When it comes to managing assets throughout their lifecycle, business leaders know they need a comprehensive strategy in place to succeed. But they aren’t always clear on the strategic opportunities around parts inventory management and the role it plays in maintenance strategy.
While asset management solutions monitor buildings, equipment, vehicles, IT assets and other items a company uses to conduct its business, parts inventory management tracks the spare parts maintenance repair operations (MRO) need in order to repair assets quickly and effectively when they break down.
Let’s start with definitions of the two terms.
Companies use assets to run their day-to-day business operations and create value. This includes both physical assets (such as raw materials, equipment and vehicles) and non-physical assets (such as intellectual property and patents).
Company assets are divided into two categories, fixed and non-fixed. Fixed assets, or “property, plant and equipment” (PP&E) are items the company intends to use for more than a year. Examples include land, buildings, vehicles, equipment and computers.
Non-fixed assets are typically of lesser value to a company and the company rarely holds onto them for more than a year. Examples of non-fixed assets include office supplies, computers, audio-visual equipment and office furniture.
Parts inventory, also known as “supplies inventory,” refers to the items a company must stock to repair the assets it owns quickly and effectively. Successful enterprises rigorously maintain a list of spare parts they need to keep their most vital pieces of equipment running smoothly and improve their bottom line.
But which spare parts are critical and which parts are merely “nice to have?” This is the question at the heart of parts inventory strategy. In order to answer it, maintenance, repair and operations (MRO) managers rely on “spares criticality”—the process of identifying which spare parts threaten business operations if there are shortages vs. the spare parts that aren’t as critical.
While both types of management deal with things businesses own, asset management systems deal exclusively with equipment and supplies the company needs to operate. Parts inventory management, on the other hand, deals with items the company needs to successfully repair an asset that’s broken down.
Assets come in many shapes and sizes, from trucks and manufacturing plants to windmills and pipelines. Asset management tracks the location and condition of both physical and non-physical assets the company needs to perform business operations throughout the asset lifecycle.
One of the most common asset management use cases is asset maintenance, which is used to maintain an asset’s value for as long as possible. To do this, many companies rely on asset management software like an enterprise asset management (EAM) system to create transparency, enhance monitoring capabilities and resolve issues quickly. Here are some of the benefits of effective asset management software:
Read: What asset-intensive industries can gain using Enterprise Asset Management
The following are the four most widely used types of asset tracking systems available today:
Where asset management focuses on items that help companies operate, parts inventory management focuses on spare parts and materials the company needs to keep on hand to repair equipment when it breaks. To accomplish this in a reliable and cost-effective way, maintenance repair operations (MRO) teams must strategically maintain parts inventory levels so they have what they need, but minimize the retention of excess or obsolete stock.
Here are three critical components of parts inventory control and some questions you can ask to ensure success with them:
Every day, business leaders make critical decisions about how to cut costs, increase efficiency and seize new market opportunities. But without strong asset and parts inventory management systems in place, those decisions would likely be irrelevant. Well-executed asset and parts inventory management provides many important benefits to an organization, including the following:
Today’s top-performing asset management solutions leverage cutting-edge technology like real-time data delivered via IoT, AI-enhanced analytics and monitoring and cloud-based capabilities. Enterprise asset management with the IBM Maximo Application Suite helps companies optimize asset performance and extend asset lifespans. It’s a fully integrated platform that uses advanced analytics tools and IoT data to improve operational availability and reduce downtime and costs.
Learn more about IBM Maximo Application Suite
The post Asset management vs. parts inventory management: What’s the difference? appeared first on IBM Blog.
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