Spare Parts Management Potential in Production Sector
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School of Innovation, Design and Engineering Spare parts management potential in production sector Master thesis work 30 credits, Advanced level Product and process development Production and Logistics Abbas Al-Bawi Report code: PPU503 Commissioned by: Tutor (company): MDH Tutor (university): MDH Examiner: Antti Salonen 1 ABSTRACT Spare parts management (SPM) is an important branch of management which could lead the company to success or bankruptcy. It is also fill of potential improvements that can increase the company profits, productivity, and reliability. Wise inventory management would eliminate all the delay risks of unplanned breakdowns, and reduce process time and cost. To understand the importance of the spare parts, a fundamental knowledge of maintenance types, spare parts, spare parts management, spare parts classifications, ABC analysis, Economic order quantity, suppliers’ management, purchase management, and management computer program SAP, have been viewed. Companies realize the spare parts importance and try to develop the system to increase the benefits. Many ways has been taken to achieve that. Each company has it is own management system that the company has developed in years. In this research, spare parts management system of seven companies has been studied. By comparing of the management systems, we highlight the areas that would have negative or positive impact on the system. We would also analysis why the companies have chosen these systems, how they develop the system, and where they aim throw the development. Reviewing case studies would have many advantages, it would expand the vision to develop the management system and focus on the points that have permanent value instead of focus on temporary improvement. Two check lists of points that could have potential improvement, have been presented and in which improvement type. Keywords: spare parts, management, Maintenance, preventive maintenance, based conditions maintenance, SAP, Systems, Applications & Products implementation, Management Computer Program. ACKNOWLEDGEMENTS I would like to thank my family for supporting me to finish this program. I would thank also my supervisor and the program Coordinator PhD Antti Salonen from Mälardalen University for his time, help, and patient. His experience and knowledge in the field has been important to achieve a successful result. I would be grateful for the help and time: Engineer Hussein Al-Bawi from Midland Refineries Company (MRC) Engineer Qais Ali Hussein from Al-Nasser State Company (NSC) Engineer Saddam Naji from ConAGra Company (CAG) Engineer Elias Gogris from Hilti Company Engineer Mustafa Al-Hachami from Heavy Engineering Equipment State Company (HEESCo) 3 Contents ABSTRACT .............................................................................................................................................................. 2 ACKNOWLEDGEMENTS ..................................................................................................................................... 3 CONTENTS .............................................................................................................................................................. 4 ABBREVIATIONS .................................................................................................................................................. 7 1. INTRODUCTION ........................................................................................................................................... 8 1.1. BACKGROUND ......................................................................................................................................... 9 1.2. PROBLEM FORMULATION ...................................................................................................................... 10 1.3. AIM AND RESEARCH QUESTIONS ............................................................................................................ 10 1.4. PROJECT LIMITATIONS ........................................................................................................................... 10 2. RESEARCH METHOD ............................................................................................................................... 11 2.1. RESEARCH APPROACH: .......................................................................................................................... 12 2.2. RESEARCH DATA: .................................................................................................................................. 12 2.3. RESEARCH METHOD: ............................................................................................................................. 13 3. THEORY ....................................................................................................................................................... 15 3.1. MAINTENANCE MANAGEMENT .............................................................................................................. 15 3.1.1. Background........................................................................................................................................... 15 3.1.2. Maintenance strategies ......................................................................................................................... 18 3.1.3. Corrective Maintenance (CM) “Work to fail” ..................................................................................... 19 3.1.4. Preventive Maintenance (PM) .............................................................................................................. 20 3.1.5 Condition Based Maintenance (CBM) ................................................................................................... 21 3.2.6. Total Productive Maintenance (TPM) .................................................................................................. 23 3.3. SPARE PARTS MANAGEMENT .................................................................................................................. 24 3.3.1. Spare parts ....................................................................................................................................... 24 3.3.2. Spare parts management .................................................................................................................. 25 3.3.3. Ordering ........................................................................................................................................... 26 3.3.4. Parts storage .................................................................................................................................... 27 3.3.5. Issuing .............................................................................................................................................. 27 3.3.6. Controlling ....................................................................................................................................... 27 3.3.7. Handling parts and supplies ............................................................................................................ 27 3.4. SPARE PARTS CLASSIFICATION AND TECHNIQUES .................................................................................. 28 3.3.1 ABC analysis ......................................................................................................................................... 28 3.3.2. Minimum –Maximum control ............................................................................................................... 30 3.3.3. Economic order quantity ...................................................................................................................... 31 3.5. SUPPLY MANAGEMENT .......................................................................................................................... 32 3.5.1. Supplier management ....................................................................................................................... 33 3.5.2. Purchase price management ............................................................................................................ 34 3.5.3. Storage location ............................................................................................................................... 34 3.6. MANAGEMENT COMPUTER PROGRAM: SYSTEMS, APPLICATIONS & PRODUCTS IMPLEMENTATION (SAP) 35 3.7. KEY PERFORMANCE INDICATORS (KPI) ................................................................................................. 36 4. CASE STUDIES ................................................................................................................................................ 37 3.8. CASE STUDY: AL-NASSER STATE COMPANY ......................................................................................... 37 About the company ......................................................................................................................................... 37 The Company SPM model .............................................................................................................................. 38 Foundry Special Steel inventories .................................................................................................................. 38 Inventories management ................................................................................................................................. 39 1. Control and record ..............................................................................................................................