Spare parts inventory optimization plays a crucial role in the performance of assets. Having the right inventory size and locating it in the correct place are both as important in controlling costs as optimizing availability.
Context and challenges
As the sizing and location of spares are performance-critical, decisions regarding them can be hard to reach are not always properly implemented. Current practices may even be continued without question.
The modelling of the spare parts supply chain is highly technical, due to the high number of complexity factors. These include the vast number of references, the unpredictable consumption of specific parts, the existence of very slow movers or items with a very low rotation (and a high risk of obsolescence), the specific management of repairable parts (definition of the level of reparability, organization of the logistics of returns, etc.) and repairers, the concept of criticality, etc.
Consequently, financial and service issues are significant in terms of inventory costs, logistical costs, and impact on the availability of parts, and as a result the equipment itself.
This means that all the different business lines must be considered when negotiating between the various demands. The modelling of flows and inventories can be of great help in objectifying problems and in decision-making.
How can Argon Consulting help you?
- Analyzing processes and performances in spare parts management, both in terms of consumable and repairable items: defining initial supply requirements, forecasting re-supply requirements and choices, managing repairable items, deploying inventories within the organization (single-site inventory location with inter-site distribution logic vs multiple-site inventory location, service policy definition based on the criticality and predictability of failures, optimization of inventory management modes, planning of repair requirements, consumption forecasts assessment, etc.)
- Identifying key performance optimization and improvement initiatives: priority action with rapid results or medium-term results (e.g. redefining contractual terms with strategic parts or repair service suppliers)
- Building a business case, valuing accessible savings to justify the project and track the progress of savings against these targets
- Defining an ambitious target that is accessible to the existing organization
- Identifying the key milestones in the implementation of this target
- Implementing optimization measures
- Transferring skills and knowledge to the existing organization