
14
Inst. Reliability = 99.94%
Stock cost $42,000
Case Study 9 Shipboard Components
Part
V
W
X
Y
Z
Stock Level
6
8
16
19
11
Supportability Interval T* (years)
Reliability=90%
Reliability=95%
Reliability=99%
5.84
4.92
3.49
1.06
0.92
0.69
3.08
2.79
2.28
3.19
2.91
2.43
5.03
4.45
3.49
Supportability for the system is determined by the shortest
supportability for any of its critical parts
SMS – Typical Problems Solved #1
A manufacturing plant uses a total of 50 optical sensors to
identify different part geometries. The sensors cannot be
repaired easily so they must be replaced when they fail.
On average, a sensor lasts 2 years, assuming the parts
fail completely at random
a. How many sensors are expected to fail over 4 months?
b. How many spares will the company need to keep in
stock if they require at least a 95% reliability over 6
months?
c. IF the spares are reduced by 1 unit below the level in
“b” what is the level of reliability over six months?
SMS Answers: 8, 19, 92.4%
23
SMS – Typical Problems Solved #2
A factory uses 50 presses to manufacture shoes. The presses
are repairable, and fail on average every 5 years. A press takes
about a week to repair. The downtime cost is $15,000 an hour,
and the holding cost is $3,000 per year
a. How many spares are required to achieve a reliability of 95%
over 30 weeks?
b. If two presses are in stock, what is the probability that a shortage
in spare parts will occur over 25 weeks?
c. How many spare presses are required for a 95% instant
reliability?
d. How many spare presses kept in stock would result in the
minimum cost?
e. What is the minimum cost?
f. If the company is only interested in at least a 98% availability,
how many spares should be kept in stock?
SMS Answers: (a. 3) (b. 7.71%) (c. 1) (d. 4) (e. $33.56 /day) (f. 0)
24
SMS – Typical Problems Solved #3
A clothing company uses 50 presses to put labels
and graphics on t-shirts. A component of the presses
was poorly designed, and it causes the presses to
wear out and need to be replaced about every three
years. The company requires 95% reliability over a
year. How many presses should they keep in stock?
SMS Answer: 24
25
SMS – Typical Problems Solved #4
A company uses the same size bearings on type
machines A and type machines B. There are 5
type A machines and 2 type B machines in use at
all times. Type A machines utilize 10 bearings
each, while type B machines use 25 bearings
each.
If the company uses quarter year planning
horizons and requires as close to a 95% reliability
as possible, how many bearings should be kept in
stock? Bearings need to be replaced on average
every 6 months and 9 months for type A and B
machines, respectively.
SMS Answer: 56
26
SMS Inputs Required
•
•
•
•
•
•
•
•
•
•
•
•
•
Asset ID and Description
Adjusted cost / Purchase Price $
Repairable? Y/N
# of Parts in Use
Planning Horizon - months
Constant Rate of Replacement (MTBR) - months
If Non-Constant, the standard deviation for replacements
Number of Spares in Stock
Emergency cost of Spare Part $
Downtime cost of Spare Part $
Expected Annual Loss of Value of Spare Part in Stock %
Holding Cost of Spare Part - $ per month
Capital cost per month %
Current GUI
Screen Shot #1
Proposed GUI
Screen Shot #2
Output Report #1
Output Graph #1
Output Report #2
SMS Summary
1. Matches spares levels to needs – saves $$$,
increases reliability
2. Improved decision making, reduced cost of spares
3. Integrates risk and cost calculations
4. Forecasts timing of replacements for current spares
5. Sets the Spares levels required to meet multiple
replacement conditions and % reliability
requirements:
6. Given a stock size, shows the availability during the
period being planned
7. Accommodates variable failure intervals, variable
lead times, variable repair times
8. Provides cost calculations for repairable and nonrepairable spares
OMDEC SMS
Questions – Next Steps
ben@omdec.com