Is your stock room overflowing with all the parts that are essential to the operation of your production lines? In that case, a useful tool for clearing crowded shelves is the Accepted Parts List. It'...
February 1, 2003 | By Judy Van Rhijn
Is your stock room overflowing with all the parts that are essential to the operation of your production lines? In that case, a useful tool for clearing crowded shelves is the Accepted Parts List. It’s simply a list of common parts to be used in the design and repair of all production equipment. When this list is combined with a program of standardization, you can be ready for a variety of emergencies throughout the plant with only a small number of parts on hand.
Although it may seem attractive for the maintenance department to have the perfect part on hand for every application, failure to limit installations to common parts can cause headaches further down the track.
Ian Palk, maintenance manager at Weston Bakeries Ltd. in Kitchener, Ont., has seen first-hand the confusion caused by inconsistency. “I recently saw an e-mail asking if maintenance staff used a common flow meter. Almost everyone came back with a different manufacturer. If they were using the same manufacturer, they were using different models.”
Pity the poor maintenance staff that needs to find the right part in a hurry, when a simple act of organization can streamline the process. “If we say, ‘We only use Acme flow meters,’ then everyone uses them,” says Palk. “We stock one spare at the Eastern Avenue (Toronto) plant and a backup at Kitchener.”
When a part is this easy to locate, substantial time is saved in canvassing stockrooms at other plants or local suppliers. At the PPG Canada Inc. fabrication plant at Hawkesbury, Ont., long-standing use of what it call its standard parts list has lead to a significant reduction in unplanned downtime. “When we go into our store, there are not so many parts to know,” explains maintenance superintendent Steven MacDonald. “The maintenance staff are familiar with where to find it and how it works, so they can get the line running quickly. It’s a huge advantage.”
PPG Hawkesbury has three lines that have the capacity to make hundreds of different automotive windshields. These lines are so long that maintenance staff concentrate on standardizing the equipment rather than the lines. “A part could be an entire robot, to minimize the types of robot,” MacDonald explains. “There is also a recommended drive which is a specific model of a specific brand. It can be as simple as only wanting one supplier for all our bearings.”
PPG also enjoys a significant reduction in maintenance training because of the limited number of parts in use.
Suppliers stock the inventory
Some plants like to empty their stockrooms completely and have suppliers stock standard items on their behalf. Jack Eva, who is president of Electra Supply Inc. in Cambridge, Ont., likes to guarantee that the parts his customers need are either in the customer’s plant or in his plant. “One of the big things we say is that the customers should not have inventory. We have inventory.”
Depreciation savings are obvious. Instead of having three different parts for three different lines depreciating on the shelf, you have one part that can serve all three lines. If you leave stocking up to the supplier, you save on the initial capital outlay as well. MacDonald says that reduced carrying costs are the second biggest reason for having the list, the first being to make life easier for the maintenance staff.
Palk agrees. “If I pay $2,000 for a motor, depreciating at 13 per cent for three years, and at the end of three years I haven’t used it, it has cost me $3,000,” he says. “If the supplier stocks it, it costs me nothing. Even if I had to buy it at the end, it would still cost me $2,000.”
Preferred supplier arrangements
The close relationship required between the plant and the supplier to make this work often leads to a preferred supplier arrangement. Palk has seen major time savings from this practice, especially when the price is locked in by contract. “You don’t need to go pricing all the time,” he says. “Everything is pre-priced for a year or more.”
In the bigger picture, price can be a minor factor compared to the cost of downtime when parts are not readily available. Reliability and technical support are more important considerations when choosing a preferred supplier. “Someone might come in once a week,” says Palk. “They might mark, identify and sort out your stock and keep back-up stock. They might have 24 hour service and a [direct] call line.”
There is a cost to this arrangement when a supplier holds parts that you never need. You might be required to buy the part at the end of the contract or to pay a restocking fee when it is returned to the manufacturer. This needs to be addressed in the original contract, with the supplier’s co-operation.
“I always make sure the contract says that expenses are to be defrayed,” says Palk, “If they approach the manufacturer, it might not cost them anything to stock it. They might get full credit on returns.”
Another disadvantage is the delay in the introduction of new technology. The accepted parts list is usually reviewed at the end of the supply contract, and in the meantime, production advantages may be lost. Designers at PPG, Hawkesbury struggle with the list and frequently ask for new items to be entered. “I don’t think the engineers see all the advantages of it,” says MacDonald, a professional mechanical engineer.
