Abstract
M.Com. (Business Management)
A key performance indicator of a cement manufacturer is that of its operating equipment efficiencies or OEE. The world-best standard for OEE of cement manufacturers is 85%, and this figure can only be achieved through very good maintenance practices and programmes combined with exceptional maintenance inventory levels and good maintenance inventory strategies. Maintenance inventory can be described as spares that support the manufacturing process, but that is not included in the final product. Like all types of inventory, maintenance inventory has a cost associated with carrying the inventory that can be calculated through applying the various carrying cost components associated with inventory. In a cement manufacturer this carrying cost figure can be excessively high as a result of the slow movement of major spare components that have to be held in inventory due to its critical importance to the manufacturing process. It is also evident that inventory levels in AfriSam are high. This may be due to the fact that management believe the best possible method to minimise the risk of production loss during a breakdown, is to increase maintenance inventory levels with no comparison to the costs associated with carrying the inventory. The chosen research problem is: “AfriSam (Pty) Ltd carries maintenance inventory worth millions of rands with slow movement of high value maintenance inventory sometimes in excess of 3 years. The cost of managing the inventory together with the carrying cost of the inventory has become a key focus point in the business and there is a need to find methods to optimise the inventory.”