MS 57 IGNOU MBA Solved Assignment -Write the short notes on the following a) Terotechnology b)Spare Parts Inventory c) Total Productive Maintenance (TPM) d) Condition Based Maintenance (CBM)

Write the short notes on the following

a)      Terotechnology

b)      Spare Parts Inventory

c)      Total Productive Maintenance (TPM)

d)      Condition Based Maintenance (CBM)

a)      Terotechnology

Terotechnology is a kind of applied science for measuring the operational values of physical assets. It is concerned with things such as the installation, maintenance and replacement of those assets. Professionals who are involved in terotechnology look at tangible assets of a company or business such as buildings, equipment and vehicles. They measure how these items will provide a net value for certain years until they need to be replaced.

Part of terotechnology is called life-cycle costing. Life-cycle costing can include attention to depreciation and other tax-related values. Generally, in life-cycle costing, one adds up all of the positive and negative values associated with a physical asset during a certain period of time to produce a net result. Companies use this net value to understand how ownership and use of a piece of equipment or other physical asset during that period of time will affect their bottom line.

A big part of terotechnology is in understanding the role of maintenance and the value of a warranty. Many larger pieces of equipment and other physical assets come with warranties offered by the manufacturer or vendor. In terotechnology, the way in which these warranties provide value relative to projected costs is examined.

Spare Parts Inventory
Few companies are self-insured, and most pay premiums to their insurance company to the tune of maybe 5 percent or more of the total inventory value. Even fewer are cash-rich, and have to borrow money for major capital improvements and other projects. While the cost of capital (i.e. interest rate) is relatively low these days, another 5 percent or more is very realistic to borrow funds even in today’s economy. Every dollar invested in inventory represents another dollar that has to be borrowed somewhere else. Then, of course, there’s the Governor. For states that have an inventory tax, the spare parts inventory is taxed on total value, not on the inventory items that are used in the daily operation. If you own it, it gets taxed.

Taking into account embedded costs like salaries and wages, buildings and utilities to manage the spare parts inventory, the total administrative exposure for carrying cost can add up to as much as 20 percent or more. And that cost is not just a once-and-done expense. That’s every year, year after year, for as long as you carry storeroom inventory investment as an asset. It becomes clear that if you buy a spare motor for $5,000 to keep in the storeroom inventory “just in case” you need it, that motor will cost you an additional $1,000 each year that you carry the spare motor in inventory. It doesn’t take long to double the cost of a spare part. Plus, if the motor isn’t under a scheduled preventive maintenance program, there’s a good chance that when the motor is put into service it will not perform as expected or have the life expectancy of a new motor.

The good news is that if you are turning your storeroom inventory on a regular basis, you are more likely to be able to reduce these carrying costs by minimizing the inventory on the shelf. But what if you aren’t using it? Many people say (with conviction), “Don’t get rid of it, just hang onto it. We might need it someday. Besides, it doesn’t cost anything to hold onto it.” Well, it is clear that isn’t the case. If it costs money to house usable inventory, then it stands to reason that it also costs at least that much to maintain obsolete or unusable parts as well.

In fact, one could argue that it actually costs more to keep obsolete and excess inventory of spare parts in stock, because those items consume valuable storekeeper time and storeroom space to count, move, clean and perform other non-value added activities associated with trying to keep the inventory straight. Each time a spare part is moved or handled during its time in the storeroom, there is a cost involved. Inventory management practices that do not review inventory regularly to identify obsolete items and target items over the maximum stocking levels also drive up the carrying cost of spare parts inventory. During inventory reviews parts that have damage from rust, corrosion, and assemblies that have been cannibalized or broken should be removed from the inventory and replacement parts ordered as needed.

