Your System – Not Guilty As Charged

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Forecasting Maintenance Inventory with Descriptions?

Posted by Joel Schipper on May 7, 2018


Recently I came across a discussion in which an asset-centric company — a business that has a lot of assets (e.g., equipment) they are trying to maintain — was frustrated in the forecast and purchase of the parts used to maintain that equipment.  The discussion author was seeking a “better way” to utilize the descriptive fields in the item master to help “standardize” descriptions so that purchasing could better “forecast and buy” these items.  It’s clear that without standard descriptions a given “Pump Model ABC” could have been purchased once as Model ABC Pump, another time as ABC Model Pump, and again as Pump Model ABC, etc.  The discussion author wondered if non-stock inventory items were a good pathway, and dismissed the idea of creating standard stock items as too much effort.

But when I read this discussion thread, I thought — wait, a moment, what’s the underlying business issue here?  Having the right pumps and parts in stock when they’re needed?  Or reducing the effort of Purchasing when they are scrambling to buy that pump or part?  My experience with inventory management and procurement in a maintenance-centric situation is that standard item numbers — and inventory and consumption history — will be required, regardless of the perceived effort.  And here’s why, and what I wrote in response to the discussion thread …

If you are trying to forecast the usage of, and plan the purchase of, parts that have a consumption history, and will be used again, I strongly urge you to make them into standard inventory items, and to consider adding them to preventative maintenance bills of material; you really will not be able to make any forecasts without an established usage history, and JD Edwards [or any ERP system] requires you to do this via stocked items.

In maintenance management you have two types of forecasts:  the “known” or certain forecast that comes with the arrival of a preventative maintenance (PM) event — these happen every “so often” (time, hours, cycles, etc.).  When the PM event arrives, there is no guessing — the parts on the PM BOM are what are needed.  And you can “forecast” these events with relative ease, and add that forecast to an “MRP” run to buy the parts in advance.  The other type of forecast is more statistical, and is for “Break and Fix” maintenance events.  Only a history of issues, or a “two-bin” system of keeping enough in a back-up storage so that when you go to use the first of the back-up supply there is enough time to order a new “bag” or quantity of supply – can be used for an expensive item in which you keep only one or two reserve units, or for common, lower cost items in which you keep a carton/case or other “order quantity” in reserve at all times.

I suspect using these two types of forecasts – PM’s and Break&Fix – will overall lower your total cost of ownership through less purchasing “effort” and through higher overall “uptime” on the equipment being maintained, and that “uptime” is probably the highest value driver to you.  Equipment that is down cannot bring you any value while it’s down.

This approach will keep Your System: Not Guilty as Charged.  Going down a ‘descriptive’ approach — unless your parts are inherently attribute based items (and in that case use JD Edwards Attribute Management or similar product) — will more likely make your system “guilty as charged” later on … that is, you’ll never get the result you’re seeking, and the system will carry the blame.

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