Channelling engineering expertise
Published: 09 July, 2014
With engineering skills becomingly an increasingly scarce resource it is important that an engineer’s time is spent on core tasks. Unfortunately, too many are still spending valuable time sourcing spares, according to Andy Silver, is commercial and operations director at ERIKS UK.
Engineering skills are a scarce resource - ask any production or maintenance manager who has been trying to recruit to their team.
However, one of the biggest issues that industry faces is channelling engineering expertise onto engineering issues and problem solving, rather than non-core activities, such as sourcing spare parts for machines or production facilities.
Research suggests that highly paid engineers, whose job it is to keep plants and facilities running, can spend 30-40% of their time sourcing and buying product. In other words, they aren’t being engineers.
What’s more, only 20% of total spend on materials is MRO, yet it takes up to 80% of purchasing time to spend. The reason for this is that the 20% is usually made up of lower value items which are only intermittently required or a distress purchase. At this point, the engineer has to go out to market and source the spares, often making decisions on the basis of comparable prices.
The key question the production or maintenance manager has to answer is, “why are my highly skilled people purchasing spares when they should be solving engineering problems?”
The answer to this question lies in close examination of the indirect supply chain, in particular how and what a company stocks and in what quantities.
The “how do we stock” question is key. Generally, two methods are used, companies either hold stock in stores or go out to market to different suppliers to get multiple quotations.
Often the former is used and is justified on the basis that the line or machine will be up and running quicker if spares are held close to where they will be needed. However, this method is not without its limitations, which are ruthlessly exposed when an engineer has to actually leave a job and go and find a part. Our research suggests that, on average 13 minutes are wasted searching for every replacement part in a plant’s stores.
Why so long? Because the storeroom is often one of the least managed parts of a production facility and, by least managed, I mean no stock movement history; no proper financial or budgetary control; no real management information and often not even basic storage procedures and signage.
The alternative involves not using a stores facility at all and, in effect, going out to market and getting quotes, but as we have already identified, this is not what highly skilled engineers should be doing and is likely to be time consuming.
The second question to be answered is, “Are we stocking in the right quantities?” Often stores attempt to hold “one of everything” just in case or, alternatively, multiple spares for critical components.
Unfortunately, with cost reduction measures being applied ever more stringently, this method does little to reduce stock or release working capital. In my opinion, the goal must be to reduce stock to minimum levels without impacting production or processing, bearing in mind that 10% of an MRO budget is often spent on unnecessary duplication of parts. One of the key points that production or maintenance departments have to be persuaded to understand is that reduced stock does not have to mean increased downtime or reduced productivity.
Often this hoarding of parts creates another issue, namely obsolescence. It is not uncommon to find in stores old and out of date spares for drives, pumps and other equipment which no longer have any practical value and are merely taking up valuable space. In fact, our research suggests that circa 10% of storage costs are tied up in obsolete items.
The final question that maintenance or production managers need to ask themselves is, “Are we stocking the right products?” and this question needs to investigate both type of parts and quantities. Quite often you will find that a store can reduce the units of a stocked part from eight down to four with no impact on downtime or MRO efficiency.
Unfortunately, in MRO, it is extraordinarily difficult to answer these questions because it is impossible to know what is going to break down and when. The forward scheduling of products in MRO is exceptionally difficult, unless there is a refurbishment planned, in which case the engineers know exactly what they want.
This is obviously very different from OEM supply where the engineer knows what he or she is going to need and the components arrive just in time to be scheduled onto the assembly line.
My advice to those engineers who are responsible for MRO spares is to get advice, from experts who know what products to source and how to source them. This advice needs to be much more than just saving on the cost of invoicing. Best advice in this area is application specific and tailored to the company, not an off-the-shelf purchasing or invoicing solution.
For example, the expert should be able to spot that the reason a customer is buying 10 bearings every week for a failing machine is because the bearings are being used in the wrong application. Simple specification of the right bearing for the application will solve the problem, but that can only be delivered by engineering experts, not purchasing or invoicing professionals.
The truth of the matter is that, whilst the indirect supply chain cannot solve the engineering skills crisis it can at least play its part in ensuring that engineers are spending their time using their core skills.
My own experience suggests that it is possible to give skilled engineers back circa 30% of the time they were spending sourcing products – which is 30% more time solving engineering problems.
For further information please visit: www.eriks.co.uk