This document discusses how Ramsoft (UK) provides training and consultancy services to help companies optimize and reduce costs associated with spare parts inventory. It outlines Ramsoft's 4-day training course which covers topics like improving spare parts data quality, challenging vendor recommendations, effective cataloging and inventory management processes, reliability concepts, setting reorder points and safety stock levels, alternate inventory strategies, and key performance indicators. The training aims to help companies develop strategic plans, audit current practices, optimize stock levels through rationalization, and achieve cost reductions of over 50% in stored inventory values. Case studies show how Ramsoft's services have helped clients improve data quality and reduce line items by up to 60% through standardization and removal of duplicates.

1. 1
Achieving Cost Reduction
through Optimising &
Rationalising Spares Parts
2
Too many companies do a very poor job in managing
effectively their spare parts. The issues start in the plan phase
(due to poor processes) and continue through the Do, Check
and Act phase.
Looking from another perspective the issues arise in the
project phase and are rarely corrected in the operation phase
This presentation shows where Ramsoft (UK) can support
companies to optimise and reduce stock level and hence the
costs tied up in holding spare parts
The services available are training and consultancy support
Introduction

2. 3
Plan
DoCheck
Act
Do
Establish
cataloging &
inventory
management
in CMMS
Effective Inventory Management
Plan
Develop
strategic plans
and
procedures
Improve (Act)
Optimise &
rationalise to
achieve cost
reduction
Analyse (Check)
Audit processes,
CMMS data
quality, stock
parameter
effectiveness
4
Plan
Data
Standards
Initial Data
Requirements
Initial
Spares
Process
Strategic Plans and Procedures to
Support ISO55000

3. 5
Do
This phase includes:
Cataloguing
Short Descriptions
Buying Descriptions
Establish Attributes
Establishing Inventory Parameters
Challenge Vendors recommendations
Assign criticality & service levels
Determining the best strategy (ROP, Min-Max, Constant Vendor
Delivery
Establish replenishment criteria
Establish various classification codes
Cataloguing & Part Set-Up
6
Check
This phase includes auditing:
Plans and Processes
Option 1 Fast Track (see screen shot from AMy
software)
Option 2 In-depth (can include all aspects of inventory
management)
Data Quality (short descriptions, manufacturers part
numbers
Effectiveness of inventory parameters
Auditing

4. 7
Extract from AMy Self Auditing Tool
- Inventory Management
8
This case study from a CMMS Data Upload file audit showed
the bearing spares data build to be extremely poor. To correct
this poor build 8 actions were recommended
Case Study Poor Data Quality

5. 9
The recommended quantities recommended by Vendors are
rarely challenged in a structured manner.
This screen shot from our software shows how this done
The 2nd item in the list is only operating 50% of the time,
therefore the calculated ADR (Annual Demand Rate) is 50%
less
Challenging the Quantities
Recommended By Vendors
10
Examples of stock levels too high or too low
Inventory too high or too low

6. 11
These line items are excessively over stocked, depicted by the
very high K factor. A 95% service level would have a 1.65 K
factor. The K factor is used to set safety stock levels
Excess Stocking
12
The following chart shows how safety stock levels increase
rapidly when too high a Service Level is selected
Excess Stocking
% Service Level

7. 13
Another example of excessive stocking using the Number of
Years of Stock
Excess Stocking
14
Challenging stocking of slow movers, is based on analysis on
costs
Identifying & Challenging Slow Movers

8. 15
Identifying where an ROP/EOQ policy is not valid, i.e. EOQ is
less than the lead time demand rate:
Wrong Replenishment Policy
16
Here are two example of distribution charts
Distribution Charts & Missing Data
Fig 1 shows that 10% of the line
items have no lead time data
If Lead time, Service Level, Unit
Cost is missing no analysis can
be carried out
Fig 2 shows that 40% of the line
items have had no demand since
purchase.
Fig 1
Fig 2

9. 17
Improve
This phase includes fixing the issues identified in Audit/CHECK
phase:
Improving existing Plans and Processes
Rectifying inadequate cataloguing
Remove duplicates
Assign spare classifications
Evaluate current service levels
Seek rationalisation opportunities
Evaluate the most appropriate stocking policy
Challenge stocking of slow moving items
Analyse & propose changes to stocking and replenishment
parameters
Optimisation & Stock Reduction
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There are number of options to fix poor data quality, e.g. short
and long descriptions, e.g.
Simple data clean up conducted in a MS Access based
data clean up tool
Build attribute by copying and pasting into the templates
and then auto creating new short and long descriptions –
this is done in commercial off-the shelf software. Physical
inventory checks will be necessary to collect mandatory
missing data
As above but attributes are build automatically using data
mining techniques
Fixing Poor Cataloguing

