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Refurbishment Of High Value Spares : A Cost Effective way to reduce critical downtimes in Plant Maintenance

 

Ever faced a situation where a critical machine has undergone a breakdown and the whole production line has stopped? To add to your woes, a spare for that critical component – which is a high value item, is lying in store but that too is faulty, and a brand new spare has a lead time of 2 months. I am sure those who have worked on shop floors in maintenance would have some time or the other faced this horrendous situation.

This situation can be avoided by good advance planning and utilizing the process of Refurbishment. SAP has incorporated the concept of Refurbishment in Plant Maintenance Application Component.

Refurbishment of Spares has 2 straight advantages:

  1. It guarantees the availability of spares in an emergency breakdown thereby reducing the downtime and hence production loss. This criticality is even more in Process Industries where the failure of critical equipment could lead to huge losses.
  2. It is a cost effective process of great economic importance to the company itself. Repairing a High value Item and keeping it as a back-up would be far more sensible than buying a brand new spare each time it breaks down.

Moreover the system needs to support the tracking  and processing of items being refurbished. The work done should be documented and available for analysis at a later date. SAP provides this kind of support and analysis through this process.

Refurbishment is usually undertaken in industries in 2 ways:

  1. By sending equipments assemblies/parts to Vendor.
  2. Repairing the Assembly/parts at department itself.

 

Material management should accept the removed repairable spares from the equipment and maintain in stock with some value. It is based on a differential valuation of the equipment as a material depending upon the condition whether its ‘New’, ‘Refurbished’ or ‘Defective’. Whenever equipment is taken up for refurbishment it involves the following 5 steps:

1. Create material master for defective (repairable) spares with valuation

2. Withdrawal of defective (repairable) material from warehouse/store for repairing and generating refurbishment order.

3. Proceeding in the normal way of the PM Order processing, i.e. consumption of spares, use & confirmation of work by internal work center, procurement and acceptance of services etc.

4. After the refurbishment is over, bringing the material with valuation type and status as  ‘Refurbished’ into stock.

5. After the refurbishment work is complete, settling the cost of refurbishment to the material of valuation type and status “Refurbished”, thereby altering the moving average price.

With the Material number & Valuation type combination, defective and refurbished material can be identified in the system, even when lying outside the company in vendor’s premises.

Tracking and approvals will be easier for refurbishment process.

With my experience of more than 6 years in maintenance department, I find this process a very cost effective way to reduce critical downtimes.

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1 Comment

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  1. Manish Bansal
    Hi

    Nice blog
    Issues normally faced in reurbishment implementation is, that the FI doen’t want to inventorise the assets( faulty equipment)which have been capitalised by them.
    What would you suggest, at what value the defective item should be taken in stores?

    Manish

    (0) 

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