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Critical Spares Analysis

Critical spares analysis that weighs what a long-lead spare costs to keep against what its absence would cost, then puts one case before plant and finance.

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Follow one rotor from the write-down list to 9:43 ↓
The problem

An insurance spare looks like dead stock to a rule that only counts movement

A rotor bought with the train and never fitted is doing its job by sitting in its can. To the slow-stock report it is waste, so it lands on finance’s write-down list, while a project close-out raises a request to buy another rotor just like it.

Settling it means pulling work orders, old project files and the maker’s drawings item by item, then a meeting where engineering and finance each bring their own numbers. Whatever they agree ends up in an email, and the next review starts again from a hunch.

Built forReliability engineersMaintenance managersFinance partnersMaterials leadsInternal auditors

The Problem Today

Long-lead spares sit on old hunches, or get bought twice because one part hides under several numbers.

17–25%
of a part’s cost a year: a common rate for holding stock published

Judged by hand today

  • Slow stock
  • Work orders
  • Drawings
  • Requests
  • Rules count use, not riskA spare is meant to sit still, so it looks wasted
  • Two sets of numbersNothing both sides can sign, and the reason gets lost

The Solution

  1. Two futures, side by sideYearly cost of holding beside the expected loss of not having it
  2. One part, many numbersReads drawings, not descriptions, across units, sites and new requests
  3. One page, a source behind each valueThe case says what it costs, what it protects and what was left out
  4. The right people signSite, finance and a third at the value tier; purchasing then acts

Built-in controls

  • A fresh check before any request is withdrawn
  • Agents never sign, withdraw or write off
  • Each signer opens the records before signing

What You Get

Engineering and finance settle each spare on one page, and what you already own stops being ordered again.

  • Fewer things to readWritten cases for the big holds, plain holds renewed by sample
  • Decisions with a review dateA moved lead time or a new failure proposes a reopen
  • Spares that work on the dayCondition and shelf life checked by kind of spare
One rotor, one morning

A critical spares analysis of one rotor, from finance’s list to a signed case

A compressor rotor bought with Train 1 and never fitted is on the write-down list, and Train 3 has asked for a new one. This is how the plant settled both before lunch.

demoPlant, people, part numbers and prices here are all invented for the sample.

  1. 01Overnight

    33 items on the write-down list, and the first one is a rotor with two twins

    Reliability engineer

    The overnight read went through 38,400 stocked items and kept 612 that take 26 weeks or more to replace. Finance’s list holds 33 of them, picked by a rule of 10 years without movement. At the top sits a compressor rotor at $266,000 on the books. The note beside it says the same rotor body is held under two other numbers, and Train 3 has asked for a fourth.

  2. 02Two futures

    $39K a year to keep the rotor, $3.63M a year of expected loss without it

    Reliability engineer

    Holding wins, and by a wide margin. On the left, an 18% holding rate on the $216,000 the rotor would sell for. On the right sit the fleet rate of 0.053 rotor failures a train a year, 32 weeks to get a rotor back and $310,000 of lost margin a day. Each input opens its record, and each sample figure is labeled as one.

  3. 03All trains

    Three rotors, one body, and a fourth that would protect $400 a year

    Reliability engineer

    Asked to check every train and open request, the agents find three rotors under three material numbers on one drawing, and a Train 3 request for a fourth. A row of rungs then asks whether one more spare pays. Rotors one and two are worth holding. Number three is not, on likely figures, and a fourth would cost $432K a year to protect $400.

  4. 047:12

    Two decisions on one page, and three gates shut before anyone signs

    Reliability engineer

    The case drafted at 7:12 asks two things: hold the Train 3 request and withdraw it only once the oldest rotor passes a fresh run-out, and let financial reporting rule on the write-off on its own. Each value carries a source number. The side panel shows why nobody can sign yet: the match is not agreed, the request is open and the run-out has not been measured in years.

  5. 059:32

    One drawing and revision under three descriptions, with different sleeves

    Reliability engineer

    Their typed descriptions do not agree, so the match rests on the maker’s drawing 4172-R-0386 rev D, read on all three records. Seal sleeves differ, so moving a rotor between trains needs a sleeve change and a trim balance of about $86,000. The engineer agrees the match himself. Across the stock, 4 open requests worth $3.54M ask for parts already held.

  6. 069:33 to 9:34

    The request goes on hold before anyone reads the old rotor’s run-out

    Purchasing lead and storeroom lead

    Purchasing holds the request so its release date cannot pass while the case is open. The storeroom lead then measures run-out at the journals of the rotor in its can and records it: a pass at 0.0009 inches against a 0.0012 limit. A person records the check; the agents only raise it. Without that reading the case cannot go to the signers.

  7. 079:37

    The plant side can sign only once four records are open

    Maintenance manager

    Sign stays locked until the site’s maintenance manager has opened the failure count, the maker’s letter, the fresh run-out and the requisition. He picks his reason code, failure consequence confirmed, and signs for the plant. The engineer who wrote the case cannot check it, and the agents route it by site and value, never to its maker.

  8. 089:38

    Finance reads the ledger, the quote and a dealer note before signing

    Finance business partner

    The money side opens the fixed asset ledger, the maker’s quote, a dealer note on what the rotor would fetch, and the requisition. The three rotors carry $2,536,000 of net book between them, the oldest $266,000. Writing that one off would give back no cash. Her reason code is that the numbers agree with the ledger.

  9. 099:39 to 9:41

    With $2.4M at stake, a third signer reads the case

    Vice president of operations

    The project engineer who raised the request acknowledges its withdrawal. Financial reporting opens the accounting policy and the ledger and rules to keep the rotor on the books as in use. Because the request sits above the $1,000,000 line, the vice president of operations opens the failure count, the fresh run-out and the requisition, and accepts the risk at this value.