10. 19
Line Item Reduction
Initial Findings - 119 SWG (Spiral Wound Gaskets)
Multiple searches to identify all the SWGs
Stock existing while POs had been raised on duplicates
material in other bins
18 Gaskets supplied by Solar, Fisher Controls, Union
Pumps
Standardisation Norms Developed after discussions with
Inspection Engineers
Action & Benefit 60% Reduction in line items through:
Removing Duplicates
Combining SS304 & 316
Standardising in supplier
20
This case study shows that the proposed changes to the
replenishment parameters reduces the actual average stock
level value by over 50%
Optimisation & Stock Value Reduction
Note:
the Calculated
values are the
Optimal values

11. 21
Evaluating Insurance Spares Decisions
RAM software such as Reliasoft’s
Blocksim is ideal to support
decisions whether to stock high
value – long lead time items
22
Insurance Spares Summary Costs
Stock 0 Stock 1 Stock 2
Availability 98.58 99.86 99.86
No of Failures 1.152 1.167 1.167
Downtime 14.7 1.48 1.48
Item Cost 68,889 60,684 60,684
Holding Cost 0 111,823 267,823
Penalty Cost 49,437,350 4,974,039 4,974,039
20 year Total 49,506,270 5,146,547 5,302,547
Annualised Cost 2,475,313 257,327 265,127
Analysis summary for options stock 0,1 or 2

12. 23
Training
24
As a result of attending this Spares Optimisation & Cost Reduction workshop delegates
will understand:
ISO5500 and what it means for inventory management
How to achieve consistent cataloguing
The different costs associated with spares management
Learn techniques to improve reliability resulting in less spares usage
How to select the right inventory policy for fast and slow moving parts
Good practices related to SPIR forms or RSPL forms
How to evaluate safety stocks scientifically
How to determine how many to buy
Learn many strategies to minimise stock (Follow the 20point action plan)
How to justify the financial case for high value spares
How to measure inventory performance using KPIs at line item level
Understand the benefits of a MS Access Analysis Solution
Have an appreciation of how reliability analysis tools support the evaluation of high
value spares
NEW to UK & Europe 4 Day Course

13. 25
Section A Introduction and Initial Spares Processes
Topic 1: Introduction to Spares Management
Topic 2: Improving Vendor’s Spares Data (recommended spare parts
data)
Topic 3: Challenge Vendors Recommended Quantities
Topic 4: Building an Effective Spares Cataloguing
Topic 5: Completing the CMMS Spares Build
Section B Inventory Control
Topic 6: Spare Part Costs
Topic 7: Reliability Concepts and Spares
Topic 8: Setting Re-Order Points, Safety Stock
Topic 9: How Many to Order? Determining the EOQ
Topic 10: Establish ROP, Safety Stock and Order Quantities for Initial
Spares
Typical 4 Day Course Contents 1
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Section C Stock Optimisation
Topic 11: Inventory 20 Point Cost Reduction Programme
Topic 12: Audit Current Inventory Effectiveness
Topic 13: Database Solution for Inventory Effectiveness
Topic 14: Alternate Inventory Strategies
Topic 15: Evaluate Policies for Insurance Spares
Section D Management Processes
Topic 16. Auditing Inventory Management Plans & Processes
Topic 17: In-depth Auditing of a Business Processes
Topic 18: KPI Reporting
Typical 4 Day Course Contents 2

14. 27
For more information, including a sample data audit
contact
David Thompson
Senior Consultant (maintenance, reliability &
spares)
Ramsoft (UK) Ltd
Lancs, UK
Dave@Ramsoftuk.com
www.linkedin.com/in/davidthompsonreliability
Reliability ODL External Tutor & Project Supervisor at
Robert Gordon University
Established in 2004
28
David has spent the whole of his career (over 50 years) in
maintenance and asset management
Has worked for many blue chip companies either direct of through
a consultancy role
Experienced in many industrial sectors, oil & gas, petrochemical,
mining, beverage, pharmaceutical, utilities and power
Worked in Europe, South & North America, Africa, Asia, Middle
east
Worked both in offshore and onshore facilities
12 Courses conducted in Asia & 2 in Africa
David Thompson