March/April 2013

Spare necessities

Parts stocking software saves Teck Resources millions

By Herb Mathisen

Teck used spares optimization software developed by the University of Toronto’s C-MORE to stock parts for 18 separate critical components for its Komatsu 930E fleet at its three Elk Valley, B.C., coal operations | Courtesy of Teck

Teck Resources made the Komatsu 930E its primary haul truck in 2010 and, over the following two years at its three Elk Valley, B.C., coal mines, the number of those trucks nearly doubled from 51 to 99. With the expanding fleet, the company needed to find a way to keep just the right number of the critical spare parts in stock.

Hitting that moving target proved difficult because the company’s inventory management software at the time was not able to add new trucks as they came into operation, says Rob Kalwarowsky, reliability analyst with Teck. He had to look elsewhere, and because Teck is a member of the University of Toronto’s Centre for Maintenance Optimization and Reliability Engineering (C-MORE) consortium, Kalwarowsky had access to spares management software designed to solve this specific problem. Using resources from C-MORE, it quickly became apparent that stocked parts were not keeping up with the burgeoning fleet. “In all of the cases, we weren’t carrying enough,” he points out.

Since June 2011, Kalwarowsky says Teck has saved more than $30 million by getting critical spares stocks to optimal levels.

Smarter stocking finds costs to cut

Spares management is an area companies often overlook for potential cost savings, Kalwarowsky says. “If we step back and look at why we are here, it is to make money for the shareholders,” he explains, adding that fulfilling this purpose is closely tied to spares management.

“We have a value for downtime,” says Kalwarowksy. “If our truck runs for so long, it produces ‘x’ amount of coal. Given that, we can sell that coal for ‘y’ dollars and then we get that profitability. Do we hold more parts and reduce how many hours we’re going to be down? Or are we going to hold fewer parts and increase the number of hours we’re down?”

Teck used the program to stock parts for 18 separate critical components for its Komatsu 930E fleet. For example, at the end of 2011, Teck carried five GE GDY-106 wheel motor spares, worth $1.2 million each. Using the C-MORE software, Kalwarowsky concluded that holding eight spares was the optimal stocking option for 2012. The average cost of holding five spares was $4,683.08 per hour, while holding eight parts costs $3,196.93 per hour. Taking the difference between the two options’ hourly costs and multiplying it by 6,000 hours – the amount each truck operates per year – the calculated savings comes out to more than $8.9 million.

Teck’s calculations take into account the component’s probable rate of failure, its repair and manufacturer lead times, and the truck’s fleet number and age, while also factoring in potential downtime costs, the part’s overall cost and the $250,000 it costs to rebuild it. Holding more than eight parts would further reduce the likelihood of equipment downtime but would wind up being less economical since the probability of needing those added spares would not outweigh their cost.

Page 1 of 2. Next
Post a comment


PDF Version