The SPIR process urgently needs to enter the 21st century

At KOIOS Master Data we have a unique understanding of the difficulties caused by the current SPIR (Spare Parts Interchangeability Record) process. Through our team’s years of MRO consultancy work, we have first-hand experience of how damaging the poor-quality data supplied in SPIRs can be to oil and gas projects. It can have a profound effect on cost, time and resource – cost, time and resource that could be spent innovating and developing a competitive advantage. Not to mention, the unnecessary wastage it can lead to, in an industry that can hardly accommodate it in the current climate. In this age of Industry 4.0, digital transformation and international data standards such as ISO 8000, the question begs – why is data quality consistently letting the side down? When we struggled to find an effective SPIR solution, KOIOS Master Data was born and we set out to create one.

K:spir is the only SPIR software designed this century using ISO 8000 standard data. It creates machine-readable data that retains quality throughout the chain, enabling accurate decision making and resulting in reduced cost, time and resource.

Here, we look at the importance of master data management, the challenges created by the SPIR process, and how K:spir is uniquely positioned to resolve those challenges.

Why is data management so important to the SPIR process?

In this age of ‘data explosion’, most businesses are aware of how poorly-managed data can put them on the back foot. In Experian’s 2019 Global Management Data Research, they found that 95% of organizations surveyed see a negative impact from poor data quality.

Similarly, the Aberdeen Group’s Big Data Survey in 2017 found that the biggest challenges for Executives arise from data disparity, including inaccessible data, poor quality data informing decisions and the growing need for faster analysis. 

The overall effect is a lack of trust in data, to the great detriment of strategic decision making. And when you can’t trust your data to inform business decisions, then cost, time and resource will inevitably suffer.

In the context of the SPIR process, accurate decision making is everything. The SPIR exists as a tool for forecasting spares requirements for the life of a project, its sole purpose being to assist the Owner Operator (O/O) to make accurate decisions. Yet, as many will attest, the data supplied is often inaccurate, hard to access and sometimes supplied by the Engineering Procurement Contractor (EPC) at handover, by which time it is often too late to inform anything at all. 

Experts have raised the question – if you can’t trust SPIRs to make accurate procurement decisions, then are they worth the paper they’re written on?. The process is clearly out-of-date, yet it continues to blight the efficiency of many oil and gas upstream projects.

SPIRs dissected 

The shortcomings of the antiquated SPIR process can be summarised into three key areas:

1. DATA IS INACCURATE AND OVER-SIMPLIFIED

SPIRs are generated from paper forms and are transcribed many times, so part descriptions become distorted. Often, parts have multiple descriptions.

Solution: K:spir locks in data quality right at the start of the process, using ISO 8000 standard data. Part descriptions are consistent and safe from misinterpretation, providing confidence in forecasting and reordering. 

SPIRs are usually completed by an Original Equipment Contractor (OEM), who is not necessarily aware of the O/O’s operating and maintenance procedures. Therefore, they do not take into account equipment criticality or maintenance capability.

Solution: K:spir uses the maintenance and repair strategy to determine the spares requirement, reducing wastage and taking cost off of the bottom line.

2. DATA IS INACCESSIBLE AND DIFFICULT TO ANALYZE

SPIRs often provide information in spreadsheets or pdfs, which are impossible to extract data from quickly, if at all. To extract anything meaningful is very cost and time-intensive, and relies on support from IT specialists.

Solution: K:spir provides instant reporting on the completeness and cost of spares, allowing for accurate decision making. The information is fully configurable to the requirements of the O/O. It can also create a Maintenance Bill of Materials (BoM) and is interoperable with maintenance systems.

Information is not portable and has to be re-entered for different systems.

Solution: K:spir generates portable (machine-readable) data saving significant time spent re-keying information and unnecessary data handling costs.

Data exists on many platforms and is not available to all stakeholders, all of the time.

Solution: K:spir is cloud-based, providing simultaneous access to all stakeholders in the chain. This allows for more transparency and accountability at all stages of the project lifecycle.

