How do you determine what constitutes best practice with spare parts inventory management?
The major problem is something defined as ‘best practice’ may not make a material difference to your spare parts management outcomes.
So, hooray, you’ve implemented a ‘best practice’ but if the outcomes are not significantly different, then so what?
This is made worse when many discussions on best practice are not objective - for a lot of people best practice comes down to their own personal experience, even though that experience will, by definition, not be universal.
A third problem is that people like to focus on numbers that are easy to calculate and compare.
Thus, for many people a ‘best practice’ comes down to a number or a ratio, such as inventory value as a percentage of the economic replacement value of the plant.
That ratio is not only pointless, but also dangerous.
Pointless because it fails to consider the different circumstances of different plants. These range from physical location through to maintenance maturity.
Dangerous because the focus on things that don’t influence the spare parts holding decisions (such as economic replacement value) don’t drive behaviours to ensure the correct level of inventory in given the circumstances.
To overcome these problems, we conducted research, covering 300 storerooms, in many industries and different continents to identify the actions that really do make a difference with spare parts inventory in terms of producing better inventory management outcomes.
We correlated outcomes in terms of inventory levels, stock turns, and stock outs. This approach gives us unique insights into what works and what doesn’t work. Not just what some companies are doing better but what makes a difference.
Here is one major finding:
a strong focus on transaction control and physical infrastructure is a ‘necessary but not sufficient’ condition for achieving better inventory outcomes.
This may surprise those who think a best practice is all about a clean storeroom and transaction control.
It isn’t.
