Ford saves $1 million with parts inventory system IIE Solutions Magazine
Today, it's more critical then ever that a company manage closely its spare parts inventory. Spare parts have risen in value over the past 10 years, some as much as 100 percent. A few years ago, typical manufacturers had $2 million - $10 million in spare parts inventory. Those figures have climbed now to $5 million- $15 million.
At the same time, the net profitability among U.S. industrial companies has declined steadily, putting pressure on manufacturers to find new ways of increasing profitability internally instead of raising prices. Also, the U.S. government penalizes manufacturers with bloated spare parts inventories by requiring them to list spares as repairable assets, subjecting the spares to taxation.
In the day-today business of making products, however, spares often are neglected, forgotten, or lost. Studies have shown that only about 30 percent of spare components are kept in secure stores areas. More often, components are scattered about the plant floor in cabinets, closets, and other similar areas.
Some manufacturers are using a service called Repairable Asset Control (RAC), to tighten control of their spare parts inventories. One of those manufacturers, Ford's electronic and fuel handle division in Rawsonville, Michigan, has saved $1 million over the two years it has used RAC.
RAC, which is offered by PSI of Livonia, Michigan, completely tracks usable inventory and eliminates excess or obsolete inventory. It can tell the manufacturer the quantity, location, condition, and history of each item in the plant.
The system consists of a PC with custom software, Intermec bar coding wands and readers, and a technician, known as the RAC coordinator, from PSI. The coordinator works full time in the plant and is responsible for the setup, function, and daily control of the service. Working closely with plant personnel, the coordinator finds every repairable asset in the plant and labels it with a bar code. The code carries information such as the type of component, its manufacturer, model and serial numbers, revision level, and other identifying characteristics. The coordinator downloads the part information from the Intermec reader into the RAC computer, which transmits the data via modem to PSI's mainframe in Michigan.
This system allows RAC clients to "share the spare." All clients' spares are stored in separate files on the PSI mainframe, a database totaling more than 600,000 discrete RAC ID numbers. If one client needs a spare in an emergency, for example, PSI can determine if the part is available from another client, who may be willing to sell it.
Ford's Rawsonville facility produces fuel handling systems, throttle bodies, fuel injectors, alternators, fuel pumps, and wiper motors. Its parts inventory is worth approximately $20 million. RAC soon began saving the plant money when the RAC coordinator, using PSI's network of RAC sites and equipment users, assisted Ford in getting rid of unneeded components.
At the same time, the RAC database began playing a key role in cutting machine downtime. During a peak production period, for example, two motors critical to the operation of two separate assembly lines failed. Plant materials personnel were prepared to order replacements until they learned that two units were on a shelf in another area of the plant. Maintenance crews installed the motors, the lines continued to run, and the minimized downtime helped Ford save substantially.
A few months later, the plant needed a spare for a machine in its diecast area. Plant personnel had requested the part from the manufacturer and were give a three-month delivery date. But by consulting the database, they located the part in the plant the same day. By eliminating redundant spares and keeping essential ones stocked and ready for installation, Ford has cut machine downtime substantially.
The plant also saved money- $215,000 by knowing exactly which components were still under warranty, preventing the company from paying for covered repairs. For example, one maintenance supervisor was prepared to send several components back to their repair source. When he entered the components' ID numbers into the RAC database, he discovered that all of the units were still under their warranty period. The repair firm gave the units warranty credit at no cost to Ford.
Ford also benefited from the free certification of all spares. When the RAC coordinator found spares outside the stores system, he sent them to PSI's home office for testing. The working units were cleaned, packaged and returned to Ford. Some of the defective units were repaired, and others were eliminated.
After seeing RAC's success at the Rawsonville facility, Ford is installing the system at nine other facilities. Linking the plants together through RAC will allow the automaker to "share the spare" more efficiently than ever
