Food Engineering

Replacement Parts Survey: Processors Cautious in an Era of Uncertainty

July 1, 2009
The economic downturn is forcing some food and beverage manufacturers to cut costs in replacement parts programs, setting the stage for machine failures.



The fallout of financial meltdown is everywhere, including the tool sheds of North America’s food and beverage plants. More than a third of industry professionals surveyed for the 2009 Replacement Parts and Components Trends Survey say their programs have been disrupted, with potentially serious consequences down the road.

Although 64% indicate the economic downturn has not forced changes in parts purchasing, others have had to adjust. One in six (16%) say their plants are running equipment to failure more frequently. One in five indicate their organizations are economizing by purchasing less expensive parts, while one in 12 are buying in bulk or seeking volume discounts.

“We are holding off on purchasing some spare parts,” one respondent wrote, while another pointedly observed, “Quality is declining and the delivery time is longer” on the parts being ordered. “We are more closely evaluating how essential purchases are,” a production professional rationalized.

Whether today’s belt tightening will translate into tomorrow’s downtime remains to be seen, though skimping on maintenance usually is a false economy. Outsourcing parts ownership is an increasingly popular strategy to blunt capital constraints without inflicting long-term harm. One in five respondents (21%) cite consignment programs as a MRO practice currently being leveraged, up 5% in two years. Vendor-managed parts inventories also are more common.

Spare-parts consignment is more popular than the above figure suggests. In a follow-up question, only a third of food professionals (35%) indicated no parts or maintenance materials are purchased on consignment. The rest use a variety of approaches, including spare parts inventorying at a local distributor’s site (33%), parts owned by a local distributor but stored on the plant’s premises (19%), and relationships with multiple distributors and OEMs (13%).

Survey findings are based on mail and online polling of Food Engineering readers. Based on average reported spending on replacement parts and components, this year’s sample spent more than $251 million during 2008 to support maintenance repair operations. Respondents represent a broad cross section of the industry (see related profile on page 15).

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With 24/7 production becoming the norm in some industry sectors, a premium is being placed on parts availability. When a machine goes down, plant managers want to get it back in operation as quickly as possible, and more are turning to single-source suppliers to meet that need.

Readers were asked to rate 13 parts-supplier characteristics on a five-point scale, ranging from “extremely important” to “not at all important.” Parts availability consistently ranked third in past years, but in 2009 it vaulted to the top spot, ahead of on-time delivery and product quality, previously the top characteristics. Fully 98% of respondents rated parts-availability as very/extremely important, up from 87% five years ago. A greater premium also is being placed on speed of delivery, with 91% rating it very or extremely important.

Quality remains a key consideration for more than nine out of 10 industry professionals. National or global service capabilities are important only to firms with geographically dispersed manufacturing, and global manufacturing makes breadth of support a priority for a third of respondents, up from a quarter two years ago.

Half the respondents rated the breadth of a supplier’s line of parts and components as very or extremely important. It saw the biggest relative increase of any of the 13 factors. Another big gainer was the availability of electronic ordering and tracking, which moved up two slots in the hierarchy. The reputation of a supplier was the most devalued characteristic; alternatively, prior performance by a supplier is gaining in importance.

Price drives parts buying at more than a third of companies, though a declining proportion view replacement components as commodities. A more nuanced view is evident, with two-fifths saying they can calculate the ROI on higher quality parts. “Quantify based on ROI, manpower to service, and downtime/failure costs,” one respondent wrote. “Examining cost/benefit equation of each part as it is replaced,” added another. For many, the criticality of the machine dictates the quality of the part.

One in five agree with the statement, “cheaper parts work just as well as higher-priced parts.” Almost twice as many have the opposite view, with a similar proportion saying they have experienced premature machine failure as a result of knockoffs. More than a quarter skirt the problem by simply not using cheap replacements or knockoff parts.

“Depends on the complexity of the part,” one reader wrote. The tightness of a machine’s tolerances is another factor. Paying top dollar doesn’t always mean top performance, several respondents pointed out. “Price does not always mean better quality,” summarized one. Eight percent suspect they have received counterfeit parts.

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The Internet touches the daily lives of most North Americans, and it is becoming ingrained in the parts and components world, as well. Only one in five readers indicate they have not purchased parts via the Web in the last six months and say they probably won’t in the next six either. Six years ago, half the sample was similarly disengaged.

Three quarters of respondents already purchase online, and another 5% say they will take the plunge in the next six months. One-stop shopping is a big draw, as suggested by the growing importance of a supplier’s range of components, and that is causing a big shift in where they place their orders. For the first time, distributors’ Web sites were the most popular medium, surpassing manufacturers’ sites (40% versus 36%). Compare that to 2003, when food professionals were twice as likely to buy from a manufacturer’s site than a distributor’s (27% versus 14%).

Major changes are underway in who decides where and what to order. Maintenance professionals are involved in the majority of replacement decisions at three out of five food plants, up from half the facilities four years ago. General administration and executive management personnel also have seen their influence grow, from only 4% in 2005 to 10% of the organizations now.

Engineers, on the other hand, are being relegated to more of a consultative role. While they were primarily responsible for replacement decisions at 20% of the plants in 2005, they only make the call at 6% today. Plant operations managers are holding sway in one out of five organizations, continuing a modest increase in recent years.

Regardless of who is calling the shots, food manufacturers are making greater use of predictive tools and taking advantage of more affordable prices for condition monitoring and other diagnostic tools. Though still a minority, the number of respondents using vibration analysis, infrared thermal readers and other devices doubled to 8% of the sample. Time-based replacement and regular visual checks are on the wane, though half still use visual checks to determine wear. As recently as 2004, seven of 10 used the technique.

Automation of parts ordering is holding steady. Almost a third of readers say no automation is in place, similar to the ratios over the last five years. Almost half take advantage of system-generated purchase orders, however, with pop-up notifications of needs and verification of automated re-orders part of their plants’ protocol. Hard-copy P/Os nosed down to one in eight plants.

The days when manufacturers built their own machines are long past, but half the readers say they retain the capability to remanufacture or re-engineer parts on site. Lower cost or improved performance are the motivators. Almost as many incorporate vendor-managed inventories in the maintenance repair operations, and a quarter still have central warehouses to inventory common parts for multiple plants. Parts kits for routine repairs are steadily fading from the mix. Slightly more than a third of plants still use them, down from more than half four years ago.

Two-thirds of plants use inventory dollar value as a tool to improve inventory management, up slightly from recent years. Turns, on the other hand, are being used less frequently, though half still use turns to assess inventory management. A number of other methods were cited, including spend per month, PMC electronic inventory management, CMMS and SAP.

Survey respondent profile

One of the most balanced-and presumably most representative-samples of food industry professionals, processing plants and company sizes provided the basis of this year’s Replacement Parts and Components Trends Survey. In all, completed surveys were received from 203 individuals, including 101 who received questionnaires in the mail and 102 who responded to an e-mail invitation to complete the survey online. The margin of error relative to Food Engineering total readership is plus or minus 6.9%.

Consistent with past surveys, the vast majority of respondents (87%) fell into four job classifications: engineering, executive/general administrative, plant operations and maintenance. Meat, poultry and seafood processors were the most prevalent product category at 27%, followed by bakery and snack (21%) and frozen & prepared meals (10%). Almost two-thirds work at plants with 100-499 employees, with one in five at facilities with up to 999 and 6% at plants with 1,000 or more workers. Average 2008 spending on replacement parts and components was $1,239,969 with median expenditures of $700,000. This is the highest median spending figure since the survey’s inception in 2003, while the average was greater in three previous years, and less in three other years.