The What, Why and How of

the Reliability Centered

Spares (RCS) Process

Phillip Slater
Materials and Spare Parts Management Specialist
Founder, SparePartsKnowHow.com

www.SparePartsKnowHow.com
 The What, Why and How of Reliability Centered Spares

INTRODUCTION

Lets be clear at the outset; there is only one main reason that companies hold non-trading spare parts
in inventory: to provide a buffer between the supply time and demand needs for maintenance and
operational support. That is, to ensure that the parts are available in a timely manner, when needed.
Not all parts need to be held in inventory, only those that cannot be supplied in a timely manner, when
needed.

So it makes sense, that if you are holding these spare parts for maintenance and operational support
then you had better understand the needs of maintenance and operations. This drives the demand side
of the spare parts stocking equation and that contributes to determining the holding requirements (with
other factors that are driven by the supply side of the equation).

At a fundamental level there are essentially three ways to determine your spare parts holding
requirements:

1. Data Analysis: This is where, typically, a software packages uses an algorithm to analyze your
spare parts needs based on history. This approach is popular because it addresses both supply
and demand and promises the convenience of having the software do all the work.

However; there are three obvious flaws with the data analysis approach.

First, the history doesnt represent actual operational and maintenance usage, it represents the
transactions from your storeroom and, in nine times out of ten, these values will be very
different. For example, the data gets skewed when parts are used for capital projects or when
taken out just in case.

Second, because it is based on history it cannot reflect your future plans, and your planned
activity may be different from your past activity.

Third, it cannot anticipate changes that are made to improve the effectiveness of your
maintenance or procurement and supply. These flaws make data analytics useless as a
maintenance spare parts support tool and show that it is really just a snapshot of past
storeroom activity.

2. Process Analysis: This is where the actual actions, both supply and demand, that drive your
spare parts holding levels are systematically examined and adjusted in order to optimize the
holding level of individual parts. This is the only process to provide true inventory optimization
because it addresses all the necessary parameters, enabling you to look to the future and review

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 The What, Why and How of Reliability Centered Spares

both supply and demand issues. This approach is the basis of the Inventory Cash Release
Process, more on which can be found at SparePartsKnowHow.com.

3. Demand Analysis: This is where you determine, in detail, the needs of the equipment being
supported and the implications of not having the required parts available. Because it is based
on your maintenance plans it is forward looking and can adjust for changes before they happen.
This approach falls in between data analysis and process analysis and is the basis of a
methodology known as Reliability Centered Spares (RCS) the topic of this paper.

RELIABILITY CENTERED MAINTENANCE

Before examining RCS it is important to understand Reliability Centered Maintenance (RCM). John
Moubray, a world leader in RCM defined maintenance as: Ensuring that physical assets continue to do
what their users want them to do1.

From this he went on to define RCM as: A process used to determine what must be done to ensure that
any physical asset continues to do what its users want it to do in its present operating context1.

The RCM process requires an understanding of the physical asset, its function, performance standards,
failure modes, causes of failure, consequence of failure, the tasks that can undertaken to predict or
prevent that failure and, finally, what should be done if failure is unpredictable.

While determining all this requires a significant amount of research and information, by understanding
the potential failure modes and consequences of failures the maintainer can develop a plan for
predicative and preventive activity. This information can then form the basis of deciding which spare
parts are required to be held in inventory and which can be ordered to a plan or as needed. The process
of using this data in this way is known as the Reliability Centered Spares process and is shown
schematically in Figure 1.

Figure 1: The Information Flow for Reliability Centered Spares

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 The What, Why and How of Reliability Centered Spares

THE RCS PROCESS

The RCS process requires that you, for each individual spare part, answer a series of five questions.
These questions firstly examine the requirements for the spare parts, the consequences of non-
availability, and the predictability of demand. From the answers to these questions you then determine
your stock holding requirements and your contingency needs in case you are unable to achieve your
maintenance plan.

The five questions are:

1. What are the maintenance requirements of the equipment
2. What happens if no spare part is available?
3. Can the spares requirement be anticipated?
4. What stock holding of the spare is needed?
5. What if the maintenance requirements cannot be met?