It is critical for the storeroom to provide the right part, in the right condition, at the right time and at the right cost to support equipment reliability and production up-time. Creating supplier partnerships and striving to have only spare parts that have been identified as critical to the production process in the storeroom inventory are positive steps to reducing the spare parts inventory investment and inventory carrying cost. Taking the steps necessary to remove obsolete inventory and reduce inventory exceeding the maximum stocking level are two areas of inventory management that have an immediate effect on reducing carrying cost exposure. Some of these costs are harder to quantify than others. However, the general concept of inventory carrying costs, as well as the additional costs associated with maintaining obsolete and unusable materials, should be easy enough to rationalize that even the staunchest unbeliever can be convinced to rethink their position.
Few companies are self-insured, and most pay premiums to their insurance company to the tune of maybe 5 percent or more of the total inventory value. Even fewer are cash-rich, and have to borrow money for major capital improvements and other projects. While the cost of capital (i.e. interest rate) is relatively low these days, another 5 percent or more is very realistic to borrow funds even in today’s economy. Every dollar invested in inventory represents another dollar that has to be borrowed somewhere else. Then, of course, there’s the Governor. For states that have an inventory tax, the spare parts inventory is taxed on total value, not on the inventory items that are used in the daily operation. If you own it, it gets taxed.
Taking into account embedded costs like salaries and wages, buildings and utilities to manage the spare parts inventory, the total administrative exposure for carrying cost can add up to as much as 20 percent or more. And that cost is not just a once-and-done expense. That’s every year, year after year, for as long as you carry storeroom inventory investment as an asset. It becomes clear that if you buy a spare motor for $5,000 to keep in the storeroom inventory “just in case” you need it, that motor will cost you an additional $1,000 each year that you carry the spare motor in inventory. It doesn’t take long to double the cost of a spare part. Plus, if the motor isn’t under a scheduled preventive maintenance program, there’s a good chance that when the motor is put into service it will not perform as expected or have the life expectancy of a new motor.

The good news is that if you are turning your storeroom inventory on a regular basis, you are more likely to be able to reduce these carrying costs by minimizing the inventory on the shelf. But what if you aren’t using it? Many people say (with conviction), “Don’t get rid of it, just hang onto it. We might need it someday. Besides, it doesn’t cost anything to hold onto it.” Well, it is clear that isn’t the case. If it costs money to house usable inventory, then it stands to reason that it also costs at least that much to maintain obsolete or unusable parts as well.

In fact, one could argue that it actually costs more to keep obsolete and excess inventory of spare parts in stock, because those items consume valuable storekeeper time and storeroom space to count, move, clean and perform other non-value added activities associated with trying to keep the inventory straight. Each time a spare part is moved or handled during its time in the storeroom, there is a cost involved. Inventory management practices that do not review inventory regularly to identify obsolete items and target items over the maximum stocking levels also drive up the carrying cost of spare parts inventory. During inventory reviews parts that have damage from rust, corrosion, and assemblies that have been cannibalized or broken should be removed from the inventory and replacement parts ordered as needed.

It is critical for the storeroom to provide the right part, in the right condition, at the right time and at the right cost to support equipment reliability and production up-time. Creating supplier partnerships and striving to have only spare parts that have been identified as critical to the production process in the storeroom inventory are positive steps to reducing the spare parts inventory investment and inventory carrying cost. Taking the steps necessary to remove obsolete inventory and reduce inventory exceeding the maximum stocking level are two areas of inventory management that have an immediate effect on reducing carrying cost exposure. Some of these costs are harder to quantify than others. However, the general concept of inventory carrying costs, as well as the additional costs associated with maintaining obsolete and unusable materials, should be easy enough to rationalize that even the staunchest unbeliever can be convinced to rethink their position.
Taking into account embedded costs like salaries and wages, buildings and utilities to manage the spare parts inventory, the total administrative exposure for carrying cost can add up to as much as 20 percent or more. And that cost is not just a once-and-done expense. That’s every year, year after year, for as long as you carry storeroom inventory investment as an asset. It becomes clear that if you buy a spare motor for $5,000 to keep in the storeroom inventory “just in case” you need it, that motor will cost you an additional $1,000 each year that you carry the spare motor in inventory. It doesn’t take long to double the cost of a spare part. Plus, if the motor isn’t under a scheduled preventive maintenance program, there’s a good chance that when the motor is put into service it will not perform as expected or have the life expectancy of a new motor.
The good news is that if you are turning your storeroom inventory on a regular basis, you are more likely to be able to reduce these carrying costs by minimizing the inventory on the shelf. But what if you aren’t using it? Many people say (with conviction), “Don’t get rid of it, just hang onto it. We might need it someday. Besides, it doesn’t cost anything to hold onto it.” Well, it is clear that isn’t the case. If it costs money to house usable inventory, then it stands to reason that it also costs at least that much to maintain obsolete or unusable parts as well.

In fact, one could argue that it actually costs more to keep obsolete and excess inventory of spare parts in stock, because those items consume valuable storekeeper time and storeroom space to count, move, clean and perform other non-value added activities associated with trying to keep the inventory straight. Each time a spare part is moved or handled during its time in the storeroom, there is a cost involved. Inventory management practices that do not review inventory regularly to identify obsolete items and target items over the maximum stocking levels also drive up the carrying cost of spare parts inventory. During inventory reviews parts that have damage from rust, corrosion, and assemblies that have been cannibalized or broken should be removed from the inventory and replacement parts ordered as needed.

