Dealing with MRO parts is an essential part of good planning and scheduling. Yes, Supply Chain takes care of it, but it will work well for us only if we help them.
Are you finding it hard to get certain parts to keep your assets operating? This situation is a familiar and ongoing issue associated with performing maintenance on systems that have been in operation for some time.
Need for Parts
In North America, maintenance department budgets are often evenly split between labor and materials in the work being performed, although it can vary depending upon labor costs. Internationally it can vary greatly, especially if the equipment is imported and if local wages are low.
Regardless of what percentage of the budget it represents, for many tasks to get work done and keep the equipment in good operation is difficult if not impossible, without the effective supply of quality / “fit-for-purpose” parts, assemblies, and material that meets the requirements.
Dealing with MRO parts – Different Types of Parts
There are simple, mechanical generic, or standard parts with multiple sources e.g. fasteners, bearings, standard power transmission components (sprockets, pulleys, drive chain, V-belts, shafts, etc.) These are more easily sourced, seem to have been around forever, and are expected to be available forever, and will not be discussed further in this article.
Some mechanical assemblies use custom parts that are made specifically for the application e.g. casting, stampings, fabrications, gears, cosmetic trim / bright-work, etc. As long as the assemblies are produced, the parts that go into them are likely to be available. However, they may undergo changes to reduce the cost of manufacture, or address defects, or change in their suppliers, if the product has a long product lifetime. Those changes could make some replacement parts incompatible, depending upon the differences relative to those of the parts originally used in the assembly. There is also the situation where the manufacturer may no longer be in the business of supply that type of equipment, been taken over by another company, or just no longer in business at all.
Custom and/or complex assemblies, especially ones requiring third-party certification are a special case e.g. electrical equipment (large high amperage 600V+ circuit breakers, large power transformers, etc.), electronic circuit boards (PLCs, DCS, loop controllers, custom logic, etc.), protective devices (pressure relief valves, rupture discs, protection relays, etc.). Systems with a high level of electronic controls are a particular problem situation given the short product life cycles of assemblies and obsolesce of some of the individual components. As those building the electronic systems are often buying rather than building the components (other than custom components or programmed logic), the supply of replacement or repair of existing systems will depend upon the availability of the components going into them, unless they can re-engineer for use of a substitute. For electrical equipment that requires certification (CSA, UL, IEC, etc.), one may be dependent upon the manufacturer of the systems. There has been a lot of consolidation within the electrical equipment industry, resulting in equipment becoming “orphaned”, and no longer supplied or supported.
Dealing with MRO Parts – Potential Solutions
Supply of OEM (Original Equipment Manufacturer) Parts
For electronic control systems, OEM parts may be the only way to keep an existing system operational. For equipment requiring certification, unless a substitute and certified assembly will directly install, or one is prepared to re-engineer for an alternate solution, the OEM parts are required.
Purchase and Hold Excess OEM Parts
The time a system is purchased is when a buyer’s negotiating position is strongest, and more parts than required in the short term, can be ordered at likely the lowest cost and held in inventory. Some problems with this strategy is the amount of working capital tied up in excess inventory, the potential for losses during storage (damage, theft, misplaced), systems operated beyond an expected initial estimated lifetime, and with no operating experience of the system being able to accurately estimate what to carry and the amount of each item to carry.
An alternate would be to negotiate with the vendor at the time of purchase to guarantee the supply of parts for a fixed time period. There is a potential problem if ownership of the vendor changes, it may be difficult to enforce the terms of the contract with the new owner.
Some OEM vendors will notify their customers in advance of the dates beyond which they will no longer support certain product lines, including technical support and the supply of parts. The history of operating and maintaining the system would help in estimating what parts are required and what quantity of those parts are required for the foreseeable future the system will be required, and spares could be ordered at that time. There is a risk that the organization (e.g. Purchasing, Finance) may take a short-term cash flow perspective, and instead of buying the parts required, leave that problem for those that follow them.
Finally, if during the purchase process, the vendor-provided reference customers and a relationship is maintained with those other users of the equipment during the use of the system, if one of the other customers replace their equipment, it may be possible to purchase their spares and their used equipment for use as spares.
Salvage Dealers / Equipment Finders / Third Party Refurbishment / Online Auction Sites
If you have not developed relationships with other users of the same/similar equipment, then there are some in the business of purchasing surplus equipment and spares at a greatly reduced price (near scrap value in some cases), then hold the equipment and resell it to others who need it. They may hold the parts for a long time and may find few customers. However, often the customers they do get are extremely motivated and are prepared to pay whatever price is asked, particularly if it will keep the equipment and the operations the equipment supports going, as it could otherwise impact their revenue and / or their customer service.
It is of course a situation of buyer beware, and ensure the conditions of sale are clear with regards to the ability to return the purchase if it is not suitable due to incompatibility, damage, DOA (Dead-On-Arrival), or not able to work in the application.
In some cases, the manufacturer may no longer support their equipment, but may still have a supply of some spares that they no longer list with the field service department, or tucked in the corner of the warehouse. Certainly, worthwhile to ask.
