The spare parts referred to in this article are the same as those commonly known as spare parts and materials. In Germany, they are managed together. The goal of the economic management of spare parts is to ensure equipment maintenance while also adhering to the cost target. The key points are the consumption volume, reserve quantity, quality and storage cost of the spare parts.

I. Spare Parts Reserve Level 

Here, the concept of spare parts reserve level needs to be introduced. The spare parts reserve level refers to the percentage of spare parts that can immediately meet the equipment maintenance needs among all the required spare parts (within a foreseeable period of time). Achieving a 100% spare parts reserve level is not only impossible but also extremely uneconomical. Once the spare parts reserve level exceeds 80%, the increase in cost is almost in a geometric progression compared to the increase in reserve level. 

The appropriate level of spare parts inventory should be 80% - 85%. However, it cannot guarantee the supply of critical spare parts and the sustainable reduction of costs. A series of measures need to be taken to ensure that the cost of spare parts can be reduced while meeting the equipment maintenance requirements. 

II. Traditional Ways of Reducing Costs

Today, Chinese enterprises are largely similar to German enterprises in the past, especially large and medium-sized state-owned enterprises. In terms of reducing spare parts costs, we are following the path that German enterprises have traversed and have gradually abandoned. Here are the traditional ways of reducing spare parts costs by German enterprises.

1. Only control the inventory level of the main warehouse. The inventory levels of many so-called "black warehouses" such as those of factories or even work teams are not counted.

2. From the perspective of the purchasing department, goods are issued all at once, and a large amount of spare parts flow into uncontrollable "black warehouses". The turnover period of spare parts funds on the books is very short, but in fact it is the opposite.

3. Reduce the order quantity, which leads to the first-line maintenance departments hoarding unnecessary spare parts. It can reduce spare parts procurement costs in a specific short period, but lacks balance and stability. In the long run, it is ineffective and even harmful.

4. Use existing but inappropriate buildings as warehouses, such as old factories or office buildings. Although it reduces construction costs, it increases personnel and management costs.

5. Use low-quality personnel, such as workers who cannot be dismissed due to trade unions. Although the wages are low, they cannot take on other jobs and cannot use modern office tools. 

III. New Thinking

When considering spare parts storage, one should frequently and consistently ponder the following questions.

1. How much loss will occur due to each hour of downtime.

2. To what extent will the lack of spare parts cause the suspension of work for maintenance personnel.

3. How high are the additional costs for emergency procurement of spare parts.

However, in reality, these issues are rarely considered. Spare parts economic management not only involves the procurement of spare parts itself, but also covers the maintenance and renovation of production equipment.

In fact, except for the decision-makers who bear the pressure, almost everyone hopes to maintain a high level of spare parts reserves. In cases of high costs and large reserves, problems such as organizational structure, work procedures, communication coordination, and work efficiency are concealed, allowing people to work freely and comfortably. 

IV. Methods to Reduce Spare Parts Costs

1. Reduce Spare Parts Inventory

It is crucial to base the decision on actual demand. The approach should be bottom-up rather than top-down.

(1) Discard the unused spare parts and eventually scrap them. German enterprises, like domestic ones, also have spare parts that have been lying unused in warehouses for several years or even decades. Compared to the huge consumption of manpower and resources, many people are reluctant to bear the responsibility for "asset loss".

(2) Identify the relationship between the equipment and the spare parts, and determine which spare parts can be used in which equipment. This can enable the overall planning of the same spare parts in different equipment, thereby reducing the inventory of spare parts.

(3) Calculate the out-of-stock and supply cycle for spare parts to optimize the inventory.

(4) Store the spare parts for important equipment, such as bottleneck equipment and high-load equipment, based on factors such as the risk coefficient of the equipment.

(5) Determine the minimum and maximum inventory levels for each type of spare part. Volt Company's Cologne Motor Factory determined this based on factors such as the supply time of the spare parts, their material, and the quantity of the corresponding equipment.

