3.17.2011

Spend Analysis -- What Makes a Part "Right"?

After Michael D. Holloway published his latest book -- Spend Analysis and Specification Development Using Failure Interpretation -- I discussed with him the effects of machine downtime and replacement costs. I asked: "If I'm working in a plant, and I have so many different parts that I buy, how can I possibly figure out what is costing me the most in terms of reliability and affecting my operations?"

He had an insightful answer, and I'm reproducing it here:

Great question! First, many items purchased are done so because items either wear out or break prematurely. Some items such as pumps and motors may leave a big impression on us because the failure is dramatic but a screw, grease, or an adhesive may not be such a big deal at first glance. That is where many people make a costly mistake. One must first understand cost and value before one can appreciate the cost of failure. It is best to follow a Purchasing Specification Development Process, and I have outlined one in my book. It will aid you in identifying the reasons for purchase and failures as well as how to determine which items are costing the most. In addition, it will help you develop a comprehensive procurement specification that will drive down operation costs. When you are able to talk about these failures and examine the data as it relates to not only the cost of the item but the downtime and labor it takes to repair or replace it, it becomes obvious what to attack first. It is very important that you don’t take on too much and also to include others from different parts of the operation. Often the operators understand the equipment far better than anyone else.

What is the common factor that influences a purchasing decision in your organization? Is it price? Would this be the case if the engineering, production, and maintenance teams were involved in the purchasing requirements and part and product procurement specifications?

1 comments:

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