It is critical for the storeroom to provide the right part, in the right condition, at the right time and at the right cost to support equipment reliability and production up-time. Creating supplier partnerships and striving to have only spare parts that have been identified as critical to the production process in the storeroom inventory are positive steps to reducing the spare parts inventory investment and inventory carrying cost. Taking the steps necessary to remove obsolete inventory and reduce inventory exceeding the maximum stocking level are two areas of inventory management that have an immediate effect on reducing carrying cost exposure. Some of these costs are harder to quantify than others. However, the general concept of inventory carrying costs, as well as the additional costs associated with maintaining obsolete and unusable materials, should be easy enough to rationalize that even the staunchest unbeliever can be convinced to rethink their position.
The good news is that if you are turning your storeroom inventory on a regular basis, you are more likely to be able to reduce these carrying costs by minimizing the inventory on the shelf. But what if you aren’t using it? Many people say (with conviction), “Don’t get rid of it, just hang onto it. We might need it someday. Besides, it doesn’t cost anything to hold onto it.” Well, it is clear that isn’t the case. If it costs money to house usable inventory, then it stands to reason that it also costs at least that much to maintain obsolete or unusable parts as well.
In fact, one could argue that it actually costs more to keep obsolete and excess inventory of spare parts in stock, because those items consume valuable storekeeper time and storeroom space to count, move, clean and perform other non-value added activities associated with trying to keep the inventory straight. Each time a spare part is moved or handled during its time in the storeroom, there is a cost involved. Inventory management practices that do not review inventory regularly to identify obsolete items and target items over the maximum stocking levels also drive up the carrying cost of spare parts inventory. During inventory reviews parts that have damage from rust, corrosion, and assemblies that have been cannibalized or broken should be removed from the inventory and replacement parts ordered as needed.

It is critical for the storeroom to provide the right part, in the right condition, at the right time and at the right cost to support equipment reliability and production up-time. Creating supplier partnerships and striving to have only spare parts that have been identified as critical to the production process in the storeroom inventory are positive steps to reducing the spare parts inventory investment and inventory carrying cost. Taking the steps necessary to remove obsolete inventory and reduce inventory exceeding the maximum stocking level are two areas of inventory management that have an immediate effect on reducing carrying cost exposure. Some of these costs are harder to quantify than others. However, the general concept of inventory carrying costs, as well as the additional costs associated with maintaining obsolete and unusable materials, should be easy enough to rationalize that even the staunchest unbeliever can be convinced to rethink their position.
In fact, one could argue that it actually costs more to keep obsolete and excess inventory of spare parts in stock, because those items consume valuable storekeeper time and storeroom space to count, move, clean and perform other non-value added activities associated with trying to keep the inventory straight. Each time a spare part is moved or handled during its time in the storeroom, there is a cost involved. Inventory management practices that do not review inventory regularly to identify obsolete items and target items over the maximum stocking levels also drive up the carrying cost of spare parts inventory. During inventory reviews parts that have damage from rust, corrosion, and assemblies that have been cannibalized or broken should be removed from the inventory and replacement parts ordered as needed.
It is critical for the storeroom to provide the right part, in the right condition, at the right time and at the right cost to support equipment reliability and production up-time. Creating supplier partnerships and striving to have only spare parts that have been identified as critical to the production process in the storeroom inventory are positive steps to reducing the spare parts inventory investment and inventory carrying cost. Taking the steps necessary to remove obsolete inventory and reduce inventory exceeding the maximum stocking level are two areas of inventory management that have an immediate effect on reducing carrying cost exposure. Some of these costs are harder to quantify than others. However, the general concept of inventory carrying costs, as well as the additional costs associated with maintaining obsolete and unusable materials, should be easy enough to rationalize that even the staunchest unbeliever can be convinced to rethink their position.
It is critical for the storeroom to provide the right part, in the right condition, at the right time and at the right cost to support equipment reliability and production up-time. Creating supplier partnerships and striving to have only spare parts that have been identified as critical to the production process in the storeroom inventory are positive steps to reducing the spare parts inventory investment and inventory carrying cost. Taking the steps necessary to remove obsolete inventory and reduce inventory exceeding the maximum stocking level are two areas of inventory management that have an immediate effect on reducing carrying cost exposure. Some of these costs are harder to quantify than others. However, the general concept of inventory carrying costs, as well as the additional costs associated with maintaining obsolete and unusable materials, should be easy enough to rationalize that even the staunchest unbeliever can be convinced to rethink their position.