The process also requires that you consider these questions sequentially, shown in Figure 2, so we will
do the same here.

Figure 2: The Five Questions Must be Answered Sequentially

Question 1 requires there to be a complete understanding of the maintenance needs of the assets in
question and the plan to maintain those assets. This makes sense when you consider that the purpose
of holding the spare parts is to support the continued safe and reliable operation of the assets of the
business. Logically, if we dont understand the maintenance needs of the asset (the demand side of the
inventory stocking requirement) then we cannot reliably determine the spare parts holding levels.
Hence step one is to ensure that the maintenance requirements are known and documented.

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 The What, Why and How of Reliability Centered Spares

Question 2 is where we consider the consequence of non-availability, that is, the consequence of a stock
out. Does it really matter if the part is not available? Classically, the RCS process involves five categories
of consequence. These are based on the five categories from the Reliability Centered Maintenance
process:
Hidden risk: this is where the stock out has no immediate impact but we may be exposed to an
increased, consequential risk. For example, equipment lock-out systems that prevent
unintended mechanical interference between moving parts.
Safety risk: the stock out could result in someone being injured or even killed. For example,
operating without the correct PPE or having equipment safety systems in a temporary state of
disrepair.
Environmental risk: the stock out could result in the breach of an environmental standard or
regulation. For example, the non availability of a pump results in an environmental overflow or
spillage.
Operational risk: the stock out leads to continued loss of capacity, production or sales. This is
the most commonly referenced type of risk, where, in effect, the plant stops while the
replacement part is sourced.
Non-operational risk: this is when the action of repair or procurement at short notice results in
excessive and unacceptable additional expense.

Question 3 asks us to consider if we can anticipate the need for the spare part, and therefore plan the
requirement. Of course, we usually cannot anticipate a breakdown failure, that is, an unplanned
catastrophic failure of a part, for example, a punctured tire. However, we can anticipate some
requirements such as wear out failures, parts subject to condition monitoring techniques and parts
replaced during a planned or scheduled overhaul. Understanding our ability to anticipate needs helps us
to identify our stocking requirements.

Question 4 asks: What stock holding of the spare is needed? Classically RCS uses the technique of
Whole-of-Life costing to determine the optimum stock level. This approach takes into account the
immediate costs of holding the stock, the cost of downtime that may occur at different stock holding
levels and even the cost (or benefit) from disposal. Whole-of-Life costing is also known as Life-Cycle-
Costing and is colloquially referred to as Cradle-to-Grave costing.

Finally, question 5 requires the consideration of the contingency in the event that the company cannot
meet the maintenance plan. That is, what if the company is not prepared to commit the necessary
resources of people, time, and money to ensure the achievement of the maintenance program. In the
authors view the real question being asked here is what if the numbers are wrong and we have an
unexpected stockout of a critical item - how would we respond?

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 The What, Why and How of Reliability Centered Spares

BENEFITS OF THE RCS PROCESS

The application of the RCS process has some very positive features and benefits. Here are the main
ones:

Because the process is based on what is effectively a forecast of needs you do not need data
history to apply it. Hence you can apply the RCS process and determine your spare parts needs
before you even purchase the asset for which the spare parts are required. This means that the
process can be used as a check against vendor recommended spares and when your engineering
team is negotiating the capital purchase.
You can apply the process at any time during the life of the asset, including during the period
nearing the end of life. This means that you can minimize the probability that you will get stuck
with excess obsolete stock when the asset is replaced.
The process forces logical thinking about the demand side requirements for the spare parts
holding, an aspect of spare parts management that is often relegated to guesswork.
The process requires the involvement of the engineering, maintenance, and reliability teams.
Too often spare parts holdings decisions are based on financial (working capital) and supply
chain considerations, an approach that excludes the customer of the spare part maintenance
and reliability.
The process can be applied selectively to focus on individual items. By its very nature the RCS
process is a review of individual spare parts which gives you the flexibility to apply the process
to the parts that matter most to you. There is no need to apply the process to all parts in the
inventory; you may choose to apply the process only to slow moving spares or those with an
investment requirement above a specific set point.

