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Challenging Manufacturer's Recommended Parts

07/09/2010 8:21 AM

How do you challenge the manufacturer's recommended parts list when there is no history and no FEMA studies to support the recommendations? The recommended parts list adds thousands of dollars to the purchase for equipment, yet I need to support without part shortage interruptions once the equipment is installed.

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#1

Re: Challenging Manufacturer's Recommended Parts

07/09/2010 9:01 AM

Why would you want to it is just a recommendation not a governing fact that you will need the parts. Chances are if you have them at hand other parts that are not on the lists will fail first Murphy's Law. And how do you plan to challenge their opinion. An opinion which leads to them making a list of parts. Which most likely comes from the fact of parts most moved by their parts department in the repair of such equipment.

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#2
In reply to #1

Re: Challenging Manufacturer's Recommended Parts

07/09/2010 10:06 AM

One of the issues faced is that this is new equipment, and even the manufacturer has not had a history. What I struggle with is what do I recommend and purchase to store? I agree with your comment that the manufacturer only recommends, but often the leadership team takes that as gospel and expects purchasing to buy the added parts to "minimize" stock outs and adds that to the cost of the purchase. Five years later I still have the same parts that were recommended, and have to remove by using obsolescence. Murphy's law is always a part of the game, and may not follow the guiidelines of PdM. There has to be some tool that can be used to assist decision-making. So far I have not found one. I do challenge the manufacturer and have had some success with it, and educating the leadership team; but, it is not perfect as dollars are wasted on added parts to the inventory. It is especially difficult today with limited budgets and cash flow restrictions.

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#3
In reply to #2

Re: Challenging Manufacturer's Recommended Parts

07/09/2010 10:24 AM

Then try negotiating a service contract with the equipment supplier that includes parts supply so as to maintain the equipment in working order 24/7. An important clause has to be the one that states that when the equipment isn't working, the supplier doesn't get paid.

The supplier can then keep one set of parts off-stage for several users, and the user's spare parts bins can be turned over to someting more profitable.

Everyone wins!

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#5
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 11:07 AM

A service contract adds to the cost of the original purchase order. Usually warranties cover the first three years of an OEM purchase, so the service agreement would not add, and would not be worth the cost. Negotiations to keep parts on the supplier's shelf is a good alternative, and one worth noting. I am sure the supplier would like to continue doing business with the customer. However, my concern is that I do not want to increase my inventory any more than needed, and the recommended list even after review by our reliability engineers is still perceived as a buy list in addition to the equipment cost. Your thoughts are good ones and a service contract may be a consideration, but even with that I stand the risk of not having what is needed in a timely manner, or throwing it away down the road.

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#10
In reply to #5

Re: Challenging Manufacturer's Recommended Parts

07/09/2010 1:29 PM

I have the same issue in the equipment that is here. First knowledgeably many parts maybe acquired locally off the shelf items. Which do not require much down time to acquire. Some of the items may be duplicates of some of those stocked for other equipment. Like a basic relay. Look at the lists and trim it down.

Yesterday had an IR oven go down that is critical to production. Cause was bad contactor. Picked one up locally in 30 minutes. Not what the OEM would have supplied but it works just fine with the same specs. On top of that the cost was a third of what the OEM wanted for the part. Even the same identical parts could be out sourced from someone other then the OEM with substantial savings.

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#11
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 1:37 PM

Good to hear good experiences. That is what I found also, that the parts descriptions were changed to the manufacturer's model, yet were the same parts I had in inventory with a slightly different description. Maybe that is by design, but it is confusing since buying a new product you rely on the manufacture to"help" you. Thanks for your good suggestion.

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#19
In reply to #3

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 4:44 AM

GA for common sense.

Also, that is a pretty standard procedure in many industries.

We used to do this and if a customer wanted them closer, we would actually store them onsite for a fee!!! Basically, every third year of rental paid for all the parts.....

But some one ALWAYS pays......if a customer must be 24/7 up, then he pays......or it is part of the contract (he still pays, but he does not actually see the charges per se!!)

If the OP decides to reduce the parts count and one of the missing parts breaks, guess who's fault it is?

Clue:- Not the manufacturer!!!

"The finance people in a company are good at saving money no matter what it costs!!"

If 24/7 is needed, then every single part recommended by the manufacturer MUST be carried one way or another.

