Reduce Non-Moving Spare Parts by 43% through Strategic Inventory Analysis

Why It Matters

Excessive non-moving spare parts represent tied-up capital and incur unnecessary handling and maintenance costs. By systematically analyzing and optimizing inventory, organizations can achieve substantial cost savings and improve their overall financial health.

Key Finding

The research identified that 43% of spare parts were not being used, leading to financial inefficiency. The study found that prioritizing the review of item criticality and the accuracy of quantity calculations were the most effective immediate steps to address this issue.

Key Findings

• A significant portion (43%) of spare part inventory was identified as non-moving.
• Kepner-Tregoe Analysis and AHP both recommended 'Review Item Criticality and removal follow-up' and 'Review the calculation and Quantity' as the most effective 'quick win' actions.

Research Evidence

Aim: How can Kepner-Tregoe Analysis and the Analytical Hierarchy Process (AHP) be utilized to reduce the volume of potential non-moving spare parts and mitigate future occurrences?

Method: Decision Analysis and Multi-Criteria Decision Making

Procedure: The study applied Kepner-Tregoe Analysis to identify and prioritize issues related to non-moving spare parts and used the Analytical Hierarchy Process (AHP) to evaluate and rank potential solutions for inventory optimization. This involved assessing item criticality, reviewing calculation methods, and determining appropriate quantities for spare parts.

Context: Industrial operations and supply chain management, specifically within a global manufacturing company.

Design Principle

Optimize resource utilization through data-driven decision-making and systematic analysis of inventory to minimize waste and maximize value.

How to Apply

Conduct a thorough audit of existing spare part inventories, categorizing items by usage frequency and criticality. Employ decision-making tools like AHP to evaluate strategies for reducing excess stock and preventing future accumulation of non-moving parts.

Limitations

The study focused on a single company's specific MRO challenges, and the effectiveness of the proposed solutions may vary depending on the industry, company size, and specific operational context.

Student Guide (IB Design Technology)

Simple Explanation: This study shows how a company can save money by figuring out which spare parts aren't being used and then making a plan to get rid of the extra ones or buy fewer in the future.

Why This Matters: Understanding how to manage resources efficiently, like spare parts, is crucial for any design project that involves manufacturing or maintenance. It directly impacts cost, waste, and operational effectiveness.

Critical Thinking: To what extent can the success of these analytical methods be replicated in a design project with limited historical data or a smaller scope of inventory?

IA-Ready Paragraph: This research highlights the critical need for optimizing Maintenance, Repair, and Operations (MRO) inventory, demonstrating that a significant portion of spare parts can become non-moving, leading to substantial financial inefficiencies. By employing structured analytical methods such as Kepner-Tregoe Analysis and the Analytical Hierarchy Process (AHP), organizations can systematically identify root causes and implement targeted strategies, such as reviewing item criticality and optimizing quantity calculations, to reduce waste and improve operational expenditure.

Project Tips

• When analyzing inventory, clearly define what constitutes a 'non-moving' part (e.g., no usage in the last X months/years).
• Clearly document the criteria used in your decision-making process, whether it's AHP or another method.

How to Use in IA

• Reference this study when discussing the importance of efficient inventory management and the application of decision-making tools in optimizing resource allocation within your design project.

Examiner Tips

• Ensure your justification for choosing specific decision-making tools (like AHP) is clear and linked to the complexity of the problem you are addressing.

Independent Variable: ["Application of Kepner-Tregoe Analysis","Application of Analytical Hierarchy Process (AHP)"]

Dependent Variable: ["Reduction in the value of non-moving spare parts","Improvement in operational expenditure efficiency"]

Controlled Variables: ["Company context (ADC Company)","Specific MRO system","Initial percentage of non-moving spare parts"]

Strengths

• Combines two robust analytical methodologies (Kepner-Tregoe and AHP) for comprehensive problem-solving.
• Identifies actionable 'quick win' solutions with clear recommendations.

Critical Questions

• How sensitive are the AHP results to changes in the assigned weights for different criteria?
• What are the long-term implications of 'removal follow-up' on supply chain relationships and future availability?

Extended Essay Application

• Investigate the application of similar decision-making frameworks to optimize material selection or component sourcing in a new product development project, focusing on lifecycle costs and potential obsolescence.

Source

PROPOSED STRATEGY OF MRO OPTIMIZATION IN COST-EFFECTIVE PROGRAM BY USING KEPNER-TREGOE ANALYSIS AND ANALYTICAL HIERARCHY PROCESS (AHP) · Journal of Engineering and Management in Industrial System · 2023 · 10.21776/ub.jemis.2023.011.02.3