Reliability Centered Spares (RCS)
The heavy utilization and unpredictable nature of equipment failure have necessitated the need for adequate stockholding of critical spare parts. Insufficient stocks may result in high costs to acquire the spare, extended equipment downtime, lower availability and increased operational risks. On the other hand, oversized inventories lead to inefficient use of capital and may imply severe expenditures. The purpose of RCS is therefore to assist organizations to determine the optimal stock levels for repairable and non-repairable spare parts. Spare parts can generally be classified into non-repairable and repairable. This article will cover the two options available in ACTOR to manage spare parts, the Insurance option for critical and expensive spare parts and fast-moving (frequently used) spare options which are considered to be relatively inexpensive and are associated with low shortage costs. Below is a list of characteristics for each.
Fast Moving (Active) Parts:
- Have fairly short lead times to replenish
- Have generally high demand each month (+100)
- Have predictable future demand
- Are frequently seasonal
Insurance (Slow Moving/Rarely-Used) Parts characteristics: (Includes Repairable and Non-Repairable Spares)
- Issued infrequently (40-60 percent have no demand over the last 3 years)
- Can not be forecasted using traditional techniques
- Typically have high cost
- Make up most of the inventory value at plants
- Have long lead times (frequently a year or more)
- Tend to be critical to maintaining production (nearly half of them are very critical)
- Need extremely high availabilities at the price-part level to support production
Non-Repairable and Repairable spare parts are covered under the insurance option as a Risk Management Strategy. This is due to the fact that the consequences of a stock out of such spares can be detrimental to an organizations ability to deliver on Service Level Agreements (SLA), thus resulting in a loss of sales. It provides a safety net that reduces the financial impact for the repair or replacement of expensive equipment.
Non-Repairable Spare Parts
Non-repairable parts, on the other hand, have to be discarded once they have been removed from operation (as it is uneconomical or physically impossible to repair them).In this case, the stock level required to ensure that no stock-outs occur (at a defined level of reliability) over a selected interval of time, typically the time required to receive a component on site, after an order has been placed is determined. This is commonly known as Lead-Time.
In the case of non-repairable spares, one alternative is to assume that whenever the stock is depleted, an urgent requisition order can be placed (at a premium in cost) with immediate delivery. This implies that no downtime is allowed.
The following stock level criteria is considered for the calculation of the probability of running out of spares in the case of non-repairable components.
- Interval Reliability: The purpose of this approach is to determine the optimal stock to support the operation of a system for an interval of length.
- Cost Calculation: This approach aims to determine the total cost over the complete interval of inventory holding including the resale value of unused spares left in stock at the end of an interval.
Repairable Spare Parts
A repairable spare part is one that upon removal from operation (due to a preventive replacement or failure), is sent to a repair or reconditioning facility, where it is returned to an operational (ready to-operate) state. Whenever a component fails or is preventively removed from operation it is replaced by a spare, and the removed component is sent to a repair shop for repair or reconditioning. Once repair work has been completed, the component is returned to the stock, where it waits until it is needed for operation again.
In determining the number of spare components needed to protect an organizations' operations from costly stock-out situations, it is necessary to define optimal stock level criteria.
The following stock level criteria is considered for the calculation of the probability of running out of spares in the case of repairable components.
- Instantaneous Reliability: This is the probability that a spare is available at any given moment in time or the probability of having a spare at hand when needed.
- Interval Reliability: This is the probability of not running out of stock at any moment over a specified period of time, such as one year. This can also be interpreted as the probability of never going into a state where the number of units in repair exceeds the minimum stock size required over the complete interval.
- Cost: These are all the costs associated with purchasing and stocking spares, together with the cost of running out of a spare part where applicable. In general, these costs are acquisition costs, inventory holding costs, and stock-out or shortage costs.
- Acquisition Costs- Acquisition costs consider the purchase cost of the items themselves (calculated simply as the unit price times the number of spares bought) and ordering costs associated with the processing of a purchase, from creation to receipt.
- Inventory Holding Costs- Inventory holding costs are related to the costs of managing the inventory and are regularly expressed per item, per unit time, costs of warehousing and the cost of obsolescence.
- Stock-out or Shortage Costs- Stock-out or shortage costs are incurred whenever demand cannot be routinely satisfied from inventory, due to lack of spares and results in lost production or valuable downtime of a system or piece of equipment.
- Availability: This is the percentage of non-downtime of a system/unit, considering only the lack of spare parts as cause for downtime (i.e. only extended downtime due to shortage of spares is considered in the calculations.