Spare parts inventory management plays an important role in maintaining the stock inventory at an optimum cost.
Presently, the industries are going for capital intensive, mass production oriented and sophisticated technology. The downtime for such plant and machinery is thus extensively expensive.
It has been observed in many industries that the non-availability of spare parts contributes to as much as 50% of the total down time. Further to that, the cost of spare parts is usually about 50% of the total maintenance cost for the factory. Thus, it is a paradox to note that the maintenance department is complaining of the non-availability of the spare parts for their usage and finance department is facing the problem of increasing locked up capital in spare parts inventory.
This amply signifies the importance of spare parts management in any organisation.The unique problems faced by the organisation in controlling/managing the spare parts are as follows:-
1) There is an element of uncertainty as to when a part is required and also the quantity of its requirement. This is due to the fact that the failure of a component, can not be estimated correctly.
2) Spare parts are not that easily available in the market as they are not fast moving items. Only the original manufacturer has the supply of spares. Ususally new models are introduced to incorporate the design improvements and old models are phased out thus the spares for old models are not readily available.
3) the number and variety of spare parts are too large making the close control more and more tedious. For instance, the number of items of spares in a medium scale engineering industry may be around 30,000 and that in a large scale chemical industry may be around 150,000.
4) There is a tendency from the stage of purchase of the equipment to the stage of the use of the spare parts, to requisition spare parts more number than that are actually required and accumulation of spares takes place.
5) The rate of consumption of spare parts for some are very high and for some are very low.