PROBLEMS WITH THE RCS PROCESS

The RCS process is deceptively simple all it requires is for you to answer five questions. Easy right?
Well, maybe not. You see the detail behind those questions could be quite difficult to determine. Here
is a list of just some of the issues that can arise:

Even companies that claim to have a high standard of maintenance operations can find that the
required maintenance plans are non-existent, not well developed, or not well documented.
It is often the case that companies hold spare parts and dont actually know all of the pieces of
equipment on which the spare is used. Thus they make decisions using partial information.
Sometimes Bills of Material (BOMs) are non-existent, not well populated, or not well
documented.

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 The What, Why and How of Reliability Centered Spares

Failure consequences are not well documented and potential work-arounds that mitigate the
need for the spare part not widely understood. Thus decisions may be made without
considering viable alternatives.
Condition monitoring may not be reliable or not carried out correctly.
Determining the Whole-of-Life cost of different stockholding scenarios is a highly specialized
discipline that most companies do not seek to maintain in-house. Bringing in outside resources
adds an additional cost barrier to the successful application of the RCS process.
Small changes in Whole-of-Life costing assumptions may make a big difference to the spares
holding outcome.
Gross simplification of the cost analysis can result is significant overstocking. This especially
occurs in industries with high downtime costs that can be used to justify almost any level of
spares holdings.
Spare parts criticality is often not clearly defined or the definition is too simplistic. This results in
criticality becoming a matter of opinion.
Risk can be difficult to quantify, especially in terms of probability. This results in the risk analysis
also becoming a matter of opinion.
Companies sometimes take the view that determining inventory holdings is a set and forget
process where changes in production requirements, necessitating a change in maintenance
strategy, are not reflected in a redetermination of stock holding requirements.
The process doesnt overtly force us to think through the supply side of the stock equation and
without this consideration the numbers determined could be meaningless. After all, what is the
purpose of saying that you should hold, say, one of some item if it can only be purchased in
pairs.

What all of the above really tells us is that, in addition to the technical requirements of Whole-of-Life
costing, successfully applying the RCS process requires a consistency of rigor and discipline plus
additional considerations relating to the supply side of inventory management.

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 The What, Why and How of Reliability Centered Spares

SO SHOULD YOU USE THE RCS PROCESS?

In the authors view, the short answer to that question is: not in its pure form.

For 99% of organizations the RCS process is far too data intensive to be applied with the level of rigor
required for success. Or, looked at another way, the cost of applying the level of rigor required may
make the application of the process uneconomical in most circumstances.

The danger with all processes of this type is that shortcuts are taken in the analytical component,
perhaps using an untested range of assumptions. This can result in the company telling itself that it has
applied a rigorous scientific process when it has not. It has in effect made a guess.

Plus, as mentioned above, for practical application, the stock holding decision making process requires
consideration of the supply constraints, something not overtly included in the RCS process. This means
that the RCS process can certainly be used as a guide to the thinking required for stock holding, so long
as it is applied within a more complete framework.

CONCLUSION

The Reliability Centered Spares process presents as a complete and thorough approach to determining
the requirements of spare parts holdings. Yet, as this paper has shown this is not entirely the case.
There are a significant number of problems with the application of the process. There is however a
number of genuine benefits from the process. For this reason, this paper recommends that the RCS
process is only applied with great care, attention to detail, and with the understanding that it should
only be used within a broader framework that ensures that all aspects of spare parts stocking decision
making are considered.

nd
Ref: 1. Reliability-centered Maintenance, 2 Ed, John Moubray, Industrial Press 1992

Phillip Slater is a leading authority on materials and spare parts management. He is a

qualified engineer, an experienced operations and maintenance manager, a seasoned
management consultant, and the author of eight operations management books,
including Smart Inventory Solutions and The Optimization Trap. For more information
on Phillips services visit www.PhillipSlater.com.

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