About the Spares Optimisation Training Program 

Most companies do a poor job of managing their inventory effectively. There are many reasons for this, but it usually starts with bad submission of vendors recommended spare parts data, poor cataloguing and selection of initial spares.

Based on our extensive experience, irrespective of the industry e.g., oil and gas, mining, power, food & drink, electronics and semi-conductor plants, all do a bad job of managing spares and this subsequently leads to excess costs and these can be enormous.

This practical 4-day workshop covers the aspects related to reducing inventory and costs of spare parts and is supported by case studies, software and practical exercises to aid understanding.  This workshop focuses on reducing inventory and deals with the practical issues of spares cataloguing, optimising spares and stock reduction.

The course will provide delegates with the tools and techniques that can immediately be applied to their own companies, in order to reduce costs of spares holdings.  In addition, an Excel Analysis worksheet containing all formulae will be provided to conduct an audit of current inventory parameters.

Two analysis techniques will be covered; first using probability for normal operating and consumable spares and the second using simulation (modelling) techniques for high value spares with logistic issues.

The course is of particular benefit for those companies who:

  • Want to audit their spares data quality,
  • Need to upgrade their CMMS system,
  • Want to reduce inventory levels and costs.

A number of case studies will be demonstrated, including reduction of 50-70% in line items.

Course Instructor - David Thompson BSc, MSc


Introduction to Spares Management

  • Delegates’ Issues
  • Common issues in inventory management with real examples
  • Where we incur excess costs
  • Benefits of improved inventory management
  • Terms and definitions used in the workshop

Inventory Cost Reduction Techniques (Part 1)

Introduction to 38 tactics categorised in 6 phases (Audit, Document, Cleanse, Rationalise, Optimise, Monitor) that make up our inventory reduction programme, including:

  • Auditing CMMS Master Data Quality
  • Spare criticality and service levels
  • Applying the 80-20 rule to AIV, Item Cost, Stock Holding Cost
  • Identifying duplicate stock
  • Standardisation, identify OPMs, APMs, etc.
  • Select the most appropriate replenishment strategies (min-max, ROP Control, constant vendor delivery).

Understand Different Spares Costs

  • Different costs used in the stock management process, e.g. buying, holding cost, item cost, issue cost, penalty cost, total ownership costs.

Introduction to Reliability Theory

  • How the selected maintenance strategy impacts spares usage
  • Common distribution the Normal & Poisson distribution
  • Calculating Weibull parameters
  • Explanation of service levels, and understanding of what they really mean
  • Importance of the P-F curve


Challenge Vendors Recommended Quantities

  • Calculate estimated annual demand rates based on MTBFs to challenge vendor proposed values
  • Case studies where actual consumption has exceeded initial estimates

Setting of Re-Order Points, Safety Stock

  • Different approaches to determine safety stock levels
  • Using the Poisson distribution to set re-order points based on lead time, annual usage and criticality
  • Exercise how rules of thumb are inappropriate

How Many to Order? Determining the EOQ

  • How to determine the quantity to order
  • The effects of ordering too many or too few,
  • EOQ related to evaluation discounts for higher order quantities (single and multiple price breaks)


Auditing Current ROP Inventory Parameters Effectiveness

  • Evaluate service levels; compare existing with those parameters in the Inventory Management System
  • Different KPIs such as Turnover Ratios, Issue Rates, Annual Issue Value, Stock holding value
  • Using an MS Excel analysis worksheet with all formula and the facility to calculate current KPIs, optimised parameters and Proposed parameters

Alternative Strategies

  • What to do when ROP & EOQ is not valid (the Min-Max & CVD strategy)
  • Exercise: Analyze a Min-Max data set (From a SAP system and impact in stocking parameters when the number of PO line items varies


Database Tools versus MS Excel

  • Demonstration of how an MS Access Based Application is more effective
  • Demonstration of data cleansing

Critical Spares Review

  • Definition of a Critical Spares and the Critical Spare Review
  • Approaches to conduct an evaluation of critical spares using both Excel and Commercial Tools

Inventory Cost Reduction Techniques (Part 2)

  • Auditing Inventory & Warehouse Best Practices
  • Auditing the procedures in place to support ISO55000
  • Challenge the decision whether to stock and who pays
  • Reduce internal lead times to reduce stock holding costs
  • Conduct RCA/RCFAs (Case studies where actual consumption has excessed initial estimates)
  • Monitoring spares usage
  • Reduce the number of stocking locations
  • Group & prioritise your issues and develop an action plan

See what others have to say about our training seminars HERE.

Enquiries or comments to info@M2K.com