Online auction sites (e.g. eBay) have become a source of connecting organizations or individuals with rare or obsolete parts to those needing them. I personally know someone at a Canadian university who frequently uses that as a source of supply for assemblies and parts for expensive and relatively new (less than 15 years old in some cases) chemical and scientific analysis equipment (e.g. Gas Chromatographs, Balances, Spectrophotometers, Electron Microscopes, etc. ) that are no longer supported by the equipment’s suppliers. It sometimes seems they would rather sell new equipment, than supporting their current installed equipment. The equipment suppliers are also running into the demographic issue of a number of their field service technicians who are retiring, and it is more effective to train the new field service technicians on only the new equipment, rather than keeping old equipment going. As noted above, ensure there is clarity in the agreement on the ability to return the parts if not useable through no fault of yours.
Replacement or Substitute Parts
Pre-emptive Replacement Prior to End of Life
Replacing a control system before it needs to be can provide benefits, as, besides the issue of parts availability, the staff (engineers, technicians) supporting the systems may be getting near retirement age, making ongoing support an additional problem. Newer systems can have improved functionality and improved communication ability to allow the information collected by the system to be transferred to other OT / IT systems (Operating Technology / Information Technology) to better manage operational information, as well as addressing the obsolesce issue.
Fabrication and Remanufacture
Fabrication and machine shops have been in the business of repairing or replacing mechanical components for years. Traditionally they measured up the damaged parts and rebuilt the damaged component or fabricated new ones, and depending upon the capabilities of the organization may be producing drawings (manual or electronic) for when the need to fabricate another replacement, or put together a CNC program.
Rapid Prototyping Techniques
There are a number of new techniques to make custom parts in small quantities, and this is an area that is changing rapidly, as new techniques arise, the capabilities continue to rapidly evolve, and the costs involve reduce, as they are more broadly used. This area is changing rapidly and my comments likely out of date as I compose them.
There are a number of traditional fabrication processes that would be categorized as subtractive techniques, including machining (turning, milling, grinding, etc.). As well there is now laser/plasma/water jet/abrasive cutting systems mounted on X-Y coordinate systems for 2D cutting. These processes are often now programmable to allow electronic files (i.e. CAD) to directly perform its task. Recently used a small laser cutting system at the local library “Maker Space” to design (CorelDraw file) and make some baggage tags and some radius gauges out of ¼” thick oak board.
Small 3D scanners are now available to capture the profile of parts and create a digital model. The digital model can then be used to fabricate a physical copy of the part scanned using some of the new 3D printing techniques.
What is interesting, is the new and evolving capabilities and costs of additive 3D printing technologies. The capabilities of 3D printing have evolved in allowing larger parts to be made and using a broader range of materials. One of the recent interesting applications is the use of 3D printing to fabricate gas turbine jet engine parts (http://3dprint.com/47085/3d-printed-jet-engine-2), one of the most severe operating environments for components. It is another trickle-down technology, as in the same library “Maker Space”, did some 3D printing of some miniature horse jump stands for my granddaughter’s horse collection using an online file.
Not everyone can afford or learn to use a 3D printer, so like machine shops and fabrication shops, I would expect that service companies providing the 3D scanning and 3D printing services, and 2D cutting could be created to fill that need.
It is also expected that the OEM suppliers to embrace this technology, as it could greatly reduce their inventory working capital costs, as with the required files, 3D printing technology, and correct 3D printing materials, they could print the parts on a JIT (Just In Time) basis, and thus eliminate the need for a large inventory of spare mechanical parts, and the time and cost of shipping physical parts.
This article is authored by Leonard G Middleton for publication and distribution as part of the Asset Management Solutions newsletters. The newsletters are distributed to a number of practitioners, including international practitioners who often have limited information available to them locally.
This is intended to be an overview of the subject written in common language with the minimal required finance and accounting jargon for asset management, maintenance, and reliability practitioners to understand how their efforts contribute to the performance of the organization. It is intended to help them communicate that message within the organization and for the maximum benefit for the organization and its stakeholders.
The author and copyright owner grants Conscious Asset permission to include this article in its Body of Knowledge.
Leonard G. Middleton is an experienced professional with many years of broad professional experience, in Canada, the US, and internationally, He has worked in a number of different roles related to maintenance, reliability, and asset management, program and project management, contracts management, outsourcing, and engineering, in industry and in his consulting roles.
His experience in asset-intensive industries has reinforced his perspective on the importance of the physical assets on the operational cost structure and with that the need to get the assets appropriate to the organizational objectives through projects, and then operating and maintaining them effectively.
Leonard has an undergraduate engineering degree (B.A.Sc.), a graduate business degree (MBA), and holds professional designations in engineering (P.Eng.), project management (PMP), and in Maintenance, Reliability, and Asset Management (CMRP, MMP, CAMA), and is an RCM Practitioner.
Leonard is a long-time member of PEMAC, having served on the national Board of Directors for multiple terms. He is an instructor in both the MMP and AMP programs and is a subject matter expert responsible for the content of two MMP modules.