Or buy a second identical machine as backup!!!

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#4
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 10:39 AM

I may be way off base here, but, it seems to me, that if the manufacturers recommend these parts, and are telling you that they are necessary, that they would be willing to keep the parts in their inventory, and you would be more than happy to purchase them on an as needed basis. It sounds way too simple, I'm probably missing something.

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#6
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 11:12 AM

It is what you say it is--a recommendation based on history or supplier's experience. However, with the challenge of budgets and costing, and the pressure to get new equipment running quickly, the recommended list is considered a buy list by requisitiion, which I feel forced to do. On one hand you have reliability, on the other you have inventory dollars. I guess that is what I struggle with. Is there a tool to help in this decison-making?

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#7
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 11:49 AM

I personally know of no tool for this, however, this certainly seems like a very sweet deal for your manufacturer/supplier. You assume all risk of being stuck with all unused or obsolete inventory, while the manufacturer can rest easy knowing that they have made a sale of parts that you may or may not need. This is a very lopsided relationship, and one I'm sure your supplier would love to maintain. You need to find a reasonable solution to even out the risk. Maybe a buyback program on parts that you don't use, in the meantime they will have your money to use as they want, like an interest free loan. Hopefully, you have some leverage in this situation, because anything you propose, that lessens your risk, and changes the status quo, will be met with resistance. If you were to be able to talk them into a buyback program, this would also serve to incentivise them not to sell you too many spare parts to begin with, knowing that they would be taking them back later. In the meantime you would absorb all costs associated with keeping the parts in your inventory. The buyback could even be used as a credit toward future purchases.

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#8
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 12:45 PM

If I'm reading your posts right, your supplier is writing a list of recommended parts for you to keep in inventory. They are then able to take that same list of recommended parts and basically generate a purchase order for you, based only on their recommendation, with no, "skin in the game", on their part, think about it. I think the tool you need is a contract negotiator that's not afraid to assert him or herself and doesn't play games.

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#9
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 1:17 PM

Good point!

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#12
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 4:09 PM

Good luck with this Daniel. I know I'm getting a little long in the tooth, but, if they are comfortable with their recommendations, and truly feel as if that is what you need, they would have no reason in the world to balk at a buyback program. It would be interesting to see what happens to their list if they have to take back what you don't sell. It certainly wouldn't hurt to remind them, that if this excess inventory continues to the point, where you are out of business, you will be buying nothing from them.

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#28
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Re: Challenging Manufacturer's Recommended Parts

07/12/2010 8:05 AM

dead capital is a killer and quick road to bankruptcy.

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#13

Re: Challenging Manufacturer's Recommended Parts

07/09/2010 5:58 PM

In conjuction with your mechanics, you can discuss such issues as how long various repairs might take, how much downtime can be absorbed, what parts are subject to wear or breakage, and inventory costs.

If the equipment supplier normally stocks spare parts, and the logistics can deliver them within the acceptable downtime, you wouldn't need to stockpile them yourself.

There will inevitably be some guesswork in this, which will diminish as you acquire experience with the equipment.

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#14

Re: Challenging Manufacturer's Recommended Parts

07/09/2010 7:08 PM

I know this was and probably still is a common practice for a company to assign unique or proprietary part numbers to common off-the-shelf-items. Companies doing business with the government were notorious for this practice. They were able to make more money by providing spares than with the original item. They would buy a common bolt for 10¢ and sell it to the government for $10. This way, the company can provide common items like nuts and bolts to the consumer at inflated prices. The only challenge I can think would be to let them know you won't be doing business with them again. I'll bet they stated in their warranty clause that use of other than specified components would void the warranty.

An example of this is: a company will submit a really low bid to get a contract. They will supply the item at the specified bid, but will specify a list of proprietary parts needed for support. Here is where they make their money. The spare parts are usually off-the-shelf items, but they will mark them up 1000%. Look up any parts list anywhere and there will be an exhorbitant charge for a simple item like a #8-32 machine screw for $2.00. If you take all the small items and add them up, they can amount to big bucks.