(6) Optimize the order quantity. In Germany, as the order quantity increases, the reputation improves, and the price discount also increases; however, an increase in the order quantity also means an increase in capital occupation and management costs. Therefore, a balance between the two needs to be sought.

(7) Establish enterprise standards to reduce the variety of spare parts. In 2001, with a sales volume of 20 billion euros, DeKussa Company was the third-largest conglomerate in the German chemical industry, consuming approximately 1500 tons of hydraulic lubricating oil per year. Since establishing an enterprise standard for oil selection in 1984, despite a threefold increase in equipment scale, the consumption of oil products has slightly decreased, and the number of oil varieties has been reduced from over 500 to 70.

(8) Regularly check the implementation of the above measures.

2. Reduce Storage Management Costs

(1) Transfer the spare parts that are continuously consumed and have low value to the warehouse of the maintenance workshop. This not only avoids diverting the energy of the total warehouse managers and reducing the number of managers, but also avoids waiting time for maintenance personnel.

(2) Train the warehouse managers. High-quality managers not only can improve work efficiency but also can propose valuable suggestions for rationalization. In 2000, a warehouse worker at Volt Company's Cologne Motor Factory received a reward of 500,000 marks for reasonable suggestions, and the value created was 2.5 million marks.

(3) Centralize the management of "black warehouses" of spare parts. This may lead to an increase in personnel and management costs, but as compensation, it can reduce the burden on the "black warehouse" managers who also need to exert labor, and accurately control the inventory of spare parts.

(4) Use modern warehouses. It can not only reduce the time of entry and exit but also reduce the number of maintenance personnel and warehouse managers. There are approximately 2,000 modern elevated warehouses in Germany. The elevated warehouse of the Wesseling Factory of DeKussa Company stores 22,000 types of spare parts worth 19 million euros, with an area of only 1,600 square meters and only 15 people, and three people are responsible for providing supplies on site and three for quality inspection of the goods.

(5) Establish a spare parts management information system. In Germany, computers are widely used in equipment management, and the management software of most enterprises is the R2 or R3 equipment management information system produced by German SAP. Spare parts management is an important part of it. Using computer management of spare parts can efficiently summarize and analyze the frequency of spare parts replacement, the time of procurement arrival, etc., thereby better controlling the minimum and maximum inventory levels of spare parts and reducing the reserve funds occupied by spare parts. 

V. Some Suggestions

For most domestic enterprises, due to differences in the economic development background, some experiences from Germany cannot be immediately adopted. For instance, investing in large-scale modern warehouses and management information systems. However, the following points can be learned from Germany.

1. Store common and slightly valuable spare parts and materials in a central warehouse. For example, reducers, motors, fans, pumps, etc. This can shorten the actual capital turnover cycle. Of course, this requires a high level of management and convenient transportation facilities at the central warehouse.

2. Establish enterprise standards for spare parts and materials. Some large German conglomerates, such as Volkswagen, Mercedes-Benz, and Deutzsa, have their own enterprise standards. A few years ago, a production plant of a certain domestic company had several machines of the same model but with different speed ratios for the large vehicle reducers. This not only increased spare parts storage but also increased the burden of maintenance.

3. Regularly calculate the consumption cycle and procurement cycle of main spare parts and materials. This can reasonably define the storage quantity of spare parts and materials and exclude those unused spare parts from the spare parts supply. The determination of the minimum and maximum storage quantities can respectively ensure the safety and economy of spare parts supply.

4. Batch purchasing, network bidding, and quality tracking. The electrical component procurement of Volt Company's Cologne Motor Factory was selected from two suppliers, General Electric and Siemens, at the beginning of the year, and the settlement was made based on the usage in the end of the year. Deutzsa Company's important spare parts have a "historical number" similar to an ID card, which can effectively track the service life. Network bidding can minimize the possibility of backroom operations.