After years of sustained growth, spare parts management has become an important activity within Weir Minerals. Weir’s high-quality pumps are used around the world in key industrial sectors such as mining, and they are always business-critical. Therefore, together with Involvation, the company embarked on an initiative to further professionalise its spare parts management.
The question originated in the sales department: “What kind of agreements can we make with our customers when it comes to spare parts?” A list of recommended spare parts was included with every pump supplied and the list was discussed with the customer, but experience had shown that customers could not be relied on to stick to the list – with potentially serious consequences. It also became apparent that there were many different situations and agreements: different SLAs, VMI or no VMI, consignment stock or no consignment stock, stock was/was not to be held locally, different levels and ways of exchanging information, etc.
The aim of the project with Involvation was to guarantee high availability of spare parts in an efficient and standardised manner. The first step was to analyse the various product-market combinations (PMCs):
This resulted in around ten relevant PMCs, and a model was applied to ensure an integrated approach. This entailed taking the objectives as the starting point to determine the basic processes (inventory locations, centralised/decentralised, 1 or 2 tiers), the optimal way of managing them, demands on information systems and the optimal way of organising things.
Determining the basic logistics set-up for corrective maintenance was founded on a risk-based approach. The main principles of this approach are outlined below.
Expensive spare parts with limited risk should be held on stock centrally (or not at all), while cheaper spare parts with a high risk should be kept on stock at (or close to) the customer. In this approach, deciding on the extreme cases is not difficult. When implementing this model in practice, the challenge lies in selecting the dividing lines between the quadrants so as to optimize the financial situation.
Last but not least, the level of alignment also plays a role; expensive spare parts that feature in many different pumps should preferably be held centrally, but that would make no sense for parts that have been specifically engineered for one particular customer.
This risk-based approach is not applied to preventative maintenance and regular orders. Instead, the basic form is determined based on the relationship between the tolerance time (how long the customer is prepared to wait for replacement parts) and the lead time. If the tolerance time is very short then stock must be kept decentrally, i.e. close to the customer. If it is long, for instance if customers are prepared to inform Weir of their plans for preventative maintenance in good time, the stock can be held centrally in Venlo or can even be manufactured to order (hence not involving stock at all).
Now that the objectives and optimal basic set-up are known per PMC, this forms the basis for management, ICT and organisation. Needless to say, customer requirements also play a role here (e.g. does the customer want VMI or not, has it been agreed to hold consignment stock or not?), which is why a kind of menu of options was prepared for the sales department including relevant considerations. Many different customer needs can now be met, while Weir also benefits from working with a more standardised process.
The concept has since been successfully applied to one of Weir’s most important customers and will be rolled out further in the coming months.