  10. 109:43

    Withdrawn before release, so nothing is owed

    Purchasing lead

    Purchasing withdraws the request; the agent only routed it there. The year’s results move with it: 105 of 178 cases signed, and $3.94M of requests withdrawn, 6 of 9, because the stock was already on the shelf. The write-down list drops to 32 items, nothing is written off, and three rotors cover three trains until the review date.

Insurance spares, one rung at a time: when does another rotor pay?

Each rung is one more rotor against what it protects, at the likely fleet rate of 0.053 a train a year and 32 weeks to get a rotor back.

SpareHolding, a yearProtects, likelyReading
1st rotor$38,880$10.5MWorth holding
2nd rotor$38,880$508KWorth holding
3rd rotor$38,880$16KNot worth holding
4th rotor, new$432,000$400Not worth holding

demoSample data, from the working solution. At the high rate of 0.166 the third rotor protects $432K, so it stays on a judgment with a review date, and selling it would bring about $216,000 once.

Around the case

What the storeroom, purchasing and audit see around the rotor case

Storeroom, purchasing and audit work from these. Click a screen to enlarge it.

The run, agent by agentEach agent shows what it read, how sure it is and who it hands to, from 2 failures in 38 train-years to the four rungs and the signers.
Will the spare work on the day?82 checks are overdue and 43 due this month, each suited to its spare: nitrogen on a rotor, insulation on a motor. The storeroom lead records them.
Where the agents stopped and asked8 open, with 6 cases held until a person settles the facts: a quote against the record, an unreadable drawing, two revisions on file.
What reopens a decisionSix triggers wait: a maker ending support, a lead time moved from 60 to 74 weeks, a price up 18%. Reopening is a person’s call.
Audit trailEach read, hold, check, signature and withdrawal in order, by person or agent, with its reason. It cannot be edited, and an evidence file exports the case with its records.
Rules that take two peopleCost of money 10%, storage and upkeep 8%, a third signature at $1,000,000. Finance proposes money rules, the plant proposes plant rules, and another person signs.

demoSample data, from the working solution.

Three things the rotor case caught that the slow-stock list missed

One rotor body under three numbers

Three records with three descriptions share one drawing and revision, so the request for a fourth asked for a part the plant already held.

A cover spare with an old reading

The rotor counted as cover had not had its run-out measured in years. The case held for a fresh reading before it reached the signers.

A $2,400,000 request about to release

Purchasing held it before its release date and withdrew it only after the last signature, so no order existed and nothing was owed.

demoSample data, from the working solution.

Who signs a spares case, and what each one opens first

Sign stays locked until each person has opened their own records.

Reliability engineer
Sees
The two futures, the rungs and the source behind each value
Signs
Reviews and sends the case, and cannot check one he made
Maintenance manager
Sees
Failure count, maker’s letter, fresh run-out and the requisition
Signs
The plant side, for his own site only
Finance business partner
Sees
Fixed asset ledger, maker’s quote, dealer note and the requisition
Signs
The money side
Financial reporting manager
Sees
The accounting policy and the fixed asset ledger
Signs
The write-off ruling, kept apart from the request
Vice president of operations
Sees
Failure count, fresh run-out and the requisition
Signs
The third signature, at $1,000,000 or more at stake
Purchasing lead
Sees
Open requests for parts already held
Signs
Holds a request, and withdraws it only after all signatures

demoSample data, from the working solution.

Behind the case

Agents that read stock and failure history, and none can sign a spares case

One task apiece, each with a line it stops at.

Stock reader

Finds the long-lead items in the stock ledger.

  • Never changes a stock record
History reader

Counts real failure events from work orders.

  • Never invents a rate
Same-part finder

Matches parts on drawing and revision, open requests included.

  • Never merges a material number
Futures calculator

Works out each rung with one fixed formula.

  • Never changes an input
  • Never rounds a close call
Case writer

Writes the one-page case with its sources.

  • Never signs or sends
Storeroom checker

Raises condition and shelf-life checks by kind of spare.

  • Never marks a check passed
Review router

Routes by site and value, runs the clocks and proposes reopening on triggers.

  • Never routes to the case’s maker
  • Never signs
  • Never sends a cancel

What maintenance and finance ask about critical spares analysis

What is critical spares analysis?

Critical spares analysis decides which long-lead spares to hold. Here, agents read the stock ledger, work orders, drawings and open requests, set the yearly cost of holding each spare beside the expected loss of not having it, find one part held under several numbers and write a one-page case. The site’s maintenance manager and finance sign it, with a vice president at the value tier.

How is a case different from a critical spare parts list?

A list says which parts matter. A case says how many to hold, what that costs a year, what each one protects and who agreed, with a source behind each value and a date when the decision is looked at again.

How does it judge spare parts criticality when failures are rare?

It counts real events from work orders across each machine that uses the part and shows the fleet rate with its low and high ends. You can move the rate, the lead time and the lost margin a day to see where the reading turns. Where the history is thin, the screen says so.

Can it write off capital spares or cancel a purchase request?

No. Financial reporting rules on a write-off as a decision of its own, after opening the accounting policy and the ledger. Purchasing holds a request and withdraws it once every signature is in. The agents read, count, compare and route.

What does finance see that it does not see today?

The cash a spare ties up, at what it would sell for rather than what it once cost, the net book of each unit, and the plain fact that a write-off gives back no cash. The holding rate is a rule that one person proposes and another signs.

What reopens a decision once it is signed?

Triggers the agents watch for: a maker ending support, a moved lead time, a new failure, a price change, equipment being changed, or use rising. The agent proposes reopening, and a person reopens or keeps the date.

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Bring one spare
finance wants written off.

We’ll walk you through its two futures, its other material numbers and the case, using your own stock and work orders.

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