Availability vs. Cost Efficiency : A Case Study Taking on an Integrated Approach to Spare Part Distribution in the High-Tech Industry

Sammanfattning: Finding the proper balance between availability and cost efficiency is an important concern within spare part management. Spare part suppliers need to respond quickly to customer demand as a stock-out can have severe consequences for both the customer and the supplier. It is critical to identify what items to keep in stock and where to allocate the inventory to avoid stock-outs. This case study was performed at a large high-tech company producing manufacturing equipment to be used in the electronics industry. The aim was to lower the stock-levels of spare parts while not impairing the availability by combining item classification, demand forecasting, and distribution network optimization. A decision diagram for classifying spare parts was constructed using the analytical hierarchy process. Twenty items were classified using the diagram, and the demand for them was forecasted using the Syntetos Boylan Approximationmethod. The shipping cost for spare parts within one region was minimized using a linear optimization model. The analysis showed that equipment criticality, annual usage value, and installed base are critical when classing spare parts. Instead of using five distribution centers in the European region, it was discovered that the shipping costs would decrease if only three warehouses made up the distribution network. The spare parts investigated appeared to follow the typical characteristics for spare parts, showing a low and irregular demand. Hence, demand forecasting seemed to be unnecessary, considering the difficulties in getting satisfactory results. Instead of combining the results from classification, forecasting, and inventory allocation, we suggest that the processes affecting stocking decisions should cooperate and work towards a common objective, namely to satisfy the customer demand in a cost-efficient way. Thus, widening the meaning of taking on an integrated approach to spare part management.