3. DATA IS SUPPLIED TOO LATE

Sometimes even as late as handover, by which time it’s too late for the O/O to minimize the operating risk. There is no opportunity to make informed decisions, such as ordering spares with long lead times, or calculating warehouse space. This can lead to unnecessary wastage and operational difficulties along the line.

Solution: K:spir provides transparency right from the beginning of the project, allowing for critical decisions to be made early on. 

With its unique set of features and benefits, it’s clear that K:spir can relieve the symptoms of the current SPIR process with immediate effect, saving valuable cost, time and resource.

A SPIR – this is not what efficiency looks like!

SPIRs and effective MDM – who is responsible for getting it right?

As confident as we are in the KOIOS software suite to advance the world of Master Data Management (MDM), there are clearly other factors that need to be addressed, most notably, ownership. It is a thorny area, and one that is being more keenly contested as digital transformation rattles on apace. As the Aberdeen Group puts it, there is a “growing urgency for better data management”, as businesses see the shortfalls of their inability to harness data.

Experian’s report shows that in 84% of cases, data is still managed primarily by IT departments. Revealingly, 75% of their sample thought that ownership should lie within the business, with support from IT. They conclude that organizations should develop their MDM strategy to fulfill the needs of a much larger group of stakeholders, who wish to harness the power of their data to improve decision making and efficiency.

In the context of SPIRs and oil and gas projects, we believe that O/Os should become more demanding over the quality of data supplied to them by manufacturers. It is unrealistic for their IT experts to have sight of the broader operational requirements, with their own priorities being diverse and demanding. It is the Executives who suffer the consequences of the risk taken by ignoring poor data, and the operations and maintenance departments that will experience the pain. Clearly, they need to make their voices heard much earlier in the process. That said, manufacturers and EPCs also need a better understanding of the challenges faced by O/Os, and in our view should share the responsibility for getting the data right from the start.

It is, as previously stated, a tough subject, but we are constantly encouraged by the conversations we have with manufacturers and O/Os alike. More and more key stakeholders are waking up to the power that effective MDM can have in driving business forwards, by freeing up cost, time and resource and supporting strategic decision making. Not just to their own ends, but for industry as a whole to fully realize its digital transformation goals.

Join us in our vision to revolutionize the SPIR process

A radical change to the SPIR process and MDM as a whole is on the horizon. While there may be no silver bullet, we firmly believe that the right software is an essential move forward. The KOIOS software suite is geared towards this larger shift in MDM, but in the case of K:spir, the results can be felt immediately.

Our hope is that O/O’s and manufacturers alike will unite in becoming more discerning and demanding about data quality, working as one to create harmony along the chain. At KOIOS Master Data, we are committed to leading the conversation and driving better data quality.

Context: Oil and gas upstream projects typically extract material requirements from Spare Parts Interchange Lists (SPILs), sometimes referred to as Spares Parts Lists and Interchangeability Records (SPIRs) or Recommended Spare Parts List (RSPL). These lists are supplied to the owner / operator (O/O) at handover by the Engineering Procurement Contractor (EPC) having been supplied to the EPC by the manufacturer or the vendor of the equipment.

What challenges do SPIRs on spreadsheets create?

There are a number of issues for plant operators that arise from the use of SPIR documents in oil and gas projects. The release of these documents by the EPC is often left until the very end of the project, or not at all, despite financial penalty clauses being inserted in the contracts. This is a real challenge to the operator who wants to reduce the operating risk by purchasing long lead items early enough, and those who want to calculate the size of warehouse they require in a greenfield project.

The format of the SPIR is frequently inconsistent; effectively being a paper form that has been recreated onto a spreadsheet and edited many times. In the end it resembles nothing much more than an optimistic vendor order form. Certainly, it is an incredibly difficult document to extract data from, and as no two forms are constructed in the same way and often have merged cells. Extracting a complete project worth of data is a costly exercise in terms of both manpower and time.

So, what is the solution? 

