Spare Parts Industry Sheet

Line Art

How demand planning for spare parts leads to MRO optimization

Common forecast methods that work well for finished goods are often ineffective when applied to spare parts as demand for MRO spare parts and materials is often highly intermittent and erratic. This makes for difficult forecasting and MRO optimization.

For production-based organizations, the failure of critical equipment can spell disaster. Production downtime causes supply shortages and potentially lost sales of finished goods. The impulse preventative action is to pad safety stock, especially for critical parts. However, doing so indiscriminately can explode the number of SKUs on hand, create an overage of high-cost parts, and raise carrying costs to unsustainable levels. Keeping low stocking levels with fingers crossed runs the risk of production stoppage. It is tough either way, and further complicated by the following challenges:

  • Intermittent and erratic demand
  • Hard to detect demand pattern
  • Abounding SKU quantities
  • Severe financial consequences
  • Cost of critical but rarely needed parts
  • Cost of obsolescence and expensive parts

Vanguard Software delivers a cloud inventory platform that automates forecasting while applying advanced analytics to derive trends, patterns, and probabilities from even the most intermittent of demand sets. Vanguard’s advanced-analytic tool set includes Croston’s intermittent demand model, as well as more advanced Monte Carlo simulations for probability modeling. All of this is packaged in a cloud network environment to help users improve margins, service levels, and MRO optimization, while reducing stockouts and net carrying costs to achieve the lowest possible total cost of ownership (TCO).

With Vanguard Predictive Planning™ for Spare Parts, organizations gain:

  • Maximum forecast accuracy
  • Improved intra-company and value-chain partner collaboration
  • Reduced stock-outs
  • Reduced safety stock
  • Improved service level, revenues, and customer satisfaction
  • Increased procurement efficiency

Leverage Vanguard Software for part, or all, of your S&OP or IBP process- from MRO optimization and materials to sales forecasting to supply planning to budgeting. Vanguard can integrate all of these distinct applications on a single platform designed to unify management estimates, exceptions, and data.