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#15
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Re: Challenging Manufacturer's Recommended Parts

07/09/2010 11:06 PM

I worked for a company that did this as common practice. They are out of business now. They would lowball bids on massive projects in order to get the job, and then absolutely rape them on change orders, extras, etc. I was the man in the field and had spent a lot of time developing friendships based on trust with my counterparts with other companies working on the same project. When my company, (which was hundreds of miles away), pulled this, it was embarrassing to say the least. All of my efforts were instantly nullified and I became the face of the enemy. This is no way to do business! If you can't earn an honest buck, stay the hell out of business and just become a full time crook.

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#16
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Re: Challenging Manufacturer's Recommended Parts

07/10/2010 2:29 AM

A bit of appropriate knowledge can save incredible amounts. A year and a half ago, a repair company wanted $2k to replace a small circuit board on one of our CNC mills. Only they didn't have one on hand, and tried to sell us the whole module containing the circuit board for $5k.

I took a look at the board, and replaced one capacitor which cost way under a dollar, and it's been working fine ever since.

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#23
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Re: Challenging Manufacturer's Recommended Parts

07/10/2010 11:47 AM

As far as I know, it is still a common practice among manufacturers that make "durable" goods. Go to any auto dealership and check the cost of any part, like a nut or bolt. The dealer wants you to believe that only their part will work best. You may only need one DIN or SAE bolt and have to pay $5.00 for it. This is an off the shelf item and if you went to an industrial supplier like McMaster-Carr, you could get the same bolt for 8¢. The only problem would be that you would have to buy a box of minimum 100 piesce for $8.00 plus S&H.

Manufacturers have a field day with the U.S. military. Having worked with the U.S. Navy for 40+ years, I saw storerooms on board their ships that were stocked with everything needed to rebuild any failed item used on ships. Of course this was necessary, but each vendor who represented an equipment had his own list of spares. Much duplicity results and takes up a lot of valuable space. Space is very valuable on a ship. Efforts have been made to consolidate spares that are common to several different equipments. I once had the opportunity to do work on a British ship that had been transfered to the U.S. Navy. The electric motors on that ship were all from the same manufacturer. Spares were kept to a small number. In the U.S. Navy, electric motors can come from many different suppliers, making spares a sizable addition to their warehouse of spares. Again, the manufacturers have their list of propriatary parts. That $1000 motor can become worth $5000 or more to the manufacturer. Government is well aware of this practice, but seem to be powerless to do anything about it.

Do you remember the aircraft sale years back to a foreign country? I don't remember which one, but it was a well known fact that the aircraft spares contract to support the fighters was worth many time over the original contract. The American public was allowed to know this because it was with a foreign country. On occasion, cost scandals are brought out in the open here; the Air Force contract for toilets. I don't remember the cost, but it was in the neighborhood of $10,000 per toilet.

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#25
In reply to #23

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 12:03 PM

...Toilet SEAT!!!

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#17

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 4:03 AM

The recommended parts inventory should be maintained regionally by the manufacturer.

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#18
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Re: Challenging Manufacturer's Recommended Parts

07/10/2010 4:35 AM

O Utopia!

Since when does that happen?

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#20

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 6:09 AM

Hi Daniel.

This is really one of those; "who done the sums" question. In your position it appears that only the capital expenditure budget was considered and the maintenance was played second if at all. Now you sit with the pickle.

In my presentations to buyers, The Parts List, IS part of the CAPEX that set the standards for the machine to produce at the production rate specified, which included minimum downtime, to justify the CAPEX in the first place. As such, from an accounting point of view the list value would depreciate as per your tax laws along with the machine itself. Cost to stores should only be units replaced from the spares list items used in maintenance that were not replaced by your supplier under warranty.

Part of the due dilligence in the purchase process should include research into parts interchangeability and even your company's specification of manufacturer components. Eg If you have VSD's running in the factory specify the brand and series you have the best service from in your shop for use in the new machine. Likewise with contactors, motors, bearings etc. In today's world there really are very few components in a machine that are absolutely unique.

I have had to bow to pressure to do the redesign of machines around this philosophy on two occasions. A redesign fee was levied which was happily paid as the CAPEX cost in holding spares was drastically reduced. It was agreed tha since I had no experience of the specified VSD's I would over-spec to the next size up that was already a stock item. All happy and a set of twenty one machines still running smoothly after eight years. Each situation would demand it's own solution.

Your response to the bean-counters should reflect the production value in $$ lost per hour down-time if the unit breaks down. Get them to re-allocate the cost of said spares to the Capital Account and then they'll be off your back.

