Businesses rely on their plant and capital equipment to be in good working order for effective and continuous operations. Since equipment downtime causes lost production and a potential loss in revenue, business managers will look for strategies that will minimise that downtime. These strategies will often rely to some extent on the availability of spare parts. But which spare parts?
Well, spare parts logistics focuses on managing the maintenance, repair, and operations (MRO) supply chain for equipment and machinery. It’s a business function that keeps production lines running and service operations active.
The core components include:
Inventory Management
Maintaining optimal stock levels of critical spare parts while minimising excess inventory costs. This requires tracking usage patterns and establishing minimum/maximum levels based on lead times and criticality.
Parts Classification
Organising parts by criticality – from crucial components that need immediate availability to general consumables that can have longer lead times. A typical breakdown might be:
- A-parts: Critical, need 98%+ availability
- B-parts: Important, 95% availability target
- C-parts: Standard, can be ordered as needed
Warehousing Operations
Strategic placement of parts across distribution centres and maintenance locations. Many operations now use forward stocking locations (FSLs) near key customer sites to reduce response times for urgent repairs.
Demand Forecasting
Using historical data and equipment maintenance schedules to predict parts needs. This is particularly challenging because spare parts often have sporadic, unpredictable demand patterns.
Reverse Logistics
Managing the return and refurbishment of repairable parts, which can significantly reduce costs compared to buying new components.
The biggest challenge in spare parts logistics is balancing parts availability against inventory carrying costs. Having too much inventory ties up capital, whilst stockouts can lead to expensive equipment downtime. Most operations aim for 95–97% parts availability while keeping inventory turns at four to six times per year.
