I remember once I tried to justify for a BOM review project for existing materials under maintenance department. Is there a better way to prove that it's a must and not a nice thing to have? I tried to calculate that the project cost is less than cost of improper materials management but the management commented it's subjective.

From "THE MISSING Tool OF MRO INVENTORY CONTROL
BOMs – An MRO Inventory Savings Model" By Bpb DiStefano, MRG and originally delivered at the Computerized Maintenance Management Summit


"Plant Savings from MRO BOMs

MRG has previously stated that a maximum savings equal to 50% of the MRO inventory value
is possible. The actual potential percentage of savings is based on the current state of the
plant’s MRO BOM program, the current level of MRO inventory management and the sophistication of the maintenance reliability program at the plant. MRG research indicates that MRO BOMs are on average 30% of the total savings value. The direct inventory savings come from eliminating spare parts no longer supporting plant equipment, reduction of spare part stocking levels because total potential need for each spare part is now known and can be more
accurately forecast and from the elimination of duplicate spare parts as a result of the MRO
BOM building process.

In addition, MRO BOMs result in other plant savings in areas such as maintenance labor and
the reduction of equipment downtime. Maintenance labor savings of up to 15% are possible.

These saved hours can be “banked” in the PM/PdM program, which will result in even greater
savings over time. The labor savings are a result of the decrease in time spent identifying and locating parts needed for equipment repair. MRG assessments have found that 10% to 25% of a craftsman’s time is spent obtaining parts. BOMs will largely eliminate this waste and will also allow for in-plant deliveries by the storeroom in large plants because visual identification of the
spare part by the craftsmen is no longer required.

Another area of savings is from equipment downtime avoidance. MRG has benchmarked this
savings at 3.5%. This savings is normally calculated based on the value of lost production.

However, since the focus of this report is on MRO inventory supply chain, and not maintenance
reliability the savings percentage and formula has been tied to the MRO inventory value. The
savings come from the fact that required spare parts are quickly located thus reducing the mean
time to repair. Another saving results from installing the correct spare part and not just one that fits. Accurate MRO BOMs add quality assurance to the maintenance repair process by
significantly reducing the possibility of installing the wrong part and possibly causing early and potentially catastrophic failure of the equipment.

In highly regulated industries such as nuclear power and pharmaceuticals there is a soft savings that while not quantifiable in dollar savings has a potentially high impact. If a complete BOM program is in place, it is much less likely that craftsmen will install incorrect parts in equipment."

The PDF of the full original paper is attached as well.

Not much sizzle in BOMs but they are important.

Terry O

distefano_doc.pdf (42 Kb, 38 downloads) THE MISSING Tool OF MRO INVENTORY CONTROL

Thanks for that Terry. I did more or less write the same verbal justifications but I guess they want to see some concrete figures by calculation in advance ie how much would be the savings.

I wonder whether we can use the quantitative method in this case.

The project estimated cost was about 500K.

Another advantage of proper BOMs would be spare part interchangability, which I did catch in the article attached above.

Josh,

Can you give us an idea of the arguments you used at the time?

Best regards,

If I remember correctly, something like this:
1) Easier & faster to select spart parts from BOM for daily maintenance & turnaround planning
2) Spart parts have correct specs & shorter buying process
3) Spare part interchangablity where possible
4) Review stock min/max levels to optimise inventory
5) review which equipment should have stock or not
Pls note we didn't start from zero, just for improvement.

Josh,

It has been my experience that when pitching something like this to senior management there is a need to tie together cuase and effect.

For example,

quote:

2) Spart parts have correct specs & shorter buying process

So what? Is this provably a probpem now? Is it costing us money today? How much would we save? (estimates are good enough)

What are the downsides to this if any? How much will it cost? When will I see the benefits from this?

Let me put together something for you for general use, and I wil try to target this particular issue also if you like.

YOur goal if you want to get thing sthrough is to answer all of the questions they are going to have before they think of them theselves, do so in their words, and make sure that the cost benefits are obvious.

Depending on what level you are pitching to, the actual cost is meaningless as long as the benefits outwigh them and there is a high liklihood of achieving the benefits.

Give ma a day or so to get something together on this one.

Best regards,

quote:

What are the downsides to this if any? How much will it cost? When will I see the benefits from this?

I am trying not to be negative, but in my experience, the next question from higher management will be:

Who is going to do it? If the word I is not in answer, probably end of story.

My boss once told me that everyone comes with great ideas, but a only few are willing to accept the responsibility for implementation.
Frankly he said: "If I don't have a "horse" to pull the wagon, I am not going to pull it myself. "censored version"
If the approach is: I want to reduce/implement/... just fill in the blanks, doors will open.

Returning to BOM:
Sometimes an sub assenbly can be purchased as a repair kit, but of that repair kit just one or two of the five parts is really needed frequently. What to do?
* Purchase the reapir kit?
* Order the parts separately?

I would have a spare part and a repair kit in stock, especially if the kit is substancially cheaper than the spare part, it wouldn't need some rocket science computation to figure that out.
Did you ever compared the price of a mechanical seal against the price of a repair kit?

