Introduction and challenges
The management of spare parts is a critical aspect of performance for after-sales and maintenance activities; it is the main contributor to the cost and working capital and heavily influences equipment availability.
The management of spare parts involves very specific and complex issues, some include:
- The need to constantly improve service level targets driven by increasing competitiveness and expectations of consumers,
- Managing and optimizing the long tail of spare parts and stock rotation
- Managing repairs around high equipment utilization targets, such as fleet servicing and repair
Spare parts management involves complex trade-offs between cost, inventory and service; these three dynamics must be addressed simultaneously, and therefore a number of key questions need to be answered:
- What forecasting approach should be used for planning repairs?
- What service level should be promised?
- How to segment service level targets by parts category?
- What level of stock should be held and where?
- What is an acceptable SKU (Stock-keeping unit) tail versus downtime risk and working capital?
- What kind of network and logistics resources are required to provide the service?
- How should returns and recycling be managed?
Achieving the right design of the supporting supply chain processes will drive operational efficiency and customer satisfaction. Adopting a lifecycle management approach will also help optimize the control of regulatory requirements and proactively maintain service levels throughout the whole life of the equipment.
How we can help
Argon & Co supports its clients in optimizing their spare parts supply chain to achieve service, inventory and cost targets. Our scope of services ranges from the diagnostic and target design stage through to operational implementation and includes:
- Multi-criteria segmentation (price, criticality, rotation) to define the service strategy, logistics strategy and stock policy
- Design of end-to-end supply chain processes including forecasting, inventory and physical logistics
- Organizational design and people capabilities, including centralized planning
- Development of tactical plans to reduce inventory and improve service level
- Design and implementation of lifecycle management methods for spare parts and sub-assemblies
- Supporting systems selection and implementation