We recently highlighted new approaches to tackling the biggest challenges in parts inventory management. In this article, we look at the challenge of identifying which parts are critical to your ongoing business operations.
Every asset-intensive business has certain spare parts that are critical to operations – not having them available and fit for service when needed can have drastic results. But how do you identify those critical parts in a way that’s objective and reliable?
In our experience working with companies around the world, spare parts criticality can play an important role in optimizing a Maintenance, Repair and Operations (MRO) supply inventory. In fact, there’s no better way to get alignment around spare parts supply. That’s because, unlike subjective analysis, this methodology is less open to interpretation and gives everyone across the business the same objective insight into a part’s value to operations.
Let’s take a closer look at what parts criticality is and how it can improve asset reliability.
What is Parts Criticality?
Parts criticality takes a systematic approach to quantifying the relative importance of a part to your business. Knowing the relative value of parts can help your teams make informed supply chain decisions and give them more latitude in making creative and flexible supply arrangements.
The process involves assigning an alpha/numeric score to each part, representing how important it is to ongoing operations. By assigning each part a criticality score, you get an objective framework to make informed supply chain decisions. Let’s take a closer look at how this information can be used by teams in every department.
Say, for example, a part is given an A or 90/100 high criticality rating. Knowing how critical it is to operations, the purchasing department can make informed decisions about finding multiple suppliers of that part, instead of relying on a single supplier. As well, the maintenance team can take extra steps to ensure that part is fit for use by increasing the frequency of inspections. The criticality score can also help the logistics team make informed decisions about expedited freight modes that can ensure the part is always available when needed. And, inventory planners can benefit by knowing the relative importance of a critical part when they have to make trade-offs on which parts to keep in stock.
Common Challenges to Implementation
When implementing a parts criticality strategy, there are a few challenges that you might face. Here are five of the most common:
Subjective process – Some people in your organization may prefer to determine criticality by gut feel rather than a rules-based approach.
Binary designations – If an item is designated as either critical or non-critical, it can limit the ability to consider relative criticality.
Limited stakeholder involvement – If criticality is set by one department or individual, this can lead to a lack of buy-in and ongoing questioning of the results.
Infrequent review – Values that are left unchanged over years or decades become increasingly irrelevant as underlying conditions change.
‘Gaming the system’ – Criticality can potentially be used to expedite item creation or drive preferential stocking decisions that may not be warranted.
How is a Parts Criticality Score Calculated?
When we conduct a Parts Criticality Assessment for our clients, we consider two sets of variables: equipment-related factors and item-specific factors.
- Equipment- related factors
We first determine an asset’s criticality and the type of processes it supports. To do that, we calculate the relative importance of asset failure on production, safety and the environment. Then, we consider the type of maintenance strategy that’s being employed. This tells us now much warning there’s likely to be before a failure occurs.
- Item-specific factors
After looking at criticality and maintenance strategies, we then focus on the supply side. We consider the breadth of the supply base, lead times and suppliers’ track records for filling orders and delivering high-quality parts that are fit for purpose. We also look at historical data on the failure characteristics of a specific part to determine how likely it is to fail in the future.
Who Participates in a Parts Criticality Assessment?
The ultimate value of parts criticality is as an objective communications tool that helps inform decision-making. Confidence increases in the assigned value if people understand how it was calculated and how it is maintained. That’s why for change management and buy-in reasons alone, a Parts Criticality Determination project should be conducted by a cross-functional team.
Supply chain benefits the most from the clarity parts criticality provides because there are always trade-offs in inventory management. But if you get input from all areas of the business, including maintenance, engineering and operations, it will increase buy-in and make the parts criticality assessment process more transparent.
The Value of Knowing What Matters Most
As you can see, there are significant benefits to knowing which parts matter most to your operations. Having a robust parts criticality program can result in less unplanned downtime, better maintenance schedule adherence and an overall improvement in asset health.
Spare parts criticality is also a valuable communications and decision-support tool that gives everyone in your company an objective view of which parts are essential to ongoing operations.
- Get started with an MRO Health Check to uncover your parts inventory optimization opportunities
- Book a demo to find out how Xtivity’s Pulse software can help you find the right asset inventory balance