Just-in-case inventory planning

It amazes me just how little is written about Just-in-case (JIC) inventory planning, often termed MRO style inventory management, once you get into the world of asset management. Many of those people charge with maintaining large-scale inventories and warehouses for asset management purposes are often at a loss to find applicable advice on how to manage the maintenance store.

And when they do find some advice it is often given by software vendors, often slanting the view towards what their software will deliver. (Cynical but sadly true!)

So what is just-in-case inventory management? (As opposed to Just-in-Time inventory management - JIT) Basically it is a recognition that the management of inventory for large scale asset management stores, (utilities, mining, manufacturing, etc) is vastly different from production based inventory management.

While production based management tends to be able to forecast the quantity, time, and allowable lead times, to a high degree of accuracy. The manager of an asset focused store does not have this luxury. He needs to be holding stock "just in case" there is a failure!

In short, it is a way of managing stock that is based on the probability of failure, rather than on the exact time it will be required. JIC managers need to understand a range of complex issues such as:

• likelihood of failure of specific assets
• Lead times and indicators of failure
• The many complex ways to manage cost of ownership (Shelving costs) through a range of potential and innovative partnering approaches with vendors
• Most cost effective reorder points and reorder quantities
• How to deal with obsolescence issues, the risks associated with through-life stock holding, and the how to mitigate the risk of this
• How to calculate the workload that will be required in managing the maintenance inventory to maintain the right levels of risk
• How to "read" the metrics such as service level and rotation for best effect
• And so on...

The JIC store manager is a critical element in the reliability process, and while supervisors, planners and front line staff realize this, management often do not until something goes wrong!

Current approaches to JIC inventory management include a range of algorithms, based on historical usage, that are used to try to predict forward stock levels. For many areas these are adequate, but for other areas they are hopelessly inadequate.

Any focus on historical usage means that there is a need for failures to occur first, leading approaches to whole-of-life asset management are challenging long held beliefs in this area and it is one where there are still substantial benefits to be taken out of the maintenance spending.

Cheers,

Daryl...