Material and Spare parts Classification

Greetings,

today my topic is how to classify material and spare parts.

if you a facility management engineer, or plant maintenance engineer, and just received the punch list or snag list with recommended spare part lists from manufacturers, so you will start a journey to organize the material and spare parts. I was in a plant when I found that spare parts was handed over in closed boxes, which was a mess to check the spare parts for classification.

when you receive the spare parts with codes, it will be either codes of the contractor in case of EPC or codes of manufacturers. so you have to do your internal classifications. example : you will receive a bearing for a gearbox with gearbox manufacturer part no., also there is a code from bearing manufacturer. in the same time you will find the same bearing used in different machine like a compressor. so do you will classify the bearing under gearboxes family, or compressors family, or bearing family. there is no right answer, you can classify according to your criteria, it may be your procurement strategy, maintenance plan, or even operation requirements. you can have one item in your computerized maintenance management system (CMMS), which is linking the Material code in the warehouse to Bill of Material of the plant.

but now we will discuss about classifications of the materials. each material has a technical details, financial value and procurement criteria, so you can have three classifications for each item. for financial accounting classification, we can have Capex and Opex in the inventory, capex is capital expenditures, opex is operational expenditures. mainly it depends on item value, but there are other criteria like critical situation of the material , like PLC CPU module. which used as a brain for the plant.

other financial classification is used for G/L account Grouping, you can classify the Inventory in G/L accounts group wise, like group one is for lubricants, group two for electrical spare parts, Group three for raw materials, group four for finished products, this kind of classification will summarize the inventory in few lines, you even can monitor your maintenance budget from this kind of groups.

regarding technical grouping, you have to build your own classification tree, it’s long procedure and not iterative process ,as you gave a material a group, and transaction already done, it will be difficult to change it. so start with the end in your mind.

first you can think in a classification tree, check below tree

  1. 10 Raw Material
  2. 20 Mobile Equipment
  3. 30 Utilities
  4. 40 Electrical Materials
  5. 50 Mechanical Materials
  6. 60 Oil and Lubricants
  7. 70 finished products

so you can start to go deeply in each group, you can have Electrical motor group to be no. 10 in electrical materials, so your classification for motors in the classification tree will be 4010 , then in third classification will be single phase motor, which will classified as no, 10, so your group for single phase motors to be 401010, then finally you can add three or four digits as a serial for generic coding for single phase motors.

I used for stage classification before, with help of UNSPSC (United Nations Standard Products and Services Code®) http://www.unspsc.org/ you can check there classification for an idea to classify your material.

something more you need to know before classification, it’s the material description.

next time we will talk about how to enrich material description for better classification.

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Spare parts management

Square parts site is to tell you about my experience in how to manage spare parts for your project or your plant.

My name is Mohamed Ali, I worked in Construction and Mining Industry, in Engineering, Maintenance, and Material management. any budget for a project or a maintenance plan mainly focus on material cost, and how to manage this cost.

in a project, you have the S-Curve to monitor the project performance through Earned Value Management (EVM), which you take into consideration the cost performance index, mainly reflecting project resources like material , machine, and labor. most of the cost will be the material. finally you do the installation of the material, leaving spare parts as per project document requirements.

in a maintenance plan, you do your annual maintenance budget, monitoring maintenance activities, taking into account the required material and spare parts to achieve target operation KPIs.

finally if you want to close the plant, how you will dispose the spare parts in your warehouse? I sow closed plants with spare parts cost Millions of US Dollars sold as a scrap. what a loss.

I worked in different roles, which enriched my vision regarding materials and spare parts.

Material management from perspective of an engineer working on an installation or troubleshooting, is totally different than inventory , procurement, audit, IT, and Company management. which the engineer should take into consideration during managing them.

In next few weeks I’ll start talking about material classification, material attribute selection, material interchangeability,  material life cycle, obsoleted material, and much more.

Mohamed Ali, PMP.

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