Mntc Material Planning

and Control

Arivoli N Asst ProfNIFT Bangalore 1

Issues related to Spare parts
Mgmt
High Fin commitmnt to procure
Overstocking of spare parts due to
unpredictable nature of failures
Prolonged usage of equipmt beyond its
normal lifecycle due to scarcity of funds
Non availability of spares
Non-interchangeability
Purchase of imported eqpmnt
Political relations/foreign countries/
defence supply
Govt import policy
Communication gap betwn concernd
parties Arivoli N Asst ProfNIFT Bangalore 2
 Matl Mgmnt policies
ABC analysis is a business term used to define an
inventory categorization technique often used
in materials management. It is also known as
Selective Inventory Control.
ABC analysis provides a mechanism for
identifying items that will have a significant
impact on overall inventory cost, while also
providing a mechanism for identifying different
categories of stock that will require different
management and controls.
When carrying out an ABC analysis, inventory
items are valued (item cost multiplied by
quantity issued/consumed in period) with the
results then ranked. The results are then
grouped typically into three bands. These
bands are called ABC codes.
Arivoli N Asst ProfNIFT Bangalore 3
 ABC codes
"A class" inventory will typically contain items that
account for 80% of total value, or 20% of total items.
"B class" inventory will have around 15% of total
value, or 30% of total items.
"C class" inventory will account for the remaining 5%,
or 50% of total items.
ABC Analysis is similar to the Pareto principle in that
the "A class" group will typically account for a large
proportion of the overall value but a small percentage
of the overall volume of inventory
Another recommended breakdown of ABC classes:
"A" approximately 10% of items or 66.6% of value
"B" approximately 20% of items or 23.3% of value
"C" approximately 70% of items or 10.1% of value

Arivoli N Asst ProfNIFT Bangalore 4

ABC Analysis

Arivoli N Asst ProfNIFT Bangalore 5

 ABC Analysis
A B C

High Value Moderate value Low value

Rigid Control Moderate ctrl Loose ctrl

Freq order Less Freq Bulk

Every Fortnightly Quarterly yearly

review

Vigorous Follow up Periodic Occasional

Arivoli N Asst ProfNIFT Bangalore 6

 Classification of Spares
Consumables, Non Consumables
Maintenance Spares
Overhauling Spares
VEIN-VED Analysis
HML High, Med, Low
FNSD Fast, Normal, Slow, Dead
SDE Scarce,Difficult, Easily
VIR vital, Imp, Routine
MTR Matl Turnover Rate
(MUSIC)
Arivoli N Asst ProfNIFT Bangalore 7
 Inventory Costs
Capital Cost involved in procuring the
items

Recurring Storing Cost involved in

warehousing the items

Loss due to Non-Usage of stored items

(theft, wastage, obsolescence)

Overhead Expenditures in terms of

payment of Wages, Rent etc
Arivoli N Asst ProfNIFT Bangalore 8
 Inventory Costs
Insurance Cost to protect the stored
items

Stockout charges- Emergency

procrmnt

Penalty Costs paid

Transportation costs
Arivoli N Asst ProfNIFT Bangalore 9
 Stores Management
Receipt of Orders
Processing of Orders
Procurement of Spare parts
Inspection of Spare parts
Issue of Spare Parts
Stock Record keeping
Valuation of Stock

Arivoli N Asst ProfNIFT Bangalore 10

 Inventory control
Stock verification at appropriate Time
Proper storing of Spare parts
Coding of Spare Parts
Coordination with other
Depts/Suggestns
Sorting out store problems

Arivoli N Asst ProfNIFT Bangalore 11

 Spare parts Inventory
Failure rate
Spares control
Provision of Accurate quantity of spare parts
Reduction in the Non-Moving lot of spares
Maintaining the optimum level of spare parts
inventory

Arivoli N Asst ProfNIFT Bangalore 12

Inventory Costs

Arivoli N Asst ProfNIFT Bangalore 13

Arivoli N Asst ProfNIFT Bangalore 14
Reorder Level

Arivoli N Asst ProfNIFT Bangalore 15