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Wired for Parts

By Kevin T. Higgins
July 13, 2004
While the Internet and automation systems are becoming bigger factors in parts ordering, maintenance managers still struggle with age-old challenges.



One year does not a trend make, but this year's Replacement Parts and Components Trend report confirms what the manufacturing world intuitively knows: there's something to this World Wide Web.

Internet-based ordering is rapidly becoming the preferred way of purchasing spare parts and components, and it's not because it speeds delivery.

Automated ordering has an appeal of its own, though, and is becoming the preferred alternative to telephone ordering. More than half-54 percent-of respondents indicated they had purchased replacement parts via the Internet in the last six months, up sharply from 42 percent a year ago. The web sites of parts manufacturers were most commonly used, though distributors' web sites are catching up. A year ago, buyers were twice as likely to use a manufacturer's site to order as a distributor's. Now, distributors get three hits for every four that the OEMs generate.

Only a third of respondents say they probably won't do any Internet ordering in the next six months, compared to half with Googlephobia a year ago.

Maybe Internet buyers just want to take human contact out of the ordering process. Or maybe they've had one too many conversations with uninformed or excessively chatty customer service reps. Asked where they source information about replacement parts, only 58 percent cited manufacturers' sales and customer service personnel, down from 71 percent. Manufacturers' literature and web sites were the preferred information sources, with the printed word cited by two out of three maintenance professionals.

Automated ordering is getting a boost from developments such as computerized maintenance management systems (CMMS). Almost half of respondents' purchase orders are automatically generated with CMMS. EDI and other direct links with distributors and other parts suppliers are in place at 5 percent of plants. Automation systems output hard copy P/Os at one plant in six. Only a third of readers report no ordering automation.

Regardless of how they place their orders, maintenance managers gravitate to OEMs for their spare parts. Two thirds of respondents indicated OEMs were their primary sources for replacement parts and components. Last year, respondents were almost evenly split between OEMs and compatible parts suppliers.

The perception of quality dictates sourcing decisions, with 96 percent rating product quality as extremely or very important. Respondents stressed product quality even more than last year's survey participants. Product availability, on the other hand, declined in value, slipping behind on-time delivery in relative importance when selecting a supplier.

However, the slippage needs to be taken with a grain of salt. Almost three out of five plants-virtually the same proportion as last year-either fabricate their own replacement parts or turn to a local machine shop to do it for them. Cost is certainly a factor, but quick turnaround rates at least as high. "Delivery time first, secondarily cost, thirdly custom designs," one maintenance manager wrote. "Locally outsourced parts (can produce) better quality, more reliable service," wrote another.

Chain of command

If anything, respondents to this year's survey have more of a mañana attitude than their peers who answered last year's survey: one in five indicate parts delivery within one to two weeks is perfectly fine with them (a year ago, only 12 percent were willing to wait that long). Crisis mode is not the preferred way of ordering: only 20 percent indicated they expect delivery of replacement parts and components within 24 hours, down slightly from 22 percent.

Automated ordering has an appeal of its own, though, and is becoming the preferred alternative to telephone ordering. More than half-54 percent-of respondents indicated they had purchased replacement parts via the Internet in the last six months, up sharply from 42 percent a year ago. The web sites of parts manufacturers were most commonly used, though distributors' web sites are catching up. A year ago, buyers were twice as likely to use a manufacturer's site to order as a distributor's. Now, distributors get three hits for every four that the OEMs generate.

Only a third of respondents say they probably won't do any Internet ordering in the next six months, compared to half with Googlephobia a year ago.

Maybe Internet buyers just want to take human contact out of the ordering process. Or maybe they've had one too many conversations with uninformed or excessively chatty customer service reps. Asked where they source information about replacement parts, only 58 percent cited manufacturers' sales and customer service personnel, down from 71 percent. Manufacturers' literature and web sites were the preferred information sources, with the printed word cited by two out of three maintenance professionals.

Automated ordering is getting a boost from developments such as computerized maintenance management systems (CMMS). Almost half of respondents' purchase orders are automatically generated with CMMS. EDI and other direct links with distributors and other parts suppliers are in place at 5 percent of plants. Automation systems output hard copy P/Os at one plant in six. Only a third of readers report no ordering automation.

Regardless of how they place their orders, maintenance managers gravitate to OEMs for their spare parts. Two thirds of respondents indicated OEMs were their primary sources for replacement parts and components. Last year, respondents were almost evenly split between OEMs and compatible parts suppliers.

