How Risk Centered Spares can help solve supply chain woes

By Theuns Koekemoer

As the world slowly recovers from strict global lockdown and travel restrictions, we continue to experience the impact of supply shortages. Many industries have been hit hard due to the short supply of critical components, with no end in sight. This has led organizations to struggle to decide where to apply scarce resources best.  

Having a comprehensive risk centered spares (RCS) approach that is supported by reliability centered maintenance is key to reducing risks and having the right spares on hand when the organization needs them.

For too long managers of physical assets have been led by the nose when it comes to keeping engineering stock/spares to support maintenance and operations. The initial decision whether to keep spares or not is often left to original equipment manufacturers (OEM’s). This results in OEM’s selling far too many spares to companies, starting with offering spares during commissioning and startup. 

Compounding the issue is the fact that engineers are tasked with acquiring spare parts as part of the design cycle. Our experience at Aladon shows that engineers are not necessarily the most qualified people to decide on spare parts required by operations and maintenance staff (O&M) for future operations. Strategic spares are identified during design and then acquired with capital budget. This is again with guidance from OEMs. Some spares will never be used throughout the life of the plant.   

There’s rarely a data-driven, robust process to challenge this old approach, so the typical maintenance manager has to manage unused spares for many years into the life of the plant or equipment. Some spare parts or components are obsolete as soon as the plant enters service (e.g., control systems). Others will be in the stores even after the technological life of the part has expired. Many spare parts are worthless but remain in stock. 

How to determine what spares to keep

The challenge, though, is how to decide to keep or not to keep spare parts. And, how many? 

What is even more challenging is how to manage spare parts that can be in the store for a long time without being used. The responsibility for inventory and stock levels normally fall with the CFO. Companies use metrics to manage inventory and stock levels that do not align with the needs and metrics of O&M. As soon as the company gets rid of the spares to satisfy some financial metric, a failure occurs, exposing the organization to intolerable (but avoidable) risks because the spare was sold (normally for a fraction of what it is worth). 

This is especially true of “insurance spares,” which tend to be expensive, slow-moving parts.

Insurance spares are often targeted by financial managers who detect that the spares have not “moved” for long periods and seek a (short term) financial gain by selling the spares. These decisions are made in a board room from a purely financial viewpoint, where the risk of a stockout of the spare part is rarely considered.

To proactively manage the risks equipment failures pose, the organization needs a modern maintenance strategy development methodology like RCM3. An approach that complies with international asset management and risk management standards and guidelines is ideal. This kind of methodology takes into account risks that include all aspects of business, including financial/operational risk, environmental risks and safety risks.

The effectiveness of these failure management strategies and maintenance programs are limited if companies lack a proper spares stocking policy to support the asset management strategy. Having the right spares on hand is part of ensuring risks are properly managed. 

Aladon’s Risk Centered Spares (RCS) provides organizations with a scalable, robust solution to determine what spare parts to keep, how many and where to store them

The first step in RCS is to use an RCM-based approach to determine what failure management strategies and maintenance requirements are necessary to manage the risk associated with equipment failures. The second step is to determine the required and optimum spares stocking policy to support operations and maintenance at all levels. This results in a completely integrated approach for all your spare parts, ensuring the optimal outcome for the business.

Some organizations are still applying expensive, time-based asset care strategies to manage spare parts requirements. With RCS, the maintenance strategy can be optimized (condition-based) to ensure that maintenance is effective and efficient (technically feasible and worthwhile).

Distinguishing between reparable and non-repairable parts

RCS distinguishes between repairable and non-repairable parts. In the case of repairable parts, models for limited repair capability as well as models for unlimited repair capability are considered.

The algorithms and RCS modeling includes practical assumptions for the demand, and the modeling is applied to determine the best strategy, based on cost or availability.

Benefits of RCS

Using RCS, organizations can determine the optimum spares strategy, considering the following:

  • Cost of spare parts.
  • Equipment availability.
  • Availability of required spare parts.
  • Interval reliability of spare parts to prevent running out of stock at any moment over a specified period, such as during a specific mission or calendar time. 

Successful spare part management requires the participation of financial, operational and maintenance personnel. 

The RCS methodology supported by proprietary software, facilitates this integrated approach for a business focussed spare part stocking policy.

For more information on Risk Centred Spares contact us at