Case study: ever decreasing O-Rings…

If we look at these documents, it soon becomes clear that they have many drawbacks: they are not extractable; contain only a brief description of the product, often just a noun; they take no account of the equipment criticality; they take no account of the O/Os maintenance capability, or their spares and repair strategy, such as repair or replace. Data quality is extremely poor in these types of documents. In this example, from a single 62-line SPIR document, O-Ring is described four different ways. The shore hardness is also missing from the details, making it impossible to safely order the part from another supplier. For consumable items, it is common for the original part manufacturers name to be omitted from the document.

I would also challenge the spares actually listed on the form. Interpretation of what constitutes two years operating spares vary from manufacturer to manufacturer. Some list only basic consumables, as in their opinion, that is all that is required in the first two years, some list a full production BoM (Bill of Materials) that includes such items as pump casing. Neither approach is helpful to the analyst trying to decide what spares to stock in the plant or organize an on-demand local supply for.

The companies that design and manufacture equipment rarely operate them, and EPCs do not always have experience of operating and maintaining plants – so why would they know what spares you need? Asking the vendor how he calculated the failure rates in your application gets an interesting range of answers, although when you ask him if he will take back all his recommended spares that you have not used in five years’ time, you usually get the same answer! To be fair some major manufacturers do track component failure rates in the field, but they are few and far between.

I would strongly challenge the decision to list the “two years recommended spares” on the SPIR. How many plants are designed for a two-year life? As a materials manager working with the maintenance team, I simply want to know all the maintainable items required for the life of the equipment. My task is to determine the spares required to keep the revenue producing assets running for the life of the plant.

When is a spare no longer a spare? When it becomes waste

Commissioning spares is another column frequently found on SPIR documents. Before you buy the commissioning spares check with the EPC, they will probably be responsible for these spares during the commissioning period and will be leaving you a mountain of unused spares, and will usually be asking a hefty price for them on handover. As an owner operator, you will be in danger of overloading your warehouse with spares you might never use or have already purchased.

I do not want to spend subsequent years repeating the exercise to find out what spares I do not have, or which spares I will never use, you know, those spares that were purchased “just in case”.

When reviewing SPIR documents in order to determine the spares required for the operation, the criticality of the equipment, the maintenance capability, and an understanding of the planned consumption also need to take into account. Furthermore, a number of organisations have strategies to run certain non-critical equipment to failure and then replace the complete unit rather than repair the item using the recommended spares. This information is, understandably, not on the SPIR form but is vital in the decision-making process.

It never ceases to amaze me seeing a room full of people analysing SPIR forms and ordering the spares listed – using the column added by the vendor – without taking these factors into account.

I have carried out many studies of MRO inventory for companies around the globe, and the two most frequent causes of non-moving stock is spares purchased for equipment that is no longer exists, and more commonly, spares purchased for equipment where the plant maintenance capability does not exist to repair and item; motor and pump spares are the favourites. It should go without saying that there is no point in keeping a bearing for a motor in a zoned area for your repair shop to use if the repair shop is not approved to complete work to that standard, or does not have a facility to test the repaired equipment. Pump and motor spares are most frequently purchased and remain unused, as most often the maintenance strategy is to send these units out for refurbishment when they fail. So why were they purchased in the first place? Probably because they were listed on the SPIR and the buyer has taken the appealing route of taking the word of the manufacturer regarding the required spares or they have purchased the spares as part of a package.

Why are you still using spreadsheets? 

In the age of international digital data exchange standards such as ISO 8000, it is frankly mystifying that people are still using these outdated methods of creating and distributing the vast amounts of data required for large projects. 

I firmly believe the answer lies in a simple data exchange service.

There is a paradigm shift using new technology and international standards such as ISO 8000. The antiquated process of buyer-led templates is replaced with supplier-led specification delivered in a computer interpretable format. The success of this new method lies in the provenance of data, eliminating any ambiguity and making data easy to extract.

It can be achieved by a simple clause in the contract with the EPC:

“The supplier shall supply technical data for the products or services they supply. Each item shall contain an ISO 8000-115 compliant identifier that is resolvable to an ISO 8000-110 compliant record with free decoding of unambiguous, internationally recognized identifiers.”

This result? Guaranteed data quality leading to a reduction in costs and increased efficiency.

To find out more about the tools you need to unlock the power of ISO standard digital data, visit KOIOS Master Data.