Gain a competitive advantage from efficient spare parts management!

Challenges in spare parts management

Spare parts management is challenging for several reasons. One important factor is the large number of items. Typically, there are thousands or tens of thousands of spare parts to manage. In addition, the individual items differ in value, lifecycle, weight, size, criticality, and predictability of demand. Due to the heterogeneity of the items, effective inventory management requires that each item and stock location is examined individually; generalizations or rules of thumb, such as ABC classes, seldom lead to adequate results.

In addition, the delivery chains of spare parts are often complex. Spare parts are stocked at several stages and numerous stock locations by manufacturers, wholesalers, retailers, and end users. Oftentimes, several delivery options with different cost structures and lead-times are available for the same item. A typical decision is, for example, whether to stock a particular spare part in a central depot or retail outlet or whether to place an express order for the item when it is needed. As decisions such as this need to be taken for a large number of items at several points in the spare parts network, the total impact of these decisions on shipping, storage, and obsolescence costs is notable.

Furthermore, spare parts ordering and inventory management is often carried out by maintenance staff or sales clerks. Therefore, ordering and goods handling is time away from these persons’ main occupation, i.e. maintenance work or sales. In addition, the accuracy of spare parts management often suffers as it is not prioritized.

The challenges in spare parts management often show up as large amounts of dead stock and the need for notable inventory depreciations. Systematic spare parts management based on the individual items’ sales volumes and other characteristics (including obsolescence risk), however, enables significant reductions in dead stock and inventory costs, while maintaining or even increasing service levels!

RELEX increases the efficiency of spare parts management!

With the aid of RELEX’s software tools, our customers have management to significantly increase the efficiency of their spare parts management. Among other things, our customer have benefited from:

• Service level increases of more than 30 percentage points,
• Several times faster inventory turns,
• Significant reductions in the time spent on spare parts inventory management and ordering through automated replenishment,
• Cost-effective, item and location specific delivery channel choices for thousands of spare parts, enabling savings of several hundred thousand dollars,
• Economical, item- and location specific purchase batch sizes, enabling a more than 15 % reduction of total logistics costs.

The RELEX Processor software provides excellent support for automated inventory management and purchasing in the spare parts sector.