The perception of quality dictates sourcing decisions, with 96 percent rating product quality as extremely or very important. Respondents stressed product quality even more than last year's survey participants. Product availability, on the other hand, declined in value, slipping behind on-time delivery in relative importance when selecting a supplier.

However, the slippage needs to be taken with a grain of salt. Almost three out of five plants-virtually the same proportion as last year-either fabricate their own replacement parts or turn to a local machine shop to do it for them. Cost is certainly a factor, but quick turnaround rates at least as high. "Delivery time first, secondarily cost, thirdly custom designs," one maintenance manager wrote. "Locally outsourced parts (can produce) better quality, more reliable service," wrote another. The study provides clear mapping of the respective roles of various manufacturing professionals in the parts-purchasing cycle. Nine job classifications were presented to readers, and respondents were asked to indicate which job functions were involved at each step in the process, from determining need through approving the purchase. Multiple responses for each step were allowed.

Not surprisingly, maintenance was responsible for determining need, according to four out of five respondents, with plant operations and engineering professionals playing a role almost two-thirds of the time. Engineering took the lead in specifying, though maintenance was involved half the time and plant operations a third of the time. Maintenance and engineering were on even footing when it was time to recommend or evaluate purchase options, and administrators or executives signed off on purchases 61 percent of the time. Maintenance managers were the second most likely to give approval, followed by engineering and plant operations.

When it was time to place the order, purchasing sent the P/O letter or e-mail seven out of 10 times, though maintenance often handled that detail itself.

The run-it-until-it-breaks philosophy of plant maintenance may finally be heading for the dustbin of maintenance strategies. Only one in eight plants confess to using that approach, half the rate from a year ago. Preventive maintenance based on visual inspections are the rule at seven in 10 plants, up from 56 percent a year ago. Time- and volume-based replacement schedules are in place at 15 percent of facilities, while only one in 50 claims to take a predictive approach.

For the first time, readers were asked what criteria they used when deciding to replace malfunctioning machinery rather than trying to fix it. The cost of repair relative to replacement cost was frequently cited in the open-ended answers, though the ratios varied widely. "Cost of repair 50 percent of (replacement) value," wrote one, and the percentage escalated from there, up to and exceeding the cost of a new machine. "Most times we have to repair because it takes so long to get new" equipment, wrote one respondent. Another replaces an obsolete machine "when it can no longer be rebuilt." New isn't in some operators' equipment vocabulary: "We rebuild in house," one simply wrote.

Many other considerations factor into the repair versus replace decision, of course. Overall age and condition of a machine, maintenance history, current availability of capital, the ability of a new machine to produce a superior product and downtime costs for commissioning a new machine are considerations. Depreciation schedules, useful life of the machine and the opinion of engineering and management also carry weight.

Sometimes, replacement parts and components simply are no longer available, mandating new equipment. In fact, availability of parts, particularly for old equipment, was frequently cited in response to the open-ended question, "What are the biggest obstacles when ordering replacement parts and components for your plant?" Identifying the correct parts numbers is an issue for many, particularly for those operating vintage machines. Technological advances are rendering components obsolete in a shorter period of time, compounding the sourcing problem.

For want of a nail, many a battle has been lost, and the same holds true in a production environment: when a critical piece of equipment goes down, regardless of size, a line can grind to a halt. Time becomes critical in those emergencies, and managers who have experienced that scenario cited "delivery time for emergency needs" as their top priority. "Suppliers' working schedule is usually Monday through Friday, 8 am to 5 pm," one reader ruefully noted. "We run 24/7."

Given the trend toward Internet ordering, it's only a matter of time before eBay makes the list.



Who Answered the Survey?

Surveys were mailed in February to Food Engineering readers with job titles in plant operations, engineering, general administration, R&D and purchasing. Most respondents worked at a manufacturing facility (85%) as opposed to a headquarters location. Almost two-thirds were at plants with 100 to 499 employees (63%). Slightly more worked at a facility with more than 1,000 employees (11%) than less than 100 (10%). Eleven different categories of food and beverage production were represented, with meat, poultry and seafood the most prevalent (19%), followed by grain-based products (14%), bakery (13%), beverages (11%) and dairy products (11%). Median spending on parts and components was $400,000. Average spending per plant totaled $1.15 million.

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Kevin Higgins was Senior Editor for FE.

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