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#21
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Re: Challenging Manufacturer's Recommended Parts

07/10/2010 8:31 AM

GA!!

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#22

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 9:50 AM

I used to always base "recommended" replacement parts on the manufacturers Mean Time Between Failure MTBF - if they have not done that testing, I'd find a different source. They should have MTBF for Field Replacable Units (FRP), and possible a "system level" MTBF.

Just my opinion.

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#24

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 12:03 PM

Having been a tech for many years, I have found that the manufacturer's recommended list often has more items than needed. This may be because they are over cautious for your sake or that it makes more profits.

My suggestion is to call one of the manufactures technicians and ask them for their advice as they are more likely to seen many breakdowns and could give you a better idea of the parts most often needed that cannot be temporarily patched with paper clips, duct tape or rubber bands. An experienced field tech would be better than the customer service tech that only sees problems over the phone. You want someone who has been "in the trenches".

Remember, it doesn't matter how many spare parts you have, there are times when something will break that doesn't ususually break and a part must be ordered. You have to figure this in to your needs and maybe have backup equipment available.

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#26

Re: Challenging Manufacturer's Recommended Parts

07/10/2010 4:55 PM

Daniel,

Don't know whether you are purchasing this new equipment for a single or multiple facilities, but obviously for multiple facilities with the same processes, it is common practice in the industry to have a "Central Store Room" located where it is logistically feasible to service all facilities. This will share the burden of the expense across several facilities. Once again, this is contingent on acceptable down times. Both OzzB and Ronseto also have great cost saving ideas by using standard "off the shelf" items in lieu of the more expensive parts recommended by your Manufacturer. I'm sure between your Maintenance Leaders and Reliability Engineers; some form of cross referenced list could be generated. And yes, using these "bastard" parts will most likely void the warranty. As far as tools that currently exist to help you determine which spare parts you should stock, I would suggest you check into any of the risk analysis software that utilizes Monte Carlo Simulation. Most of them will have some type of program that if programmed with the right variables (i.e. - reliability of components, acceptable downtime, $ of downtime, availability of parts from other sources, etc.) should minimize your acceptable risk. Of course, this software also comes with additional costs, but it is cross functional and can be utilized for many different uses (Maintenance, Production, Financial Forecasting, Purchasing, etc.) so the initial cost possibly can be spread over several budgets, and the ROI might be realized in just your example alone. Here is a link that may help:

http://www.palisade.com/risk

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#27
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Re: Challenging Manufacturer's Recommended Parts

07/10/2010 7:53 PM

The point I was trying to make was: Vendors will use off the shelf items , but assign proprietary numbers to them. There is no way the customer can identify the part as to specifications. Is it a standard or special item?

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#29

Re: Challenging Manufacturer's Recommended Parts

07/12/2010 8:44 AM

Daniel, do you mind telling us what kind of equipment this is? The reason I ask is that some of the parts they want you to obtain may be subject to obsolescence and not available at any price (or only at high prices) later on. Nuts and bolts aren't subject to this, but circuit boards, sensors, robotic assemblies and other electronic parts are often superseded by 'better' units which may not work with your generation of equipment. I guess an example of this would be a computer-based tool where an interface card goes out and the card slots are all ISA, which requires jumping through all kinds of hoops or even upgrading the entire computer system to bring the tool back up.

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#30
In reply to #29

Re: Challenging Manufacturer's Recommended Parts

07/12/2010 8:59 AM

The equipment is a CNC Milling machine, with added features to supplement manufacturing. What you are indicating is an issue, because there may be possible obsolescence in the suggested parts repair list. The CNC equipment has new software, with more features than previously made machines. My question has really been answered by a number of respondants on different solutions to the problem. Each one has commerits worth noting and has given me added ideas to addressig the problem. The negotiations with the supplier concerning parts availability, extended warranties on the life of the equipment, and better service agreements would go a long way to challenge the list of parts. I just did not want to give a carte blance check just because it was within the budget. The methods discussed have helped me realize different ideas to support the purchase of the equipment. We are now beginning to assemble a FEMA study on the parts. Of course structural parts are run to failure parts, and if not available can be machined. The internal usage parts requiring lubrication or motion have the greatest chance of failure.

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#31
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Re: Challenging Manufacturer's Recommended Parts

07/12/2010 11:31 AM

C'mon, show us a picture or two!!!!!

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