Spare Parts Inventory
Manufacturers have always been focused on keeping costs low, but in unprecedented times such as these, cutting costs has never been more important. Although many organizations tend to focus on reducing head count to reduce costs, others are finding that optimizing the results from their process leveraging AI and advanced analytics is proving to be more effective. Investing in demand planning software to bring forth process improvements delivers the much-needed short-term gains, as well as continuing to yield benefits to the organizations when the economy improves post-pandemic.
After-sales services become more important as companies delay purchases for new equipment and need to extend the life of their current assets. This provides an opportunity for organizations to make improvements within the service business. Improving process efficiencies in service can deliver a far greater impact than effort made in other parts of the organization.
A key area for improvement in service delivery is the management of spare parts inventory. Better intelligence about what spare parts are required reduces costs by having less inventory while also improving customer satisfaction through reduced time to repair.
Having high excess levels of service parts inventories are a direct result of the challenges of the service supply chain. These challenges include varied service commitments, intermittent demand that is difficult to forecast, extended global networks, and a large volume of parts with long product lifecycles.
8 Best Practices for Managing Spare Parts Inventory
Leading service organizations have implemented advanced planning systems, like Vanguard Predictive Planning™, to manage spare parts resulting in a significant reduction of inventory costs while improving customer service levels and equipment uptimes and achieving an ROI within months of a project’s start.
While spare parts planning has made improvements, the capability to forecast part demand effectively has been limited due to reliance on historical data. Parts failures are unpredictable though, so large levels of inventory must be held to ensure high service levels since it is unknown what problems will be found.
With more accurate and detailed information about the installed base of equipment, there is an opportunity to proactively predict part failures, maintenance events, and help reduce stock levels. What if you had real-time information about which parts were failing? What if you could predict part failures and the need for maintenance events?
Vanguard Predictive Planning™ for Spare Parts is an integrated cloud inventory platform that automates forecasting while applying advanced analytics to determine trends, patterns, and probabilities from even the most intermittent and erratic demand. With Vanguard Predictive Planning™, organizations gain:
- Maximum forecast accuracy
- Improved intra-company and value-chain partner collaboration
- Reduced stock-outs
- Reduced safety stock
- Improved service level, revenue, and customer satisfaction
- Increased procurement efficiency
All of this is packaged in a cloud work environment to help users improve margins and service levels while reducing stock-outs and net carrying costs to achieve the lowest possible total cost of ownership (TCO).
In contrast to other cost-cutting initiatives (where the return is limited), there are only upsides to process improvement investments. With predictive inventory planning, organizations can increase revenue from premium-level service contracts, achieve greater operating efficiency, reduce working capital tied up in inventory, and improve the overall customer experience by turning equipment issues into opportunities to cement brand loyalty through outstanding service.
Demand Planning for Spare Parts