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Considerations When Parts Shopping
September 1, 2005 By: Ron Giuntini Paperboard PackagingRemanufactured or aftermarket parts? This decision can make a difference in maintenance and equipment performance.
Capital equipment purchasers should review several variables when analyzing the impact of this equipment on productivity. First, let's review key terms:
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Spare parts, also referred to as Line Replaceable Units (LRU), are items such as a motor, compressor, and gear drive, which can be replaced by a maintainer without requiring any further processes besides installation;
Remanufactured spare parts are items that have been reassembled from used-as-is, reconditioned and new pieces parts in order to ensure or extend the planned economic life of the original item;
Original parts are those that have been sourced by the OEM as part of their product; the part could have originally been delivered with the equipment or could have been sold through the OEM's authorized channel of distribution as an aftermarket spare part. The remanufactured spare part can be sourced directly from the OEM, its authorized distribution channels or independent third party shops.
Aftermarket parts are not sourced from the OEM; they can originate from U.S.-based or foreign-based (i.e. China, India and others) manufacturers.
The following items will impact investment productivity when sourcing new-condition aftermarket parts versus remanufactured original parts:
Warranty: Review the length of the warranty and the date it goes into effect. Many warranties are worthless because their in-effect date may begin on the customer's receipt and have an expiry date that is most likely to occur before the part is ever used for corrective or preventive maintenance.
Buy-back: If your supplier provides an annual buy-back of parts, your organization can reduce its exposure to being burdened with parts that are no longer required, or are in excess quantities.
Item availability from supplier: Higher supplier parts availability provides lower downtime when parts are not stocked by the operator. Safety/insurance stock also can be owned by the supplier, reducing inventory investment.
Ownership transfer: Vendor Managed Inventory (VMI) can improve both efficiency and effectiveness. You only pay for what you use.
The educated purchase of spare parts, whether remanufactured original parts or aftermarket, requires an organizational culture that continuously improves the sourcing decision-making process.
