Engineers: Solving problems or sourcing spares?

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 to 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. Our research suggests that, on average, 13 minutes are wasted searching for every replacement part in a plant’s stores.

The alternative involves going out to market and getting quotes, but as we have already identified, this is not what highly skilled engineers should be doing.

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. 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.

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 managers need to ask themselves is: "Are we stocking the right products?” and this question needs to investigate both the 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.

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. The expert should be able to spot, for example, that the reason the customer is buying 10 bearings every week for a failing machine is because the bearings are being used in the wrong application.

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.