• Avoid wastage in a quickly changing economic environment.

• Producing goods without reducing product quality.

• Reduce cost.

• Produce a low batch quantity at the earliest possible time.

• Goods send to the customers must be non defective.

Advantages and disadvantages

• Improved system reliability

• Decreased maintenance costs

• Decreased number of maintenance operations causes a reduction of human error influences

• High installation costs, for minor equipment items often more than the value of the equipment

• Unpredictable maintenance periods cause costs to be divided unequally

• Increased number of parts (the CBM installation itself) that need maintenance and checking

• Maximum Productivity

• Maximum Uptime

• Lowest Daily Operating Costs

It’s always disappointing, but no longer surprising, to find people who actually believe that once you pay for material and put it on the shelf in the storeroom, it no longer costs anything to keep it there. The fact is, there are significant costs associated with holding spare parts on the books.

Total Productive Maintenance (TPM)

What is Total Productive Maintenance ( TPM ) ?

It can be considered as the medical science of machines. Total Productive Maintenance (TPM) is a maintenance program which involves a newly defined concept for maintaining plants and equipment. The goal of the TPM program is to markedly increase production while, at the same time, increasing employee morale and job satisfaction.

TPM brings maintenance into focus as a necessary and vitally important part of the business. It is no longer regarded as a non-profit activity. Down time for maintenance is scheduled as a part of the manufacturing day and, in some cases, as an integral part of the manufacturing process. The goal is to hold emergency and unscheduled maintenance to a minimum.

Why TPM ?

TPM was introduced to achieve the following objectives. The important ones are listed below.

Today, with competition in industry at an all time high, TPM may be the only thing that stands between success and total failure for some companies. It has been proven to be a program that works. It can be adapted to work not only in industrial plants, but in construction, building maintenance, transportation, and in a variety of other situations. Employees must be educated and convinced that TPM is not just another "program of the month" and that management is totally committed to the program and the extended time frame necessary for full implementation. If everyone involved in a TPM program does his or her part, an unusually high rate of return compared to resources invested may be expected. 

Condition Based Maintenance (CBM)

Condition-based maintenance (CBM), shortly described, is maintenance when need arises. This maintenance is performed after one or more indicators show that equipment is going to fail or that equipment performance is deteriorating.

This concept is applicable to mission critical systems that incorporate active redundancy and fault reporting. It is also applicable to non-mission critical systems that lack redundancy and fault reporting.

Condition-based maintenance was introduced to try to maintain the correct equipment at the right time. CBM is based on using real-time data to prioritize and optimize maintenance resources. Observing the state of the system is known as condition monitoring. Such a system will determine the equipment's health, and act only when maintenance is actually necessary. Developments in recent years have allowed extensive instrumentation of equipment, and together with better tools for analyzing condition data, the maintenance personnel of today are more than ever able to decide what is the right time to perform maintenance on some piece of equipment. Ideally condition-based maintenance will allow the maintenance personnel to do only the right things, minimizing spare parts cost, system downtime and time spent on maintenance.

Despite its usefulness, there are several challenges to the use of CBM. First and most important of all, the initial cost of CBM is high. It requires improved instrumentation of the equipment. Often the cost of sufficient instruments can be quite large, especially on equipment that is already installed. Therefore, it is important for the installer to decide the importance of the investment before adding CBM to all equipment. A result of this cost is that the first generation of CBM in the oil and gas industry has only focused on vibration in heavy rotating equipment .

Secondly, introducing CBM will invoke a major change in how maintenance is performed, and potentially to the whole maintenance organization in a company. Organizational changes are in general difficult.

Also, the technical side of it is not always as simple. Even if some types of equipment can easily be observed by measuring simple values as vibration (displacement or acceleration), temperature or pressure, it is not trivial to turn this measured data into actionable knowledge about health of the equipment

CBM has some advantages over planned maintenance:

Its disadvantages are:

Today, due to its costs, CBM is not used for less important parts of machinery despite obvious advantages. However it can be found everywhere where increased reliability and safety is required, and in future will be applied even more widely.

CBM delivers machine performance customers have come to expect from John Deere. Although PM has proven to prevent some failures, many machines still experience premature and/or major failures. Unanticipated failures and emergency repairs have a negative effect on your uptime and don't match up with the John Deere value proposition:

The fact is that even a small failure can lead to a catastrophic one if not addressed proactively. Monitoring machine health and controlling contamination are key to eliminating failures. In addition, extending oil and filter service internals through the use of bypass filtration, shown below, contributes to lowering machine operating cost.