“We (the maintenance staff) review designs to make sure they use as many standard parts as possible. Most of the equipment is not used to its full capability and that gives engineering a lot of room to move.”
Changes to the list usually occur when a manufacturer stops making a part. “When a manufacturer says ‘Would you like a substitute for that?’ the flag goes up,” says MacDonald. “We search for the next acceptable model that we feel is going to last long enough. Once we stick it in the book, we want to get a few years out of it.” At PPG it is the maintenance manager who decides what goes on the list and what comes off.
The plant-wide introduction of a common parts regime is not possible in every production environment. The Kitchener satellite plant of PPG Canada Inc. is solely dedicated to Toyota Motor Manufacturing Canada Inc. in Cambridge, Ont., with each part destined for a specific vehicle. According to site manager Harvey Primeau, this limits his ability to implement standardization. “The plant has two complete lines and seven assembly areas,” he says. “Each line manages a part and is specific to itself. There is no standardization between lines.”
Primeau is only able to standardize within a line. He gives the example of assembly fixtures with specific datum points, which he calls “donuts.” Even this limited application of the list results in a more consistent product and fuller compliance with ISA requirements.
Palk is also limited in his ability to introduce a plant-wide parts list because of the level of management required. “You need a more developed engineering staff. It takes somebody to oversee the list. There’s a lot of searching for and overseeing of materials.”
He is introducing commonality on a piecemeal basis. He recently streamlined some belt speeds and their AC drives. “We need one, two, three, four and five horsepower units but we’ve just agreed to carry five horsepower units, and use them for everything up to five,” he explains. He will continue to try and standardize between lines before looking at the bigger picture, which is to standardize between plants.
Palk’s enthusiasm is motivated by his experience at the CAMI Automotive Inc. plant in Ingersoll, Ont. (a joint venture between Suzuki Motor Corporation and General Motors of Canada Ltd.), where he was formerly the assistant maintenance manager. An accepted parts list was introduced six years ago, leading to a major reduction in the number of suppliers being dealt with.
Management at the CAMI plant, which has the capacity for 200,000 vehicles a year, originally intended to implement an integrated supply policy — having one vendor provide all its indirect purchases — but balked because of the costs involved. It was found that manage
ment fees for the program would be prohibitive and that manpower costs would remain high. Even using EDI (electronic data interchange) to order on-line — an expensive system to set up in itself — they would still have needed a large workforce for the physical movement and receiving of parts.
Instead, CAMI committed to one supplier in a number of key areas. For example, in the electrical area, dozens of little suppliers were replaced by just one. A filter supply program reduced dealings from 40 suppliers to one. Other one-supplier areas are commodities, power transmission, consumable safety suppliers and chemical. In general, the policy was to get rid of the “onesey-twoseys” and as a result, CAMI has gone from using 700 vendors to just over 100 for the supply of MRO products.
This generated an immediate cost saving by reducing the number of purchase orders. “Every time you generate a purchase requisition, there’s the cost of handling paperwork,” Palk explains.
Electra Supply’s Jack Eva calculates transaction costs at $100-$125 per purchase order. “The average industrial user might place seven P.O.’s a day for each of these common parts,” he says. “If you take away six P.O.’s for, say 200 working days, that saves up to $150,000 a year.”
This saving is much greater than occasional disadvantages in pricing. “If you’re using one vendor, they may not be the primary vendor for everything you need,” Palk says. “They may have Allen-Bradley [products] at a reasonable price but you might use Omron for proximity switches, which they don’t stock. They would have to buy it at inflated costs.”
Integrated supply an option
Electra Supply sought to address this problem by setting up an integrated supply company, now called One Source MRO, of which Jack Eva is also the president. It has seven member organizations dedicated to supply parts in the areas of safety, industrial, bearings, plumbing, electrical, stationary and motor rewind and repair. “We go into a customer under the umbrella of One Source,” says Eva. “They issue one purchase order covering everything.”
While Eva strongly believes in integrated supply, he has seen a reluctance of companies to make the big commitment required at this time. “There’s no doubt in my mind that it’s the way of the future, but not everyone is embracing it as the thing to spend money on now.”
An accepted parts list can bring many of the advantages of a streamlined supply regime without that level of commitment. While the list requires substantial time and effort to set up, in the long-term, it can generate tangible savings for the entire operation.
Regular contributor Judy Van Rhijn is based in Kitchener, Ont.