# Green Spare Parts Evaluation for Hybrid Warehousing and On-Demand Manufacturing
## 2 Materials and Methods
### Case Study  
A new oil and gas platform is planned in the North Sea and the asset operator is working on an SPIR analysis to determine the locations and quantities of the spare parts inventory. The SPIR engineers utilize their experience and historical SPIR records from previous similar platforms. SPIR engineers follow the recommendations of the NORSOK Z-008 standard to determine the criticality and consequence of not having spare parts to define the location and minimum quantity at each location. They have three options to stock spare parts: on-site stock (on the platform), which is very limited, central warehouse stock onshore, and no stock. SPIR engineers have three issues to consider. First, the platform is planned to be unmanned, where maintenance workers visit the platform every three months to perform the required maintenance work, so it may not be worth having on-site spare parts stock (as maintenance workers are not available on-site outside of the planned maintenance intervals). Second, the idea of a digital warehouse is worth exploring, especially since the onshore central warehouse contractor is planning to offer this option with subscription fees, so the asset operator is not going to invest capital in building a digital warehouse. Third, previous SPIR studies and actual records (during the operation phase) indicate that SPIR studies are dominant with deterministic values (spare part quantity and delivery time); however, demand rates and supply times are stochastic in reality. Operationally, this means that they had some spare parts that were stocked and became obsolete before they were used, and some spare parts were needed more than what was stocked, which had severe consequences on production. In reality, the delivery time or the lead time of the supply is very stochastic and is influenced by several uncertainties that are not considered in the SPIR studies. In fact, SPIR studies do not evaluate whether the delivery time matches the demand rate. The demand rate is used in current SPIR studies to determine the criticality and define the location of the stock, but not the quantity and the consequences on production. The SPIR engineers noticed that sometimes the demand rate is higher than the stock and the delivery time is then prolonged with supply lead time from the original manufacturer (usually best-cost countries). In some cases, to keep the delivery time as contracted, the cost is significantly increased to obtain parts on time. SPIR engineers believe that digital warehousing is a good option to explore, as it first makes the delivery time more resilient. It fits the purpose and operational needs more, as it offers on-demand supply rather than stocking supply, preventing unnecessary stock and holding expenses for entire stocks. However, SPIR engineers have technical and economical concerns with regard to digital warehousing. The technical concern is related to whether the spare parts contractor is technically capable of manufacturing and can supply the required spare parts. The asset operator is willing to outsource rather than invest in building their own digital warehouse system and local manufacturing stations. Therefore, the second concern is the economics behind the digital warehouse, and whether it will cost the asset operator more than conventional warehousing or not. The digital warehouse contractor is offering a subscription fee or \"pay-as-you-use\" option and it is difficult to determine which one is more economical. The SPIR study is a strategic work document that leads to capital investment to buy spare part stock and inventory locations or to contract on-demand services. Therefore, SPIR engineers must select the spare part policy for the entire life of the asset. The SPIR engineers had five questions in mind: (1) If no stock policy is applied with a conventional supply process, what will the consequence on production uptime be? (2) If the highest production uptime is targeted with a conventional supply process, what will the optimal safety stock be?