Wouldn't it be much easier to justify to say that BOM's will reduce the need for retained knowledge by the Planner/Supervisor?

I have seen many Maintenance departments struggle because of manpower turnover. The unfamiliarity of the new people to the systems in place. If the BOM's were there, there is a base that they can start out with. Planning would be less "knowledge of the production system" and more of the CMMS system.

Get the knowledge from the people into an organized structured format, then and only then can anyone really understand what they are talking about. Get Engineers together to talk about a project without an engineering drawing. You'll have chaos! :-) Remember, I'm an engineer, too.

So, I see BOM's as bringing value to Purchasing (less searching for the right vendor), Maintenance (less time searching and specifying the parts needed), Planning (organizing tasks to scope out the job), Mechanics/E&I (having the RIGHT parts for the job).

If all our ranting doesn't help, you might want to look into contracting a good RCM for justifications. They can talk the business big-wig lingo to get upper management buy-in. They have done it before. You and I both know the value of BOM's, but our experience is not typically in "selling," ours is in "doing."

quote:

Wouldn't it be much easier to justify to say that BOM's will reduce the need for retained knowledge by the Planner/Supervisor?

Although I am a big computer fan, I don't think that a BOM will replace the supervisor/planner.

Are we willing to put the lower echelons behind te computer to poke around in the CMMS, retrieve drawings, retrieve BOMS?
I am talking about mechanics/fitters etc..

Even if we "grant" this knowledge to the mass, theoretically eliminating the need for a supervisor/planner, these same supervisors will be needed to function on a higher level.

Thus the dream of "lets put the BOM in place and get rid of the planner/supervisor with his big salary" will not make profit.

quote:

Originally posted by svanels:

Although I am a big computer fan, I don't think that a BOM will replace the supervisor/planner.
...
Thus the dream of "lets put the BOM in place and get rid of the planner/supervisor with his big salary" will not make profit.

I am not sure if what I said was clear enough then.

Maybe this will help... The knowledge that an experienced Planner or Supervisor has is specific to them, personally and is of extreme importance due to their perspective of the Maintenance Department, and Operations. No one else knows that information. What we need to do, is capture the knowledge, not eliminate the person or the position.

When the changeover happens between staff, then the knowledge is kept by BOM's, PM's, the work scheduling process, the history developed with the CMMS, etc... and you're not starting again from scratch.

Supervisors and Planners will and should never be done away with. Their positions are untouchable in an RCM environment.

I can understand the need for hard numbers and certainly agree that someone will have to be responsible for the project, yet I'm somewhat compelled to make some common sense arguments like

Don't you think most restaurants have a bill of materials (recipe) for whatever they serve you, so they can manage the costs of whatever they serve?

Don't you think most auto repair shops (and 100% of dealers) have a BOM for any repair they're doing, so they can quote you a price nearly immediately for any job they do?

Does't my company have a BOM for the products it makes and sells so the accounts can know what the product is supposed to cost and then look at the variances?

Going a slight step forward, if you accept the premise that as a maintenance and reliability function, we make capacity for our plant or organization, then don't we need a BOM for the product of capacity?

Thanks to Mark Goldstein for some of these ideas.

Hi,

I work in a cement plant. SOme time ago I looked at direct purchase vs catalogued.

Over 5000 work order pa, 10,000 catalogued item in SAP (stocked and not stocked).

Maintainers can search for catalogued items via either BOMs or MITs.

Found that maintainers were even direct purchasing parts that we had in stock/store.

Assumed that 50% of all direct matrial purchases could be via catalogued parts and minimal time saving of 14 mins per items.

This led to 9manweeks pa of time saving by having most commonly purchased items in SAP and Catalogued. This means more tool time!!

Cataloguing will provide movement history where as direct purchase does not.

Why people still buy when we have items in store means that it was not easy to find eg wording/naming / colloquial names . Adding to BOMs is a first step.

BOM have my vote in terms of improving tool time for maintainers.

However, I am not a SAP Guru and hence my posting on several matters.

BOMS - we have functional location, equipment, variant and materials types. We are moving from FL to equipment BOMs.

I belive that material BOM are best for same items of plant installed at vraioud functional locations eg motors, gearboxes etc etc. Any comments??

Also - to me...BOMs should be part lists. If U look at the OEM documentation - U will find spare parts list, assembly drawings and parts lists. To make things easier to find in BOMS lists in SAP > I was thinking of trying to reflect the ITEM or POSITION listing from the OEM docs in the BOMs eg a bolt M20 x120mm will have a MRO MM number. This bolt may be used in serval locations in the sub assmeblies of the equipment. How do we best set up the BOMs to help the maintainer find the right part...or should we rely on the maintainer looking at the OEM docs and then finding the part specification and then finding the matching item in the BOM list.

BOM lists can grow very large and this then creates another issue.

I welcome any comments on how to provide the best and most effective set up of BOMS.

Cheers


James

First, why the workers are able to do direct purchase without cataloging them first? Do you use material characteristics or just register the materials without specifications? Do you allow users to use generic material nos?

Second, what does MIT stands for?

Don't you standardize material descriptions to faciliate easy searching eg using wildcard?