Maintenance and OEM Strategies Surrounding Price and Reliability Costs

By George E. Krauter

December 10, 2017 at 7:39 PM

OEM’s publish data that directs the users of their products on how to maintain those products; however, many do not have the experience of actually maintaining the equipment they have sold.

OEM’s will recommend that inventories of spare parts be established in excessive quantities to support wear/tear, and breakdowns. The price of these spares is sometimes four/five times the market value obtained by threats of guarantee violations if comparable commercial parts are used.

Maintenance strategies set goals around the ability to provide reliable assets that enable operation of a reliable plant that will, in turn, produce reliable products. The OEM provides a manual for a particular asset; they do not supply recommendations for optimum use of that asset in the total scheme of maintenance planning in a specific plant operation.

In addition to the high price of OEM parts and the cost of maintaining excessive inventory of spare parts, there is a significant cost that is incurred; it is called the dreaded, “downtime” which can far exceed all other costs of the OEM supply chain (such as price, inventory and processing). Maintenance will utilize various methods of measuring downtime including Mean Time to Repair (MTTR), which is the time taken to repair failures of a repairable item, and Mean Time Between Failure (MTBF) which measures the time between number of failures of a repairable item.

Let’s examine the steps involved that contribute to the overall MTTR. The time is measured from when the asset is reported to be down, the mechanic is notified, an assessment is determined, needed spare parts are located, the asset is fixed, and the asset is reported to be operational. This down time is measured and reported against reliability performance measurements.

The availability of the spare parts (or lack of availability) will increase or decrease the MTTR. If the needed spares are not there when needed in the quantity needed, excessive costs occur such as rush freight charges, incorrect parts installed, and idle worker costs. Proper management of the OEM supply chain is essential to optimize costs and support reliability goals. This implies:

  • Careful commercialization of OEM parts for best price and availability
  • Inventory optimization via use of Integrated Supply methods
  • Supplier participation in engineering analysis regarding processes and use of assets

In conclusion, it is most important that there be OEM supply chain management in coordination and communication with the needs and goals of all maintenance strategies. 



Tags: MTTR MTBF OEM maintenance spare parts inventory maintenance strategy
Category: Blog Post

George E. Krauter

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George Krauter, former founder and president of Industrial Systems Assoc. [I.S.A.] has retired as vice president of Synovos.

Currently, he has initiated, "George Krauter Consulting [GKC]"  for effective reliability and cost recovery for consumers  of MRO materials. George is a recognized authority on the management of the MRO supply chain and support for maintenance reliability programs. His book, "OUTSOURCING MRO...FINDING A BETTER WAY" is available from Amazon and from Reliability Web.com.

He is published in Uptime, Modern Distribution Management, and Supply and Demand Chain Executive. George has conducted seminars across North America, in Europe, and in the U.A.R. as well as a guest speaker at Temple U., Howard U., Duke, and MIT.

George is a graduate of Temple University; he lives with his wife, Joyce, in Bucks County, PA. All grand kids live within eating distance. He can be reached anytime:   georgekrauter@comcast.net.



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