Optimizing Spare Parts by Using Criticality Level and Replenishment Policy in Oil and Gas Industry

Abstract

Spare part management is a crucial activity in many industries due to the high production loss during downtime caused by a shortage of spare parts. Conversely, a high stock level results in a high value of unproductive capital. In the oil and gas business, the choice of spare parts inventory is the most critical factor. Spare parts for oil drilling and production are costly and challenging to manage. In some companies, spare parts analysis only considers the maintenance point of view. This study was conducted to reduce spare parts inventory without compromising plant downtime caused by a shortage of spare parts. In this study, the criticality criteria include the maintenance (production loss impact and annual demand/turnover) and procurement (spare parts delivery time and quantity of vendor) point of view. The Analytic Hierarchy Process (AHP) will analyze the criticality level based on the above four criteria. Furthermore, the replenishment policy for each spare part is determined based on the results of the AHP simulation (criticality level). There is an opportunity to reduce the spare part inventory using the proposed criticality level. However, a new study should be performed, especially for project surplus material that cannot be utilized during regular operation (drilling casing and tubing).